Internship details - Erasmus University Thesis Repository

Transcription

Corporate Responsibility;
Islam and Alcohol
Internship report
Berend Raadschilders
Internship details
Company
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Al Ahram Beverages Company (Heineken Egypt)
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Cairo, Egypt
Student
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Erasmus University Rotterdam
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International Bachelor Economics and Business Economics
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330045
University Supervisor
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Dr. I Colantone
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Erasmus School of Economics, Department of Applied
Economics
Company Supervisor
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Nancy Girgis
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Corporate Relations Manager Al Ahram Beverage Company
Internship dates
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Start: 03-03-2013
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Last day: 21-04-2013
Research topic
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Influence of religion, socially and politically, on the alcohol
business and consumption patterns & levels.
Table of Contents
Introduction................................................................................................................................................... 3
The issue & background: ....................................................................................................................................3
Research topic:.........................................................................................................................................................4
Research Design: ....................................................................................................................................................5
Methodology ..............................................................................................................................................................6
Brief Analysis of Egypt..........................................................................................................................................................8
Country Profiles PES&SWOT Analysis........................................................................................... 9
Pakistan ........................................................................................................................................................................9
Iran................................................................................................................................................................................10
Indonesia...................................................................................................................................................................11
Malaysia.....................................................................................................................................................................12
Tunisia........................................................................................................................................................................13
Nigeria ........................................................................................................................................................................13
Conclusion to country profiles ............................................................................................................14
Reflection & Proposition........................................................................................................................16
Bibliography ................................................................................................................................................20
Online news articles............................................................................................................................................20
Academic ..................................................................................................................................................................21
Database/International organisations .......................................................................................................21
Interviews..................................................................................................................................................................22
Appendices...................................................................................................................................................23
Corporate Responsibility Internship
Heineken Egypt
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Introduction
The issue & background:
Companies that produce and sell alcoholic beverages are confronted with specific
challenges in the Arabic world. Under Islamic rule alcohol consumption is considered
Haram, a sin. Hence alcohol and Islam are two components that do not go together
well. On top of this the ongoing revolutions in the Middle East do not make it easier for
companies such as Heineken to operate effectively, let alone predict future
opportunities as to structure their strategy accordingly. With these two factors combined
it is evident that new operational strategies have to be developed.
After the revolution in Egypt the political landscape changed. The Moslim
Brotherhood (MB) and the Salafist, both religious oriented Parties, won 75% of the
Parliament. Followed by the election of the candidate of the Muslim Brotherhood, Morsi,
as the first democratically elected president of the country. Consequently questions
soon arose concerning the influence of religion on the state. By the beginning of 2013
many Egyptians in all layers of the population, from businessmen and universities
professors and students to taxi drivers and security guards, had strong criticisms on
how Morsi’s party, the Muslim Botherhood, is drawing power to it’s side and how they
want to enforce religion on the rule of law.
The purpose of this research internship was to look in to how ongoing political
and social changes in Egypt could have an impact on the alcoholic beverages market in
Egypt. Al Ahram Beverages Company enjoys a considerably strong market position
some would relate to as being near monopolistic. A large percentage of their sales runs
through the tourist markets, many resorts along the red sea which attract large numbers
of tourists offer all inclusive packages, which include locally produced alcoholic
beverages, all from the Al Ahram Beverages Company. Alongside this a steady growing
rate of locals consuming is not irrelevant.
With the political change in Egypt possible policy changes in the tourist sector,
could discourage tourist to come to Egypt. As well local consumption might be under
pressure as a result of increased social pressure that is religious based.
Heineken Egypt
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With Al Ahram Beverages being the key player in this market the management of
ABC was keen to gain insight in the developments in the alcohol beverage sector in
other countries dominated by an Islamic population and /or Islamic regime. This will help
ABC to predict how changes in Egypt could have an impact on the alcoholic beverages
market and which strategies would minimize negative impact. As such the analysis and
concluding remarks serve as propositions to strategic modifications concerning
specific/relevant political and social changes.
The Managing Director and the head of Corporate Relations, Nancy Girgis (my
internship coordinator) have asked me to analyze possible changes and suggest
strategies for Egypt by comparing what had happened to alcoholic beverages
companies in other countries which had gone through similar change.
Before going into country profiles the research design, methodology and
foundations of PESTLE and SWOT will be put forth. Brief country profiles based on
research data, which will be used as the base for arguments concerning the strategic
analysis and propositions serve as the backbone for the research after which strategic
propositions presented.
Research topic:
Assess the impact that Islamic influence on the government has on the alcohol business
and consumption patterns & levels. How have companies in various countries with
Islamic influence on the government adapted to restrictions and how can such a
company in Egypt use this information to predict developments in the beverage sector
and adjust their own strategy?
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Research Design:
Firstly the research, in it’s entirety, was done at the Al Ahram Beverages Headquarters
at the Obour Plant in Cairo, Egypt.
The research looked into at two sides of the impact of social and political change
in Egypt on the alcoholic beverage market. What are the impacts of such a change on
the market and how an involved company would implement internal/strategic changes?
The main cause of the double analysis would lead to answering how these
developments could have an impact on Egypt’s consumer market and social behaviour
and the impact on the Al Ahram Beverages Company.
As of the academic relevance the analysis was done through the collection and
studying of market data. The data (reflected upon in the upcoming “country profiles”)
was split into three parameters;
1. change of religious influence on the government
2. changes in tourism markets & market development
3. the correlation between government restrictions and social pressure on
consumption patterns.
The inquiry concerning changes on religious influence in government in correlation to
changing levels of restrictions on alcohol led to the following questions.

