Introduction
Labatt 50 and Molson Breweries are Canada’s two leading beer companies. Molson Canadian and
Labatt’s Blue both own a 12% market share. For many years, these 2 companies have been competitors
of each other. Canadians are said to be more loyal than Americans when it comes to brand loyalty (74%
compared to 65%) Many age categories are already well established players in the beer market as well
as niche markets, young males being the main target. The aging boomer market has started to arise
however, and could be a potentially newer target market than can be developed. Labatt 50 is looking to
further expand its market share by 2014.
Identification of the problem
Labatt 50 is looking to further increase its market share by 2014. The main target markets are already
well established (ex .young males). Smaller niche markets and emerging markets are now target
options. Aging boomers are buying beer, as well as social trends that are occurring in Toronto
(potentially other cities as well). Brand loyalty is strong throughout Canada but weakest around the east
coast and in Ontario. These are the main options for future success.
SWOT analysis
Strengths/Weaknesses
Opportunities/Threats
Varying brand loyalty (strength and weakness)
Newfoundland and Labrador sales
Large market share
Brand foothold to allow new product
extensions
History (Quebec and Ontario)
Huge amount of funding for advertising and
new products
Aging market fulfilled by other alcoholic
beverages (non beer drinkers)
Development of niche markets
Increase brand loyalty in weaker geographic areas
New product line extensions
Molson or other large beer companies stealing
emerging market share
Other beer companies
Anti-drinking campaigns (MADD, DUI scares etc)
Making beer more acceptable in the ageing
population and for women.
Strengths
Labatt 50 is a well-established beer company with a strong foothold in the Canadian beer market. They
have a strong brand loyalty in most parts of Canada. Labatt Blue already holds 12% of the beer market
share within the Canadian market. Being a large company with such a big market share, Labatt has the
funding and branding to back up new product line extensions and massive promotional campaigns.
Labatt has a historical advantage within Quebec and parts of Ontario. Quebecers naming it a “Quebec
Beer”, Ontario residents likewise consider it an “Ontario Beer”. These are both divisions of brand loyalty.
Labatt has also spawned a small subculture group within Toronto that holds Labatt 50 in high regard.
Smaller markets like these can be developed.
Weaknesses
The weaknesses mainly involve brand loyalty. Labatt is a well-established company throughout Canada;
however, brand loyalty is lowest on the east coast and in Ontario (40% are loyal). Beer drinkers in this
area are more likely to try different beers or switch up their purchasing decisions. Males over the age of
45 and Females are also unlikely beer drinkers (these groups do consume alcohol; they are likely
purchasing other beverages). Beer is not a popular choice among this demography.
Opportunities
Labatt 50 can increase brand loyalty in the areas that brand loyalty is lacking. There are also underdeveloped emerging markets that can be capitalized on and possibly grown into something bigger and
better. For instance, the subculture groups and aging males AND females. Some examples would be
introducing lime beers to attract females, and premium beers to attract ageing males that don’t want to
drink as much.
Threats
The biggest threats to Labatt 50 are other beer companies. Larger competitors like Molson will be the
main threat but smaller companies producing premium beers should also be taken note of. Antidrinking campaigns will also always be a threat to any company producing alcoholic beverages.
Organizational Objective
Labatt 50 wants to increase its market share by 2014. Brand loyalty needs to be improved and new
product line extensions should be introduced to gain a stronger foothold in certain markets. These are 2
achievable goals that can be accomplished with the right direction and in a timely fashion.
Identification of alternatives
New product line extensions
In order to help capture smaller target markets such as older males and women, new products must be
introduced. Some examples are lime or citreous beers to attract women, and premium (higher alcohol
content) beers for older men that don’t want to drink 10+ beers in one night.
Development of brand loyalty
In Ontario and the East coast brand loyalty is lower, by increasing the amount of advertisement and with
appropriate themes, brand loyalty can increase. Adding coupons or bonuses to those who choose to
buy 1 type of beer on a consistent basis can also help. An example would be for every certain amount of
empties brought back, a percentage off of the next purchase of the same brand of beer can be offered.
Development of niche markets
Smaller subculture groups can sometimes grow into large subculture groups. Pab’s Blue Ribbon
managed to capture the entire hipster scene by infiltrating the music industry with artists such as Lana
Del Rey (who poses as a hipster and mentions Pab’s in her music). Targeting this group and giving them
public awareness can cause the group to grow as people hop on the band wagon.
Recommendation
New product line extensions
Labatt must add new beverages to its product line-up in order to capture new markets and emerging
markets. Women make up a huge potential market, being large alcohol consumers that purchase non
beer beverages. Sweeter tasting beers with a sweeter vibe to them can help attract this target market.
If women like the taste of a newly introduced beer, their friends may join in as well.
Older males (boomers) are also a large potential market. A potential higher quality beer with higher
alcohol content will attract them. These men in general will have more money to spend (kids have
moved out etc.) and will also feel more obligated to spend a little more on a premium beer. The higher
price can also be a selling point to express its quality.
Implementation
Implementing the new products
The pricing on citreous beers should remain competitive. Beer is generally cheaper than the alcoholic
beverages Labatt is targeting (vodkas, Palm Bay, women’s beverages etc.). This can be a selling point
when the product is implemented.
Premium beers will be introduced at a higher price but still competitive with other premium beers
already on the market. Labatt’s strong point is its massive budget that it can leverage in an advertising
campaign to potentially drown smaller premium beer companies that currently hold part of the market
share.
Appropriate advertising
Advertising should be likewise related to the new product being sold. Citreous flavoured beers should
have a cheery vibe to them via commercials, boards and posters. The Advertisements for citreous beers
should show women and men alike socializing and looking trendy and give off a happy vibe, similar to a
Smirnoff commercial or a competitor that makes beverages that women currently purchase.
Premium beers on the other hand can be advertised in such a way to appear classy and seasoned,
reflecting its target market. An older retired man looks to kick back and enjoy a higher quality beer for
all the hard work he has put in up until now. There should be a heavy emphasis on class and quality,
perhaps making double note of the how long Labatt has been in service (dates).
Conclusion
Labatt must focus on smaller target markets and underdeveloped markets in order to increase sales.
When these are collaborated it will offer a sizeable increase in market share by 2014 and potentially
lead to bigger things in the long run. As of right now, Labatt is already one of the biggest beer
companies in Canada and holds a large share of the current market. By taking chunks out of smaller
markets and emerging markets – sales will increase and Market share will increase by 2014.