Heineken Unibrew Makroanalyse

International Case Weeks, Assignment 1 Cphbusiness, MAK2J 4th september 2014
Sandra Kylling Blumensaadt Patrong, Sara Dooleweerdt, Malene Txen Johansen, Camilla Winther Larsen, Amalie Gottlieb and
Louise Nielsen

1
International Case Weeks

Assignment 1
Unibrew
Global macroeconomic and macro industry sector analysis
Sandra Kylling Blumensaadt Patrong, Sara Dooleweerdt, Malene Txen Johansen,
Camilla Winther Larsen, Amalie Gottlieb and Louise Nielsen
MAK2J
Markedsfringskonom, Cphbusiness
4. September 2014

Louise Nielsen

2

Unibrew
Macroeconomic and industry analysis
Sandra Kylling Blumensaadt Patrong, Sara Dooleweerdt, Malene Txen Johansen, Camilla
Winther Larsen, Amalie Gottlieb and Louise Nielsen
4 . s e p t e m b e r 2 0 1 4

International Case Weeks
Louise Nielsen

3
Table of Contents
Introduction ....................................................................................................................................................... 4
Macro analysis Denmark ............................................................................................................................ 4
Sector analysis ................................................................................................................................................... 6
IMS model ............................................................................................................................................................ 7
Conclusion ........................................................................................................................................................ 10
List of sources ................................................................................................................................................. 11

Louise Nielsen

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Introduction
We are six students at Copenhagen Business Academy, whom are working on an international
project, where we have to simulate merging two companies.
These companies are Heineken and Unibrew. We have been assigned to represent Unibrew.

Macro analysis Denmark
The total value added in the domestic production in terms of market prices show a gross
domestic product (GDP) of 187415 Billion DDK in 2014 in Denmark. The growth increased
proportionally in 2004 to 2009 and has subsequently been very fluctuating. Compared to 2013,
GDP grew by 8866 Billion DDK. This shows a positive development since Denmark has been
badly affected by the financial crisis and can look forward to an economic upswing. The upswing
causes an increase in the production and the companies are forced to hire more employees. As a
result, the unemployment falls. In the short run, the development in the total demand in the
economy has a huge importance to the growth of GDP. An increase in the demand cause an
increase in the consumption, and it will get the economy going.

In 2014 we see an unemployment rate of 4.10 per cent in Denmark. The recommended
unemployment is 5.7%. However, there is a tendency for unemployment to rise a little during
2014 but it is also a positive direction, as long as it does not exceed the recommended limit.

The interest rate is only at 0.20 per cent in 2014, which we are familiar with, since the interest
rate is very low at this time.

In 2014 Denmark accounts for a productivity of 106.79 index points. Since 2011 there has been
an increase on 4.04 index points. An increase leads to growth in the productivity, which secures
Denmark with an ongoing prosperity and a higher living standard.

The Danish/American US Dollars exchange rate is 5.67 DKK 1 USD. The exchange rate changes
every day and that is why it is difficult to determinant the economic development from year to
year. The inflation is crucial because if there is a price increase in Denmark and you need foreign
currency you will spend more money on buying that currency than if you bought it before the
Danish price increase. The value of one DKK is less than before the increase. Therefore it is
crucial that the Danish exchange rate lies close to other co-operating countries currency.

Louise Nielsen

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The Government experience a minus in the financial budget on -0,8 per cent, which means that
the government has a loss in the public government coffers. From 2010 to 2014 there has been a
yearly loss, especially in 2013.

The Danish wages have increased in the 2013 to 2014 and lies now on 125.90 index points. This
increase involves several consequences. The Danish companies will experience higher
competition from other countries because the increase in the wages results in lager expenses for
the companies, and hereby higher production prices. Danish companies can be forced to dismiss
Danish employees and hire cheaper work force from other countries or to cut down the staff by
more automation in the production. Or in worst scenario they can only compete against the
market by outsourcing the whole production or the service to foreign countries. A last effect can
be that the consumers buying force increases since the prices on the products do not change in
phase with the increase in salaries.

The Danish inflation is 0.80 per cent in August 2014, which is an increase since June and July. As
mentioned before the buying force will fall and the currency value will decrease. It can be
interesting for the companies when future investments are estimated.