How did the ban of alcohol have an effect on the market in i.e. Iran?
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Alcohol not being illegal for all of Pakistan how has the alcohol market adapted to
tight restrictions?
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How do black markets benefit from restrictions on production and distribution?
Tourist vs Non-tourist markets & patterns and market development was the second
parameter that was key to analysing the Egyptian alcoholic beverages market and
formulating country profiles. Time, political instability and recent reforms in Egypt all
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indicate that restrictions on the tourism markets are possible. A key question/indicator
aside from the tourist market was the correlation between proposed tax increases and
how these could affect consumption patterns, this again in context concerning tourist
markets and non-tourist markets.
The impact of social pressure and government restrictions (Laws/Taxes/etc.) on
the market combines the two before mentioned parameters to draw a clear picture.
Here for looking into consumption levels/patterns, substitutability, and sustainability was
the most important aspect of the analysis. This was the starting points to
predicting/finding trends in the Egyptian market that serve as the foundation for an
effective strategy.
Methodology
As the foundation for strategic propositions are built on political, economic and social
factors the first method of analysis which came to mind was a PESTLE table, looking in
to Political, Economic, Social, Technological, Legal en Environmental factors which
impact changes in a market.
PESTLE is a more common form of analysis which can give us an insight of external
factors which may influence the strategic proposition for different scenarios. It gives us
the means to look in to political, economic, social, technological, legal and
environmental factors which do so. However in this research we are only concerned
with the political, economic and social factors. So I shall proceed with a PES analysis.
Political factors: To what extent does the government intervene through the economy
or legislation? This may include a tax restructuring, new laws concerning the production
of alcohol (i.e. labor) restrictions (i.e. Consumption and trade), import quotas and tariffs.
On the other hand this may also include the influence of political stability. Also
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important are trade and production laws, consumer laws, employment health and safety
laws amongst others.
Economic factors: this factor looks in to the economic conditions. So it looks at
business cycles. Growth rates, interest, inflation, unemployment and others. In our
situation it is also important to analyses the tourism industry as it plays a large role in
the alcohol market in Egypt.
Social factors: we must closely look at cultural aspects and social pressure that may
change as Islam becomes more prominent in society. Also, as seen in Iran health
awareness is increasingly important.
Through PESTLE and SWOT analyses different scenarios will be examined as to
assess whether strategies in place will still be of use and if not what adjustments should
be made for various alternative futures.
With the SWOT in mind it is important not to focus on one strength or limiting the
impact of one weakness or threat since a single strength does not directly imply an
advantage over competition. It is also important to keep in mind how the before (in
SWOT) mentioned scenarios might develop in time. However firstly one must look in to
factors of an external environment which will influence a company’s business and look
at changes which might influence strategy. Based on these a good strategy would be
formed by using a SWOT analysis as to interpret the before mentioned findings (about
ie. Pakistan and Nigeria) and decide which strategies would fall good under the
companies SWOT strategies.
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Brief Analysis of Egypt
A PESTLE analysis gives good insight to the market potential (external environment).
On the other hand one should look in to measures taken by an involved compayny to
work with concerned factors, therefore a SWOT analysis would be a logical followup
method. SWOT provides a template as to look in to a unit or proposition their position
(internal environment) before making a strategic choice. Though factors in SWOT may
appear in PESTLE they still provide different perspectives into a strategic analysis.
PESTLE takes in to account a macro oriented perspective by evaluating a market
through the position of a particular company their position whilst a SWOT analysis is the
evaluation of a company and its market position.
The two are often used together by incorporating the PESTLE analysis within a
SWOT analysis as to create a thorough analysis, which gives details insight into
strategy proposition.
Al Ahram Beverages
Company
SWOT Analysis
Strengths – S
(Action: Maintain, build &
leverage)
Existing brands
Existing customer base
Existing distribution
Importance to the economy
Weaknesses – W
(Action: Remedy or exit)
Brand perception
Social pressure
Restriction on marketing
Restrictions on outlets and
sales
Opportunities – O
(Action: Prioritize and
optimize)
Cross-selling
New markets
New Services
SO strategies
Leverage strengths to
