Global thirst, local flavour

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In May 1983, Ted Levitt, editor of the Harvard Business Review wrote one of the first articles to popularise the notion of globalisation. He argued that as markets were globalising – and, by extension, homogenising – then the companies that globalised their brands accordingly would steal a march over their more local competitors.

So influential was his thinking that, over the past 30 years, many organisations have tried to build monolithic global brands to take advantage of the “inevitable” trend. Companies including Coca-Cola, McDonald’s, Unilever, Levi-Strauss, Vodafone and Heineken have pursued the global brand route – at various points crushing local cultural and taste differences to fit the theory. City analysts piled onto the bandwagon too.

But while a handful of companies have made a success of the strategy, many others have had to adapt their approach as it became clear that the growing demand by consumers for international brands was neither as inevitable nor as inexorable as Levitt predicted. A handful were sceptical from the outset. SABMiller was one of them because, in the words of its recently retired chief executive, Graham Mackay: “Beer is different.”

Mackay believes that the highly emotional characteristics of beer brands, combined with their long history and association with place, will always dictate a high degree of localism that sets them apart in the fast moving consumer goods universe. There are very successful global brands, of course, and SABMiller itself has
four – Grolsch, Peroni Nastro Azzuro, Pilsner Urquell and Miller Genuine Draft. But these account for just three per cent of SABMiller’s total sales volumes.

The company’s results – sales and profits grew by 10% per cent and 12% per cent respectively in the year 2012-2013 – appear to vindicate its approach. Mackay sums this up as follows: “While much of the consumer goods industry is focused on identifying how everyone is the same, SABMiller is trying to work out how everyone is different.”

Fermenting change
The company’s 80-strong research and insight team plays a huge part in helping the company to discern those differences. Marketing director Nick Fell takes up the story.

“Levitt was sort of right,” he concedes. “Consumer needs are increasingly common as markets develop. We see the same patterns of need and homogeneity around the world as most consumer goods companies. But beer is a bit different in that the need is felt more keenly at an emotional rather than a functional level. The categories where global brands dominate are those where the manufacturing process brings a functional benefit. Things that people ingest are slower to globalise because they tend to be an indigenous part of the local culture.”

SABMiller is a global business. The world’s second biggest brewer, in volume terms, it boasts more than 200 beer brands and employs 70,000 people in more than 75 countries across six continents. However, most of its brands will be unfamiliar to many despite being powerful in their home markets. About 97% of the beer the company produces is consumed within the market of origin – compared with the industry average of 94-95%.

This will change: “Our global brands are less well developed because we started late,” says Fell, part of whose remit, when he joined the company in 2006, was to help to build its global brands. But the company won’t turn its back on its distinctive approach to winning global success – an approach built on the foundations and business principles laid down many years ago in South Africa.

The springboard for expansion from its home country was the advent of democracy in South Africa, which freed it up to invest outside the country just as wider geopolitical changes were throwing up new opportunities across Eastern Europe, Asia and Africa. In the early days it acquired breweries – often badly neglected – from governments wanting to privatise, applying the disciplines it had learned in South Africa to enhance quality, drive down costs and improve distribution. But its marketing approach was, where possible, to build existing local brands through strengthening their associations with local heritage and cultural icons.

“We have a three-step marketing process,” says Fell. “We ask local markets where they are going to play, how they will win strategically there, and how they will activate their strategies. So we start with segmentation, help them develop brand, channel and portfolio strategies and then help them turn those strategies into activity plans. We use our own bespoke segmentation methodology at the start of the journey and then move on to develop brand positionings based on that. We use consumer research at a local level to test these out, develop advertising, test that out and so on. So we have a global set of standards, beliefs and techniques, along with basic stringent guidelines about what ‘best’ looks like, but we don’t believe in dictating global methods. We give latitude to local markets to tailor their approach.”

Insight with a capital ‘I’
This has continued to be SABMiller’s strategy throughout the three main waves of acquisitions it has made over the past 20 years, although the extent to which acquired companies have adopted the ‘package’ depends on their sophistication. For example, between 1994 and 2000 most of the acquisitions were in Eastern Europe, where marketing was quite basic. “Most of the people working there now were hired by us,” says Fell. It was a similar story with the Bavaria business in South America, which it bought in 2005.

By contrast, Miller, which it bought in 2002, was, says Fell, “a very sophisticated business in a very sophisticated market, so we successfully married what we did with what they did – as we did with Fosters, which we acquired in 2011.”

But insight has always been left at a local level – supported by the centre and the regional hubs when necessary. “We define the function as ‘Insight’ (with a capital ‘I’) rather than ‘Consumer Insight’, ‘Shopper Insight’ or whatever,” explains Fell. “Its fundamental role is to support the commercial leaders in the business to produce insights (with a small ‘i’) because insight is their responsibility. It is a very clear partnering exercise.”