The balance of payments shows a decreasing profit for 2014 on 10459.00 DKK millions, which
causes that the Danish economy is starting to get back on track after the financial crisis and that
the consumer and the companies feel like spending money again. With a rising GDP and thereby a
rising production will the national demand increase, which normally will also increase the
occupation.

The gini-coefficient is a measure of the degree of inequality division of income. It is a measure of
income inequality in a society, which measures in per cent. The gini coefficient is often used to
see whether the income is spread evenly. To sum up the closer the gini coefficient is to zero, the
better the division is in the current country. In 2012 Denmark had a percentage of 0.281 %.
There are only few countries globally with a percentage under 0.25 per cent. A few years back
Denmark was at the top of the list with a percentage under 0.25 per cent. (see illustration below).
Louise Nielsen

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The gini coefficient can also reflect the possibility for a product to enter a different market in a
country. GDP per. Citizen makes it possible to get an insight on the income level and compare
with other countries on a global level and therefore you can consider entering the market. In
Denmark, we have a GDP per. Citizen around the 37.700, which reflects the gini coefficient. The
higher amount the GDP is, the more wealth there is in a country.
The Danish beer market accounts for 0.8 per cent of the European beer market. The market
shrank by 3.6 per cent in 2012. By 2018 the Danish beer market is forecast to have a decrease of
7.1 per cent since 2013.
This analysis shows that the Danish beer market is decreasing, even though the economic in
Denmark is experiencing growth.
Sector analysis
In 2018, the global beer market is forecasted to have an increase of 18.1 per cent since 2013. In
2013 the global market grew by 2.3 per cent. The global beer sales are influenced by an
increasing income in general, better beer quality, marketing and advertising activities and the
number of people drinking beer
1
.
It varies from country to country how popular beer is. In the western part of Europe the beer
market is stabile, but at the same time the beer market in Asia and Eastern Europe are in growth.
There is a tendency for beer to replace local liquor. This is due to increasing income.
Beer consumption is influenced by factors as seasonal changes, weather conditions, demography,
taxes and fees, laws and consumption of substituting products.

1
Carlsberg Annual report
Louise Nielsen

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The division of the beer sales on the global market:
2

IMS model

The IMS model focuses on how international the industry and market is. Before a company enters
new markets, it has to consider what kind of demography it has.
We have chosen to only focus on the first three steps in the model, which are the ones we have
found relevant according to this assignment.

Step 1 + 2
Our segmentation criterias are focused on markets with growth, and that is why we have
eliminated markets in Western Europe, which are stagnant or falling.

Louise Nielsen

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The markets that are suitable for growth are countries in Eastern Europe, which have a long
tradition for drinking alcohol, especially local brands, but the growing middle class have
influenced the change in switching from the local liquor to beer
3
.
We have eliminated countries as India since they have high tax barriers and strict laws when it
comes to importing products.
Another market that is also suitable for growth is Asia, whos also beginning to change their
alcohol habit, and are starting to switch to beer
4
.
The Asian-Pacific market would be great to consider, since they have 32.9 per cent of the global
beer sales.
5

Step 3
We have decided to focus on three countries that are suitable for growth in both Asia and Eastern
Europe.
These countries are: Thailand, China and Poland.

Thailand (last: 2014)

BNP: 387.25 USD Billion
BNP growth: 0.90 %
BNP annual growth rate: 0.40 %
Unemployment rate: 1.15 %
Interest rate: 2.00 %
Consumer spending: 643411.00 THB Million
Currency: 32.15 %
Inflation rate: 2.16 %

The Thai beer market grew by 4.8 per cent in 2013. By 2018 the Thai beer market is forecasted to
have an increase of 6.8 per cent since 2013. Thailand accounts for 3.3 per cent of the Asian-
Pacific beer market
6
.
According to the numbers the Thailand BNP are increasing, so its country that in growth. At the
same time the consumer spending is also increasing, so there is a greater possibility for foreign
beers to have success on the Thai market.

3
Carlsberg Annual report,
4
Carlsberg Annual report,
5
MarketLine Industry Profile, Global Beer, August 2014
6
MarketLine Industry Profile, Beer in Thailand, August 2014
Louise Nielsen

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One thing to consider in Thailand is that buying alcohol is limited to certain hours of the day,
from 11 am to 2 pm and from 5 pm to 00 am. But we dont believe that it would have a great
influence, and it is only limited to supermarkets.
Thailand is much known for their tourist industry, and many young people travel to Thailand for
the parties, so there is already a great market for beer sales.