maximize opportunities =
attacking strategy
WO strategies
Counter weaknesses
through exploiting
opportunities = build strength
for attacking strategy
Threats – T
(Action: Counter)
Black market
Customers abstaining
Government restrictions
Increase in taxes
ST strategies
WT strategies
Leverage strengths to
Counter weaknesses and
minimize threats = defensive limit threats = pre-defensive
strategy
strategy
Heineken Egypt
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Country Profiles PES&SWOT Analysis
Pakistan
Without question Pakistan is a key example that will have to be taken into account. With
a historic transition to Islamic law the example of Pakistan can be used to analyze the
impact such a shift in the Egyptian political system may have on Al Ahram Beverages.
After Martial law was enforced in 1977 the local population turned to the black market.
New laws meant that people had to identify their religion on a state identification card
and as so only non-Muslims would be permitted to buy or sell alcoholic product in
predetermined trading centers. Along with this came the shutdown of several alcoholic
beverages producers and left Murree Brewery in a position which can be compared as a
near monopolistic position which ABC also enjoys.
After new laws were imposed the question concerning alcoholic beverages was
no longer between an individual and God but between the individual and state. However
the following question came up; if one is willing to break god’s trust by drinking alcohol
shall this person care if state decides to intervene? After looking into numbers, appendix
tables 3&4, this was evidently not the case. The tables show that the consumption of
alcohol did decline rapidly in the short run but in the long run levels returned to “normal”.
The time buffer it took to return to this level could be seen as the time taken for people
to find alternative methods to produce and consume alcoholic beverages. The PES
analysis below gives a more detailed insight into the factors which play a role in this and
the outcomes of such.
Through the PES analysis one can go on to formulating a strategic proposition by
using a SWOT analysis. Implementing this on the Pakistan case helps to speculate on
future changes and the impact on future strategies. This can be reviewed in the SWOT
and PES tables in the appendix. Through such an analysis in the case of Pakistan it is
safe to assume that a ban on alcohol through state intervention is not a safe method. A
ban on the consumption of alcoholic beverages for the Muslim population of a country,
as seen in Pakistan, means that individuals will turn to the black market and illicit
production, these bring along with them safety and health concerns. Along with this is
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also the loss in tax revenues, which will heavily affect state budgeting. On top of this the
production and consumption of illicit alcohol and the growth of a black market would
damage the positions of a formal company such as the Al Ahram Beverages Company.
As Murree Brewery had done ABC would be most effective by targeting the lower price
sector of this market. On the other hand, insight from Amr Abou-Zeid of IFADA on the
other hand showed there are no plans for the current Egyptian government to impose
such a ban.
Iran
Similar to Pakistan, alcoholic beverages in Iran are banned. The “small” difference is
that instead of for simply the Muslim population, since the implementation of sharia law
in 1979, alcohol is completely banned in Iran. Estimates point to 60-80 million liters of
alcohol being smuggled in to Iran yearly (estimated to be values at 730,000,000USD).
The case of Iran was to be used as to sketch what the Al Ahram Beverages
Company could do in worst-case scenarios. However there is no concrete data on the
black market for alcohol in Iran, nor any exact data on the illicit production of such.
Hereby the choice was made to focus on the market for Non-Alcoholic Malt Beverages,
in which the Al Ahram Beverages Company also trades. Similar to Fayrous (a
subsidiary of Al Arham Beverages) Egypt the single producer of non-alcoholic malt
beverages in Iran (Beynoush) produces a wide range of flavored malt beverages of
which the number of sales has been increasing at a very steady rate. Increasing health
concerns of carbonated beverages lead to the Iranian government supporting the sales
of non-alcoholic malt beverages through the mass marketing of it’s health benefits. With
the obvious opportunities of this market Al Ahram would do good if they starting such a
campaign.
Furthermore PES analysis of Iran revealed a rapid decline in tourism after the
implementation of sharia law. Similar to Pakistan the ban on alcohol presented
opportunities for the black market and illicit production. The conclusion on this reads the
same as for Pakistan. A ban on the consumption of alcoholic beverages brings along
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with it safety and health concerns, also the loss in tax revenues, which will heavily affect
state budgeting. On top of this the production and consumption of illicit alcohol and the
growth of a black market would damage the positions of a formal company such as the
Al Ahram Beverages Company.
Indonesia
In contrary to Pakistan and Iran, in Indonesia Islam does not interfere with state. So why
