Case Study 3
Moosehead Distribution
IM – Impact Marketing
Set D
Anne-Marie
Daniel, Andrew, Carly, Emily
11/15/2009
Table of Contents
Introduction/Marketing Challenge ................................................................................................................. 3
Findings ........................................................................................................................................................... 3
Facts ............................................................................................................................................................ 3
Research ...................................................................................................................................................... 3
Assumptions.................................................................................................................................................... 4
Target Market ................................................................................................................................................. 4
SWOT Analysis................................................................................................................................................. 4
Strengths ..................................................................................................................................................... 4
Weaknesses ................................................................................................................................................ 5
Opportunities .............................................................................................................................................. 5
Threats ........................................................................................................................................................ 5
Channel Strategies .......................................................................................................................................... 6
Strategy 1 .................................................................................................................................................... 6
Strategy 2 .................................................................................................................................................... 6
Strategy 3 .................................................................................................................................................... 7
Solution & Implementation ............................................................................................................................ 8
Course Concepts ........................................................................................................................................... 10
References .................................................................................................................................................... 10
Appendix ....................................................................................................................................................... 11
2
Introduction/Marketing Challenge
Established in 1867, Moosehead Breweries Limited, located in Saint John, New Brunswick, is Canada’s
oldest independent brewery. The brewing process provides avid beer drinkers with the quality and
excellence they look for in a premium beer. Moosehead beer was created by the Oland family and the
secured recipes have been passed down from generation to generation. Today Moosehead is available in
over 20 countries worldwide, but they are yet to enter the market in the neighbouring province, Quebec.
What distribution channel strategy should Moosehead implement in order to gain 3% market share in the
province of Quebec?
Findings
Facts

Moosehead has been in business for 127 years and is Canada’s largest 100% Canadian Brewery.
(wikipedia, 2009)

Moosehead customers are very loyal, and the high brand awareness influences retailers to stock
the product.

Moosehead beer is positioned as a premium beer and is a favourite among avid beer drinkers.

Different brews of Moosehead are distributed in all provinces of Canada except for Quebec,
Saskatchewan, and the Yukon. Subcontracting the distribution costs a company a minimum of
$48 per hectolitre.

Moosehead currently has the highest market share in New Brunswick, but there is a very high
demand and brand awareness in Quebec.
Research

In Quebec it is estimated that seventy-five percent of beer is purchased for home consumption at
grocery stores, convenient stores and the SAQ stores. However, Quebec is not involved in the
liquor industry, so it does not offer any distribution services.

Research shows that individual brands sold in provincial liquor stores, Societe des Alcools du
Quebec (SAQ) stores cannot be sold in convenience stores and grocers. (SAQ.com)

The Quebec province in populated with over 7 million residents who collectively consume around
6 million hectolitres of beer a year; Québec is the second largest beer consumption market in
Canada next too Ontario at 5,982,499 hetolitres. (competitionbureau.gc.ca)

The two major Canadian breweries, Molson and Labatt hold 90 percent market share.

In Quebec, only the provincially-owned Société des alcools du Québec (SAQ) is allowed to sell
hard liquor. Only wine and beer that is bottled I Quebec or imported and distributed through a
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Quebec representative may be sold in licensed supermarkets and corner stores. Beer can only be
sold in supermarkets and corner stores if it is bottled or brewed in the Province of Quebec.
(Wikipedia.com)

In Quebec, there are currently 337 SAQ locations, 11,238 licensed grocery stores, and 14,670
bars, pubs, and restaurants that allow for on premise consumption only. (FTIS.com)
Assumptions
1. Moosehead has the capital and resources to engage in the following operations.
2. Moosehead has already a high level of brand awareness in Québec.
3. Moosehead has a strong sales team that will promote their product efficiently
Target Market
The Moosehead Brewery has positioned their beer as a premium product targeting the consumer who
enjoys the taste and smoothness the beverage has to offer. Moosehead creates a variety of different
flavours and textures to target the specially crafted beer market segment. This segment includes adults
aged 25-59, 92% of beer drinkers are men, while women make up only 8% and enjoy a lighter crafted
beer closer to that of competitors such as Corona, and Stella Artois. This segment is of middle class and
income; they enjoy dinning out and attending social functions regularly. This segment is not worried
about the price of the beer, they are not drinking become overly intoxicated; they are drinking to obtain
social status among beer drinkers and are open minded to new tastes and experiences. For beer drinkers
image and taste are the two key factors upon choosing their beverage. Moosehead emphasizes the fact
that their products are 100% Canadian made, and are constantly improving their micro-brews to capture
those who require perfection.
SWOT Analysis
Strengths

Moosehead is the largest 100% Canadian owned Brewery; they have been in operation since
1867. They now distribute their product in most of Canada, all of the US, and in 14 other
countries around the world.

With a diverse product line of thirteen different beers, Moosehead is widely respected as one of
Canada’s best brews, and has contained the largest market share of smaller breweries.

Moosehead’s popularity in New Brunswick and throughout Canada has produced strong brand
loyalty with customers. Their many successful years in business have allowed them to
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continuously increase their brand equity in the industry and keep customers coming back for
more.