China (last: 2014)
7

BNP: 9240.27 USB Billion
BNP growth: 2.00 %
Consumer spending: 212187.50 CNY-HML
Currency: 6.14 %
Inflation rate: 2.30 %

The Chinese beer market grew by 9.8 per cent by 2013.
By 2018 the Chinese beer market is forecasted to have an increase of 61.7 per cent since 2013.
China accounts for 51.2 per cent of the Asia-Pacific beer market.
8

China are experiencing a massive growth in the recent years, so both the BNP and the consumer
spending are increasing.

Poland (last: 2014)
9

BNP: 517.54 USD Billion
BNP growth: 0.60 %
Consumer spending: 250046.60 PLN Million
Government spending: 76998.90 PLN Million
Productivity: 127.60 Index point

8
MarketLine Industry Profile, Beer in China, August 2014

Louise Nielsen

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Currency: 3.06 %
Inflation rate: -0.20 %

The Polish beer market grew by 4.8 per cent in 2013.
By 2018 the Polish beer market is forecasted to have an increase of 76.8 per cent since 2013.
Poland accounts for 3.9 per cent of the European beer market value.
10

Poland has an increasing BNP, falling unemployment rate, a rise in productivity and in consumer
spending.
The GINI coefficient is 0.30 in Poland so the consumers are almost equal and have a greater
buying power.
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Conclusion
In our analysis we have found some markets, which will be beneficial for Unibrew to enter. We
have analysed the macro economic factors in the Danish market, and found out that the Danish
beer market is decreasing, even though the economic in Denmark is experiencing growth. This
confirms that it is a good idea for Unibrew to enter new markets, especially in Asia or Eastern
Europe.
We got to the conclusion that Heineken is already in these three countries (Thailand, China and
Poland), so it would be a great possibility for Unibrew to merge with Heineken, or do a strategic
cooperation with Heineken so they can enter these new markets.

10
MarketLine Industry Profle, Beer in Poland, August 2014

Louise Nielsen

11
List of sources

Books:
Global Marketing Sitxth Edition, Svend Hollensen, Pearson
Makrokonomi Teori og beskrivelse, Henrik Grell and Elsebeth Rygner, 2013

Webpages:
http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&language=en&pcode=tessi190, 1th
September 2014
http://da.tradingeconomics.com, 1th September 2014
http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&language=en&pcode=tessi190, 1th
September 2014
http://www.denstoredanske.dk/Samfund,_jura_og_politik/%C3%98konomi/Indkomstfordeling/
Ginikoefficient, 1th September 2014
http://punditokraterne.dk/2010/03/25/fattigdom-i-danmark/, 2th September
http://www.nationalbanken.dk/da/statistik/valutakurs/Sider/Default.aspx
http://faranginbangkok.com/2013/01/24/alcohol-in-thailand-when-you-can-buy-where-you-
can-buy-when-you-can-drink-where-you-can-drink/, 4th September
http://da.wikipedia.org/wiki/%C3%98konomisk_v%C3%A6kst, 1th September
http://ioa1.systime.dk/?id=185, 1th September
http://www.fm.dk/publikationer/2014/finansredegoerelse2014/~/media/Publikationer/Impo
rted/2014/FR14/kapitel%204_finansredeg%C3%B8relse%202014_web.pdf, 1th September
http://www.business.dk/oekonomi/oekonomer-optimistiske-trods-fald-i-betalingsbalancen, 1th
September
http://www.denstoredanske.dk/Samfund,_jura_og_politik/Samfund/Samfund_og_statistik/betali
ngsbalance, 1th September

Reports:
MarketLine Industry Profile, Global Beer, August 2014
MarketLine Industry Profile, Beer in Thailand, August 2014
MarketLine Industry Profile, Beer in China, August 2014
MarketLine Industry Profile, Beer in Poland, August 2014
MarketLine Industry Profile, Beer in Denmark, August 2014
MarketLine Contry Profile Series, Denmark - In-depth PESTLE insights, May 2014

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