is this a country of interest? One reason; the sudden increase in taxes on alcoholic
beverages as to attempt to regulate the market for these products.
With the uncertainty of what the Muslim Brotherhood might do in Egypt in
attempts to incorporate Islam in to Egypt’s politics and/or judicial system this is a very
plausible possibility. To back this up is one more factor. Egypt’s economy has been
struggling since the revolution and is quickly running out of options. The “easiest” way
out would be a loan from the IMF. However, this deal would require the government to
reduce subsidies on food and petrol along with raising taxes and other initiatives to cut
budgets. With this in mind it would not be highly unlikely for Morsi to impose a tax hike
on alcoholic beverages.
A heavy increase in taxes would have obvious effects on the market to which Al
Ahram Beverages serves, these will hit companies such as Al Ahram Beverages at their
weaknesses. If such government measures are hinted Al Ahram should take on a predefensive strategy as to counter weaknesses and limit threats. The main possibility to
do so is by cutting SKU’s and focusing on those, which have the highest volume in
sales. Seeing as they have the largest customer base a change in price will most likely
have the smallest impact there. Also, Al Ahram has to focus on efficiency in production
and distribution as to keep costs low.
When considering further impact of such measure we can draw similarities to a
ban on alcohol. Black and illicit alcoholic beverages markets will be motivated to grow
as they see opportunities. On the other hand an increase in taxes will also lead to a loss
in efficiency in the market along with a substantial loss in capital accumulation.
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Malaysia
Malaysia is a special case, in this country a dual-judicial system is in place. The state
law is imposed and for those who are muslim Sharia law also applies. Hereby 60% of
the population is prohibited from consuming alcohol. In recent years the country has
also experienced stricter advertising policies as the government attempts to gain a
grasp on the countries tourism and alcohol “problem”.
The market for alcoholic beverages in Malaysia is not of the monopolistic
structure. Carlsberg and Asia Pacific Brewery (a Heineken owned firm like Al Ahram
Beverages) are the two largest producers with both roughly 30% of the total sales
volume. Since an economic downturn in 2010 the economy has recently started to pick
up again and with this the sales in alcohol is also returning to pre-downturn levels and
growth rates.
In recent years the consumption of alcoholic beverages has also begun to shun
it’s negative image as drink driving, public awareness and underage drinking is being
tackled effectively by both the government and involved producers and distributors. The
consumption patterns have also held constant over time as small communities drink
heavily and drinking is not a social matter. This can also be seen in Egypt.
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Tunisia
Tunisia is the country, which is best, compared with the situation in Egypt. The political
structure was similar till both nations went through a revolution. However in Tunisia we
see more radicalization of religion and a slower return of politics to a stable condition.
Recent calls and a ban on advertising were the most recent hits to the Alcoholic
Beverages market. Another note which is important to consider it that both bordering
countries (Algeria and Libya) are Islamic hence it is not difficult to effectively control the
smuggling of alcoholic beverages since this is rarely attempted.
In contrast to earlier analyzed countries sales taxes on alcohol have been
constant and there are (yet) no bans on consumption on alcoholic beverages. Since it
could be seen as Tunisia being one step ahead of Egypt imposing restrictions on
alcoholic beverages an analysis into the PES of this country may serve as a strategic
forecasting model.
Nigeria
Nigeria was taken into account to serve as an example to the direction Egypt may turn if
no government action was taken. With a steady growth rate in consumption of alcoholic
beverages, good market conditions would present many opportunities for Al Ahram
Beverages. In Nigeria an ever growing youth population and an increasing level of
“sophistication” which come with economic development would mean Al Ahram
Beverages would have to focus on product development and marketing as to attract
young consumers. On the other hand such a market may present the entrance of
competitors. No further analysis was done.
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Conclusion to country profiles
Strategy analysis: (by scenario) based on SWOT & taking PES into account
Below the different scenarios (based on the country studies) are presented, their
possible impact on ABC and the a strategic proposal for ABC to cope with the
consequences.
However concerning Tunisia, not noted in the table below, a concrete strategic
proposition was not drawn. The direct advice to the company supervisor was to keep an
eye no the countries developments as they could serve as a forecasting system for
what may happen in Egypt.
Scenario
Ban completely
(Iran)
Impact on Egypt’s
alcohol market and Al
Ahram Beverages Co.
Completely shut
Strategy proposition for Al Ahram
Beverages Co.
With the sales of alcohol illegal and