Moosehead has an on-site and on-line retail store where Moosehead lovers can purchase
Moosehead memorabilia.

Partnering with the NBA has given them a large amount of publicity and increasing amount of
brand awareness.
Weaknesses

Moosehead’s inefficiency from unused production capabilities is one of their leading weaknesses,
the result of unused production facilities means that Moosehead is missing out on probable sales.

Although Moosehead has successfully positioned themselves as a premium product targeting the
Baby Boomer generation, they have not been able to attract the younger consumers of
Generation X and Y; this target market segment could potentially bring an increase in revenue.
Opportunities

Moosehead could gain market share in Quebec and Saskatchewan, as well as remaining provinces
of Canada, and new development internationally.

Today Beer is the leading choice of alcoholic beverage; sales in Canada have grown moderately in
the last few years.

Studies have indicated that retailers are very interested in stocking Moosehead beer; this high
anticipation of sales could bring further growth for Moosehead.
Threats

Currently, Moosehead’s main competitors are within Quebec; Microbreweries such as Loyalty
Belle Guevel, Boreal, Uni Brew, and Montreal 18th Bieu du Ciel. In general Canada’s alcohol
beverage industry is highly competitive as brands constantly compete for shelf space and
consumer loyalty.

The high interprovincial trade boundaries, taxes and mark-ups differ in each province and make it
difficult to enter the Quebec market. On top of these obstacles, in the past there were strong
labour and competitive corporate lobby groups that wanted to keep Moosehead out of the
province. Currently the push against Moosehead is being led by a smaller Quebec brewery, whose
product is not selling well in the New Brunswick market.

Recently Moosehead has become the producer of a government-branded beer in New Brunswick.
It will be sold at a lower price; this could possibly hinder Moosehead in either the long or short
run if their beer is repositioned and no longer perceived as a premium product.
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Channel Strategies
In order to maintain the premium brand image of Moosehead Beer we felt that it was important to enter
the Quebec market with selective distribution intensity. Below are some distribution channel strategies
that we considered in order to gain a market share of 3% in Quebec.
Strategy 1
The first strategy we have come up with is direct distribution. A corporate sales team would be
assembled and deployed in order to contact the all of the retailers who will potentially stock Moosehead
Beer. The sales team is also in charge of setting up displays and appropriate promotion material. We
intend to engage the customer, and create relationships with retailers in order to sign contracts.
Advantages
 Using a direct distribution channel will allow Moosehead to receive accurate information
regarding sales, discounts given, and returns. This will also allow for direct feedback to be
efficiently communicated.

There will be no complications or conflict with intermediaries regarding shelf space, listing fees
and in store promotions. Product promotion will be controlled by Moosehead and there will be
no discrepancy regarding the premium brand image.
Disadvantages

There are simply too many retail, restaurants, and pub locations in Quebec to be efficiently
managed. There would be a lack of customer support to each location, and additional
complications with individual orders.

Constant time consuming feedback and support of sales team is complicated and on too great of
scale.

Delivery to each and every location is unreasonable and furthermore in efficient.
Strategy 2
The second alternative we chose deals with indirect channel distribution. Indirect distribution involves
the use of one or more intermediaries such as wholesalers and distributors. Our research led us to believe
that we need to establish a supply network within Quebec in order to bring our product to the shelves of
Quebec retailers more efficiently. The majority of the Quebec population lays at the south of the province
in particular the area around Montreal. We would need to incorporate two or more two distribution
centers in Quebec; in theory one would be within the core of Montreal as well as a smaller center further
north along the St Lawrence near the city of Saguenay. The Saguenay location would also act as a crossdock facility in the transportation of products towards the center region of Quebec. These locations
would be the most logical due to the population density and geographic (See fig.1 in appendix).
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Advantages
 In using a distribution centre labour and management costs would decrease, as well overall
delivery costs that Moosehead would have incurred through a direct channel would be
decreased. The distribution centres would handle all orders from the individual locations
minimizing the potential order complications.

Introduction of a new sales strategy is simpler due to the fact that corporate sales staff works
with the distribution centre rather than individual retailers.
Disadvantages

When using an intermediary, promotional and brand image control is limited. Thus there is a risk
that improper management of promotional material would degrade Moosehead’s brand image.

Moosehead would also have to charge the distributor a lower cost, and if sales did not reach
projection they could potentially suffer a loss of profit.
Strategy 3
The third and final strategy that Moosehead could implement is a multi-channel distribution strategy.
Multichannel distribution is a combination of direct distribution and indirect distribution. In this approach
Moosehead would create a dedicated corporate sales team that focuses on selective retail locations as
well as a sales team dedicated to dealing with our potential distributors. This system would be corporate
and vertical in nature, ensuring optimal control of sales operations.
Advantages
 The strategy would allow for the most market coverage and customer support throughout
Quebec. The integration of new products and promotions would be less complicated and enter
the Quebec market with ease.

This strategy would enable Moosehead to receive accurate information regarding sales, discounts
given, and returns.