He continues: “In the regions and at the centre here, working for me, we have insight specialists, and, where we have difficult projects or issues in particular markets, those markets can call on the centre for help. For instance, if a market has an issue with brand positioning or performance we would look at the data to help them work out what the problem is and how they might think about addressing it. But most of the time, the main role of the insight specialists is to help the local markets to build their capability. They help the local businesses get better by doing – supplementing what they do with expertise where appropriate.”

There are seven insight people in SABMiller’s head office, and every market has its own research manager and, what Fell describes as, “quite a big department” with a broad remit to manage market data and provide support for the commercial insight teams. In total, there are up to 80 research and insight people around the world, with primary research conducted by local suppliers.

But this sophisticated network is concerned primarily with the way beers are targeted and positioned, not with how they taste. “When we talk about ‘beer’, what we are really talking about is lager,” says Fell. “Lager accounts for 97% of beer consumed around the world and, for the average consumer, the intrinsic differences between these ‘beers’ are very minimal. If you do blind tastings, the differences perceived by consumers are very, very small.”

While the market is not, for the most part, made up of globalised brands, beer is essentially a globalised product, which, because of modern brewing techniques, can be brewed to the same high standard anywhere, he says.

“The differentiation of beer, albeit a very ‘local’ product, comes down to the marketing and the business system.”

SABMiller believes that deep, rich and rigorous consumer insight is critical to brand building. In the words of Mackay again: “We take it to a level of granularity that borders on the obsessive, in order to understand and assimilate those attitudes towards beer which are – from a consumer’s perspective – indefinable.”

Fell explains: “Most markets have three or four mainstream brands and we insist that they are positioned in different areas and against different consumer passion points in order to keep them separate and relevant to different consumer groups.”

So, for example, in Africa the company has been trying to define the essence of ‘masculinity’ in order to inform its ‘masculine character’ positioning. Fell explains: “Through qualitative research aimed at understanding the consumer in the round and what it is to be ‘a real man’, we found that while, generally, people define its essence as being a good husband and father and providing for the family, in Africa ‘a real man’ is seen as someone who is prepared to step up and help those outside the family too. This insight gave us a much stronger positioning to bring to bear in our advertising there.”

Similarly, he adds, while ‘passion’ is traditionally associated with Italians, SABMiller’s research showed that far from being a frivolous quality, “in Italy what passion really means is that people put their whole spirit into something.” Here again, this insight has informed its positioning of the Peroni Nastro Azzuro brand in Italy. “We have uncovered these two crucial insights through deep dives,” says Fell.

Ursus, a local premium brand in Romania, bought by SABMiller in 1996, was highly successful until recession hit. The local team realised they needed to rethink their ‘value’ offer to consumers during the financial crisis, and find ways of repositioning the brand, whose symbol is a bear.

“The team has gone to great lengths to understand the symbolism and iconography of different bears among different customers in Romania, to the point of becoming experts on bears,” says Fell. “It looks funny from the outside, but they are doing really exceptional work, and have just kept going with it until they got it right.”

‘Getting it right’ is the result of extensive semiotic and qualitative studies designed to discover the strengths and emotions surrounding the Carpathian bear – known locally as ‘the king of Romania’s forests’. The new creative executions, featuring the bear, resonated with consumers and were largely responsible for the 24% lift in volume sales in Romania last year.

“I don’t think there’s anything we do in the area of insight generally that is better or more sophisticated than any other big consumer goods company,” says Fell. “SABMiller is characterised by a constant dissatisfied drive to do things better than before, and everyone in the company is driven by this, including insight people. That’s not about a system imposed from the top down; it’s the result of a passion and a commitment to local brands born out of the culture in the business.”

Beer buddies
This commitment was exemplified in last year’s relaunch of Victoria Bitter – or VB – in Australia.

“VB was the brand that broke all Australian beer market rules,” says Fell. “For 30 years VB had a very effective (and famous) advertising campaign – ‘For a hard-earned thirst, you need a big cold beer, and the best cold beer is Vic, Victoria Bitter’ – and it had 4.9% alcohol content, compared to 4.5% or 4.6% for most Australian beers.

“But in 2000 it all went pear-shaped. The slogan was replaced by ‘VB – The Drinking Beer’ as part of a marketing strategy to reposition VB up-market, and Fosters decided to reduce the alcohol content to 4.6%. There was a national outcry.”

Less than a year after SABMiller acquired VB’s parent company Fosters, it announced it was to relaunch VB with its old familiar branding and restored to its 4.9% alcohol content. The story was the lead or second lead item on every news programme in Australia on 12 September 2012, and VB was relaunched on 19 October.

“One bit of footage showed a worker standing by a bottling line saying that the relaunch was ‘up there’ with the birth of his children,” recalls Fell. “When people feel that strongly about a brand, you have to take it seriously. Local people are proud of their local brands: they play a big part in their lives.”