export as well Al Ahram Beverages
would have two options, to shut down
and sell all facilities or to fully focus on
the alcohol-free market. With evidence
from Iran’s market malt beverages are
less of a health risk than drinks such
as Pepsi or Fanta and sales volume is
considerably high. The best strategy
would be a WT strategy in the first
years until a stable, expanded, market
has been built and to then move to a
WO strategy. Such a strategy could be
tested by exporting Birell to Iran.
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Alcohol prohibition
Muslims Tourism
declines
(Pakistan)
Very limited
If Muslims, according to law, may no
longer consumer it is no longer a
question between man and god but
man and the government. Sales will
drop and is the tourism industry also
declines Al Ahram Beverages will
should cut down on their SKU’s and
build on brand loyalty to fight black
market. This is a clear WO strategy.
i.e. through cheap brands or
producing drinks under license from
foreign brands as an attempt to
improve perception.
Alcohol prohibition
Strongly controlled
Muslims Tourism still
strong
(Malaysia)
Increased taxes and
control (Indonesia)
In a situation where, as above, the
question will be between man and the
government and local sales volume
declines rapidly but tourism stays
strong (perhaps due to limited
restrictions in touristic strong areas) Al
Ahram beverages should go on the
defensive as to leverage strengths to
minimize threats.
Possibilities are to advertise through
tourist organizations and limit SKU’s to
tourist demand.
Limited control to see a Such a scenario presents obvious
reduction in alcohol
threats as an attempt by the
consumption
government to hit companies such as
Al Ahram Beverages at their
weaknesses. If such government
measures are hinted Al Ahram should
take on a pre-defensive strategy as to
counter weaknesses and limit threats
(WT strategy). Possibilities to do so
are to focus on niche brands
advertisement and promotion and
keep SKU’s with high volume sales
their prices low (i.e. Beer) or to limit
damages on brand perception.
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Reflection & Proposition
The original plan of this research was to propose strategic steps, which Al Ahram would
be able to follow as to minimize damages from social and political changes in the future.
However as the research developed it became more evident that setting down
guidelines rather than scenario strategic propositions was a better form of conclusion.
This was based on the idea that looking in to the future and speculating is not a solid
strategy, one should rather focus on the important issues and how to best prepare for
such.
The strategic propositions have been kept in table format as to keep an easy
overview. Due to this change in format the table noted above simply serves as a
summarizing note to the research that was executed the first several weeks of the
internship. The following 5 aspects were focused on; SKU’s, trade restrictions,
importance of tourism, corporate social responsibility (CSR) and the importance of a
corporate story. These combined would form a modern marketing strategy based on
CSR.
Firstly, when looking at SKU’s, maintaining efficiency and network optimization
as operating environment changes is key. Supply chain has to be responsive and
effective. My advice was to cut in SKU’s since product development and competition no
longer play an important role in a restricted market. People drink less and will only drink
if necessary so a large line of product and extended SKU’s is unnecessary – “Work
effectively with fewer, “better”, SKU’s.” Also the hesitation in killing off SKU’s that aren’t
delivering is a weakness. Al Ahram would be best off is they were to focus on SKU’s
that make up majority of sales, this being based on the question whether the profit
margin is more important than volume?
Concerning possible trade restrictions Al Ahram beverages would do better if their nonalcoholic beer brands were to be lobbied. Iran’s non-alcoholic beer market it’s size and
growth rate is evident proof that such a product could flourish in case alcohol was to be
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banned.
The tourism market also plays a strong role in forming a marketing strategy purely due
to it’s economic size and the fact that “western culture and alcohol come hand in hand.
However, as supported by Amr Abou-Zeid of IFADA there are no signals of direct policy
changes influencing tourism. Nor any policy changes concerning alcohol markets. “The
industries of several Muslim countries including Turkey and the Maldives grapple with
the threat of an alcohol ban, but they tend to realize that giving visitors and nationals the
choice to imbibe or not goes hand-in- hand with a stronger economy.” (Samantha
Shankman)
Along with the change in the style of concluding remarks, the importance of CSR played
a key role. CSR & Risk Management through reputation is now the basis of a solid
strategy based on the PESTLE and SWOT analysis
Firstly Al Ahram is to lobby for health benefits of malt beverages and increase social
awareness. Focus on protection of the environment (efficient/sustainable Energy &
Water) whilst providing as to meet consumer expectation. They are to minimize their
environmental footprint. The next step is to empower their employees and promote
sustainability through1;