With the influence of a small corporate sales team, Moosehead would be able to minimize any
discrepancy regarding the premium brand image.
Disadvantages

There is a possibility that if a poor sales team was deployed then they may not be able land many
sales contracts.

Conflict could arise between the corporate and distribution staff, resulting in poor business
decision or lack of control and management.
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
Retailers who order from the distribution centre, and are not looked after by corporate sales
representatives are responsible for the display, price, and promotion of the product. This could
potentially cause Moosehead’s premium brand image to depreciate if portrayed incorrectly.

Product presentation and promotion of those retail locations not looked after by corporate sales
representatives.
Solution & Implementation
Multi-Channel distribution with selective distribution intensity
Careful consideration has leaded us to believe that the multi-channel distribution strategy would be the
best suited for Moosehead to implement when entering the Quebec province. We chose multi-channel
because it combines the advantages of indirect and direct distribution strategies. By implementing
relationships with distribution companies in the populated areas of Quebec, Moosehead will be able to
efficiently complete orders and stock the shelves of our retail partners with selective intensity.
Product
Product destined for Quebec must be produced in accordance to bill 101 (Charter of the French
Language), which makes French the official language of Quebec. As a result all bottles and cans produced
for Quebec retailers must be labelled in French with English being the second language. The beer itself
will not be changed keeping the great taste and craftsmanship of the Moosehead family recipes.
Place
By creating business relationships with distribution companies in the Quebec province, Moosehead will
be able to most efficiently supply the market place with their product. Moosehead will have to supply and
sell 179475 hectolitres of beer to retailers to gain 3% of the market place. Supplying this amount through
private distributers will cost a minimum of $48 per hectolitre. By selecting certain densely populated
areas of Quebec Moosehead will be able to distribute most efficiently in and around Montreal, and
throughout the central region of the province.
Price
The quality and taste of Moosehead beer already has great reputation and credibility.. As a premium
beverage it will be priced slightly higher than your average beer. This price will reinforce the brand image
an allow Moosehead to differentiate itself from some of its closest competitors and mass produced beer.
Promotion
We feel that Moosehead only requires subtle promotions to reinforce the brand image that is already
established as a premium smooth tasting beer. To create value for our product Moosehead may offer
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online draws for prizes and merchandise. The consumer would enter a code online and fill out a
membership form; from there codes may be selected as winners. Moosehead would then create a
customer database and receive instant information about their product. To increase sales,
representatives from Moosehead will visit high traffic retail outlets and perform taste tests to try and
convert beer drinkers from their usual beer to the unique, smooth Moosehead brand. Following this
Moosehead will reinforce their online contest and brand image through many forms of communication
such as commercials, print, radio, billboards and signs. Provided they account for language, cultural, and
regulatory differences.
Through use of the corporate vertical marketing system and a marketing mix Moosehead will successfully
distribute product throughout Quebec and gain a 3% Market share in beer sales.
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Course Concepts
brand awareness, 3, 5
brand equity, 5
brand image, 6, 7, 8, 9
brand loyalty, 5
competitor, 5
consumer loyalty, 5
corporate vertical marketing
system, 9
direct distribution, 6, 7
distribution channel strategy, 3
indirect distribution, 6, 7
industry, 5
market development, 5
market segment, 4, 5
market share, 3, 4, 5, 6
multi-channel distribution, 7, 8
place, 8
positioned, 3, 4, 5
premium product, 4, 5, 6
price, 9
product, 8
product line, 4
promotion,6, 8, 9
repositioned, 6
selective distribution intensity,
6, 8
References
brewers.ca. (n.d.). Retrieved november 19, 2009, from brewers.ca:
http://www.brewers.ca/UserFiles/Documents/pdfs/eng/Brewers%20economic%20report%20%20English%20Dec%207%2006.pdf
Canada, A. a.-F. (n.d.). canadas brewery industry. Retrieved november 19, 2009, from www.agr.gc.ca:
http://www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1171560813521&lang=eng
canada, Brewers association of. (2009). Retrieved november 2009, from
http://www.brewers.ca/default_e.asp
Charter of the French Language. (n.d.). Retrieved november 2009, from
http://en.wikipedia.org/wiki/Charter_of_the_French_Language
competitionbureau.gc.ca. (n.d.). Retrieved november 2009, from
http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/00786.html
FTIS.com. (n.d.). foreign trade information system. Retrieved november 2009, from
http://www.sice.oas.org/dispute/gatt/91alcoho.asp
SAQ.com. (n.d.). Retrieved november 2009, from
http://www.saq.com/webapp/wcs/stores/servlet/GeneralContentView?storeId=10001&catalogId=10001
&page=/nh/accueil&langId=-2
wikipedia. (2009, nov). Retrieved november 2009, from http://en.wikipedia.org/wiki/Moosehead
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world book online. (2009). Retrieved november 2009, from
http://www.worldbookonline.com/student/media?id=mp001660&gr=Welcome+Bc+Electronic+Library+N
etwork
Appendix
Fig.1
(world book online, 2009)
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Fig.2
(canada, Brewers association of, 2009)
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