Become more committed to environmental and social responsibilities.

Realize the importance of energy efficiency and conservation & promote
awareness within the company

1
Energy: Increased investment in renewable energy
Actual proposed measure discussed in final presentation
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
Water: Water scarcity Investment and initiatives in recycling our water and
wastewater, the efficient use of water resource

Employee engagement, Innovation and Collaboration

Being the employer of choice & employee opinion from a “Them” to an “Us”

Clear benefits to working for ABC

“Employee Involvement ... a key to achieving Performance excellence with labor
management”

Engage with local communities and official to promote sustainability
The next step would be to engage the employees in community outreach initiatives and
community service. Secondly Al Ahram has to realize the importance of education.
Such include2:

The importance of education – Engaging the youth in the debate

Student involvement in sustainability programs • Summits, projects, partnerships

Excellence scholarship, trainee and internship programs • Inspire youth through
enabling education

Empowering university students by providing on campus
– Assessing the leadership displayed by the company
– Real environmental improvement
2
Actual proposed measure discussed in final presentation
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– Ability staff to establish procedures, train staff & innovate in order to
develop environmental performance
The importance of engaging employees, sustainability and education form together to
create stronger CSR. My concluding remarks presented; concluding remarks; Now is
the time to strategically place products and create a buffer for future impacts, there is a
significant importance to forming a brand environment and identity that evidently and
genuinely bear what ABC stands for, with a focus on positioning one self in positive light
in preparation towards anticipated future changes.
In the end it was felt that the concluding remarks did represent the research accurately.
However it was not what had been expected in the begging. As an intern for 2 months
no confidential information was shared and the full research was done individually to
which findings can be found in the appendix.
The data presented does give a good impression of alcohol markets around the world in
concerned countries but no clear direct relationship can be drawn through causality. As
such the conclusion, which had been hoped to present, would not be backed by data,
making it inconclusive in any matter.
As of learning points from the 2-month research little was shared about the company.
The two months on the other hand were a good personal development process during
which extensive market research was practiced. If presented with more information and
persons to work alongside with this research could have presented a far more in depth
proposition to an adjusted marketing strategy for Al Ahram Beverages.
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Bibliography
Online news articles

The express tribune, “Banned at home, Murree Brewery seizes Hollywood
moment”, November 16 2012, http://tribune.com.pk/story/466698/banned-athome-pakistan-brewery-seizes-hollywood-moment

The express tribune, “Banned at home, Murree Brewery seizes Hollywood
moment”, November 16 2012, http://tribune.com.pk/story/466698/banned-athome-pakistan-brewery-seizes-hollywood-moment

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
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
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
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
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
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
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
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
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
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
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
The star online, “Minister: Study proposal on switch to Shariah law thoroughly”,
August 24 2007,
http://thestar.com.my/news/story.asp?file=/2007/8/24/nation/18681665&sec=nati
on

The Telegraph, “Ale under the veil: the only brewery in Pakistan”, March 24 2012,
http://www.telegraph.co.uk/news/worldnews/asia/pakistan/9153934/Ale-under-the-veilthe-only-brewery-in-Pakistan.html
Academic

The RIC centre, “SWOT analysis and PEST analysis”, undisclosed date,
undisclosed author, http://riccentre.ca/wp-content/uploads/2012/01/Session-1Takeaways-Guidlines.pdf
Database/International organisations

WHO Global status report on Alcohol 2004, Malaysia Country profile,
http://www.who.int/substance_abuse/publications/en/malaysia.pdf

Euromonitor International, “Passport on Alcoholic Drinks in Pakistan”, May 2012

Euromonitor International, “Passport on Alcoholic Drinks in Iran”, May 2012

Euromonitor International, “Passport on Alcoholic Drinks in Indonesia”, February 2012

Euromonitor International, “Passport on Alcoholic Drinks in Nigeria”, April 2012
Heineken Egypt
21

Euromonitor International, “Passport on Alcoholic Drinks in Malaysia”, February 2012

Euromonitor International, “Passport on Alcoholic Drinks in Tunisia”, March 2012

Euromonitor International, “Passport on Alcoholic Drinks in Egypt”, May 2012
Interviews

Amr Abou ZZeid, Chief of Islamic Finance Advisory & Development Agency
Heineken Egypt
22
Appendices
Section 1: Market Data

Table 1: Average growth forecast

Table 2: Total growth forecast
Heineken Egypt
23

Table 3: Pakistan data

Table 4: Pakistan rates

Table 5: Iran data

Table 6: Iran rates
Heineken Egypt
24

Table 7: Indonesia data

Table 8: Indonesia rates

Table 9: Nigeria data
Heineken Egypt
25

Table 10: Nigeria rates

Table 11: Malaysia data
Heineken Egypt
26

Table 12: Malaysia rates

Table 13: Tunisia data
Heineken Egypt
27

Table 14: Tunisia rates

Table 15: Egypt data

Table 30: Egypt rates
Heineken Egypt
28
Section 2: Country profiles
Heineken Egypt
29

Pakistan PES
PES Analysis Pakistan
Country specific factors
Political
•
•
•
•
•
•
•
•
•
•
•
•
Political stability
Government organization & attitude
Competition regulations
current legislation home market
future legislation
international legislation
regulatory bodies and processes
government policies
government term and change
trading policies
home market lobbying/pressure groups
wars and conflicts
•
•
•
•
•
•
•
•
Tourism
Consumer confidence (safety)
home economy situation
home economy trends
specific industry factors
market routes and distribution trends
customer/end-user drivers
•
Economic
How these had affect on the market & involved companies
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Social

•
•
•
•
•
•
•
•
•
•
•
•
Social pressure
Education
Living conditions
Age demographics
consumer attitudes and opinions
law changes affecting social factors
brand, company, technology image
consumer buying patterns
buying access and trends
ethnic/religious factors
advertising
n and publicity
ethical issues
•
•
•
•
•
•
•
Numerous reports of government crackdown on illegal alcohol trade
including a reported 180 liters seized on March 1st 2013. ⁸
Lax enforcement , many army officers are whisky-quaffers.¹⁰
Monopoly power since the restrictions on the alcohol market through
implementation of Sharia law.
July 5 1977, Martial Law
Muslims prohibited from consuming or trading alcohol
Non-Muslim (4 % of the population), tourists and expats remain to legally
consume alcohol
Non-Muslims required a license to drink and/or manufacture alcoholic
drinks
Government ban on alcohol exports
The company’s last attempted partnership with an Austrian brewery
failed due to high costs and logistical problems. ²
High alcohol prices and social pressure lead to the black market to
expand rapidly
Murree Brewery is one of the biggest tax-paying companies in Pakistan
•
$1m (£604,000) a month in taxes and duty in 2009 ³
Sales taxes have been steady around 16%
The brewery employs 1,100 people
Strong distribution network throughout Pakistan
Tourism rapidly declined with the tightening of the governments grip on
society and the economy
Annual alcohol sales have grown an average of 20 percent over the past
five years, reaching $26.8 million in the 2012 financial year. ¹
The s ob factor ⁹
Evidence of social pressure through violence on alcohol outlets and
alcohol drinkers ⁵
Health risks of black market alcohol ⁷
Social pressure through religious intolerance and discrimination towards
alcohol consumers have become worse in the past years which evidently
has a negative impact on sales
Shop owners fear religious groups outing pressure on them through
violence and consumers have felt a similar pinch.
Sales rely on word of mouth, diplomats and foreign investors due to
alcohol taboo and social pressure
Since9the 180s number of alcoholics in Pakistan almost quadrupled ⁴
Pakistan SWOT
SWOT Analysis Pakistan
Strengths – S
Well established brewery
Strong distribution network
Monopoly market position
Steady alcohol consumption
Weaknesses – W
Muslims banned from consuming
Ban on import and export
Limited trade establishments
Opportunities – O
Non-alcoholic malt beverage market
• SO strategies - Attacking
• Leverage strengths to maximize opportunities
• WO strategies – building strength
• Counter weaknesses through exploiting opportunities
Threats – T
Surging presence of fundamentalists
Physical threats to store owners
Growing black market
• ST strategies – Defensive
• Leverage strengths to minimize threats
• WT strategies – strengthen defense
• Counter weaknesses and limit threats
“Lifting the baniw ll effectively
l
target b ack and illicit alcohol and will be a g rand revenue
Generating source for the government through taxes…”

Iran PES
Heineken Egypt
30
PES Analysis Iran Country specific factors
Political
• Political stability
• Consumer restrictions
• International trade regulations
• Government organization & attitude
• current legislation home market
• regulatory bodies and processes
• government policies
• government term and change
• trading policies
How these had affect on the market & involved companies
• 1979 Islamic revolution
• Sharia law implemented
• Government ban on alcohol production, consumption and imports
• Iran’s trade embargos meant it would take a long time to recover.
• The Iranian government does not have any issue with the advertising of non-alcoholic malt
beverages since they are healthier compared to soda carbonates and they lack of alcohol.
• In light of the large black market senior Iranian government official have voiced their
concerns on the increase in alcohol abuse in recent years and so the authorities have
stepped up anti-smuggling measures (69% increase in seizures over the past year)
Economic
• Sharia law presented the non-alcoholic beer market with substantial opportunities to grow
• Diverse range of flavors and types to attract new consumers
• With an increase of consumption through youth drinkers, and a steady growth in volume
sales and population the sales volume of non-alcoholic malt beverages is expected to triple
between 2011 and 2016.
• From 417 million liters in 2011 to 1.2 billion liters in 2016 .
• Behnoush Iran Co. switched from alcoholic beer to non-alcoholic beer.
• Recent support from the government, Behnoush attracts health conscious
• Product developments and innovation will be the significant factors contributing to a drive
in the growth of sales in the coming years because these play an important role in
increasing knowledge and awareness among consumers.
Economic growth
Tourism
Consumer confidence (safety)
home economy situation
home economy trends
specific industry factors
market routes and distribution
trends
• customer/end-user drivers
• international trade/monetary issues
•
•
•
•
•
•
•
• Sources refer to black market sizes of²:
•
200,000 alcoholics in Iran
•
60-80 million liters / $730m of alcohol smuggled into Iran each year
•
It is estimated that only 20-30% is actually confiscated
•
80%, is
m s uggled over Iran’s western borders.
Social


•
•
•
•
•
•
•
Social pressure
Health awareness
Age demographics
Consumer attitudes and opinions
Buying access and trends
Ethnic/religious factors
Advertising and publicity
• Tourism rapidly declined with the tightening of the governments grip on society and the
economy
• In recent years through a strong focus on public perception the market has been booming.
• Soda carbonates their sales volume will decline as consumers turn to the healthier nonalcoholic malt beverages.
• Alcoholic drinks in Iran particularly popular among youth.
Iran SWOT
SWOT Analysis Iran
Strengths – S
Public perception
Government support
High consumption growth rates
Weaknesses – W
Ban on alcohol
Trade embargos
Opportunities – O
Health factor
Growing youth population
Improving relations Egypt
• Leverage strengths to maximize opportunities
• Counter weaknesses through exploiting opportunities
Threats – T
Growing black market
Increased demand for alcohol
Substitutability
Indonesia PES
Heineken Egypt
31

Indonesia SWOT
SWOT Analysis Indonesia
Strengths – S
Beer loyal consumers
Limited competition - Import quotas
Producing under Diageo license
Weaknesses – W
Limited market, Muslim population
Increased taxes in 2010
Opportunities – O
Product variation
Improving distribution network
• Leverage strengths to maximize
opportunities
• Counter weaknesses through exploiting
opportunities
Threats – T
Black market due to high prices (taxes)

Nigeria PES
Heineken Egypt
32

Nigeria SWOT
SWOT Analysis Nigeria
Strengths – S
Drinking part of society
Improving economy = more sophisticated
drinkers = improving wine & spirit market
Weaknesses – W
Open market
High level of competition
Opportunities – O
Improving economy
Young population
Ban on imports
opportunities
opportunities
Threats – T
Ethic question on legal drinking age
Illicit market
Heineken Egypt
33

Malaysia PES

Malaysia SWOT
SWOT Analysis Malaysia
Strengths – S
Strong tourism
Large young tourist group
Brand loyalty
Weaknesses – W
Muslims banned from consuming
Economic downturn & slumping tourism
Advertising banned
Opportunities – O
Large youth population
Improving public image of alcohol
opportunities
opportunities
Threats – T
Increased restrictions
Calls to raise legal drinking age
Heineken Egypt
34

Tunisia PES

Tunisia SWOT
SWOT Analysis Tunisia
Strengths – S
Established brands
Limited black market - Muslim neighbors
Weaknesses – W
Perception of alcohol
Dependency on tourism
Advertising prohibited
Opportunities – O
Alcohol free malt beverages (Birell)
opportunities
opportunities
Threats – T
Calls to ban alcohol
Social pressure since revolution
Physical violence
Heineken Egypt
35

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