Coopers Brewery - Adelaide SA

Recently in the local press it was announced that our local brewery, Coopers, is to commence importing and brewing of the third biggest Japanese brand Sapporo. This got me interested because back in 2010, at Uni, my project team and I prepared a paper for Competitive Strategy on Coopers and some ideas for diversification. This included a plant in Asia and importation/brewing of other brands to add into the Coopers stable of products and brands.

Executive Summary

This report examines the current competitive strategies of Coopers Brewery Limited (Coopers); a South Australian based beer producer.

Coopers is a public company which is not listed on the Australian Stock Exchange, currently holding a 3.4% market share of the Australian beer market (Coopers Chairman’s Report, 2009). Its major competitors are the Fosters Group and Lion Nathan together holding in excess of 90% of the Australian beer market (Byrom & Lehman, 2009).

The company exports to 26 countries worldwide including the USA, UK, India and Russia. Although still small, exports currently account for 2.6% of Coopers’ total sales.

In 2005 Coopers resisted a A$420 million hostile takeover attempt by Lion Nathan, successfully persuading its shareholders that the future lay in family hands as opposed to those of the multinational. The company also changed its constitution to prevent any future takeovers by large corporations.

Through the use of various tools including SWOT, PESTLE and Porters 5 Forces this report investigates the key strategies employed by Coopers in order to analyse the company, its financial situation, competitors and competitive advantage.

With competition in the beer industry in Australia being very intense, this report will make recommendations for Coopers to remain a sustainable and profitable company within the industry.

1. Company Background

Established in 1862 by Thomas Cooper, Coopers is a 5th generation family owned business that manufactures and sells beer, home brew and malt extract.

In 1997, the business purchased a $40 million state of the art manufacturing, bottling and distribution plant in Regency Park South Australia. With advanced robotics and a commitment to an eco friendly plant and processes to reduce their carbon footprint, Coopers has never lost sight of their mission.

Mission & Vision Statements

Mission:

“Family brewery creating great craft beers and other natural product for the enjoyment of everyone”

Vision:

“Coopers is passionately committed to celebrating 200 years in the manufacture and distribution of the finest beers and brewing products”

2. Company Analysis

SWOT & PESTLE

When conducting a SWOT analysis we discovered that Coopers has a competitive advantage in the company’s style of advertising and their ‘crafted beers’ position. The main threats are being a small niche player and having no imported beer products.

From a PESTLE the key findings are:

  • Compliance and understanding of the implications and ever evolving laws associated with manufacturing and distribution of alcohol (e.g. excise dutiesincreases).
  • Implementation of innovative technology. This is evidenced through its state-of-the-art brewing, bottling and manufacturing roboticsin the Regency Park plant.
  • Fulfillment of environmental obligations through eco-friendly plant and processes to reduce its carbon footprint. This was recognised and awarded by the South Australian Government (Coopers Chairman’s Report, 2009).
  • Implications of the South Australian water shortage - if this was to prohibit the way Coopers’ manufacturer, the company may need to consider new markets, or even consider a change in manufacturing location.

Porters 5 forces

The Porters 5 Forces model revealed the following insights into the brewing industry.

Rivalry continues to be the strongest force (Porter, 1979, pp.7-8); and is particularly fierce in this industry with Lion Nathan and Fosters holding 94% of the market. The competition is in the form of pricing and positioning product as premium. Coopers has differentiated itself as a distinct niche brand that is not affected by pricing which mitigates the rivalry force.


Buyers also hold some power in that the switching cost for consumers is low and fashion and tastes can affect the decision of which beer to buy at point of purchase. Coopers have circumvented this force through developing the Coopers Club and having a distinctive tasting product. The opportunity is to convince new buyers for growth.

3. Competitive Advantage

A competitive advantage is gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and services that justifies higher prices (Burke & Jarratt, 2004, p.130).

Coopers invites its consumers into a South Australian family brewing tradition that differentiates it from its competitors, creating a clear market space (Kim & Mauborgne, 1999, p.83).

Focusing on premium beer styles and bottle fermentation, Coopers’ flagship ‘Pale Ale’ is a unique product rivalling more exclusive imported brands.

Research conducted in 2009 by Byrom and Lehman reveal that Coopers’ competitive advantage is in three areas:

1. Advertising

2. Family tradition

3. Market position of their products

The Coopers advertising agency is Adelaide based KWP! which is known for its quirky advertising campaigns for diverse brands such as SA TAB, RAA and SA Lotteries Instant Scratchies. This quirky and innovative approach has assisted Coopers in gaining market share and remaining top of mind with beer drinkers. It also acts as a defensive strategy against other brands (Roberts, 2005), appealing to the customer base.

As a family tradition the company has been in family ownership since 1862 (Coopers, 2010, p.2). These family values are represented in advertising, beer production and the company vision and mission (Byrom & Lehman, 2009, p.520). The family continues to own the business and is hands on in its daily operation.

The market position of the products is another comparative advantage for Coopers. The Ale products are perceived as premium, visually offered in the same glass dark brown bottle. The beer has a cloudy appearance that demands attention from the consumer (Coopers, 2010, p.11) and the way to prepare the beer for drinking has been another quirky way to promote the beer on TV, print ads and at point of sale (Byrom & Lehman, 2009, p.520). The label is traditional and hasn’t changed in over 30 years making it instantly recognisable and adding value to the premium brand position.

Of the five generic competitive strategies Coopers has adopted a focused differentiation strategy where the company offer a niche product to the market place while also pursuing a focused low-cost strategy to maximise products (Porter, 1980, pp 35-40). In the future Coopers should move to a broad differentiation strategy as it actively promotes more of its range for increased market share.

The Coopers core competency is brewing beer. Its distinctive advantages are its brand, the unique brewing process to develop a unique product, the tradition and its advertising.

4. Recommendations

A key opportunity for Coopers is to find a sustainable competitive advantage over rivals that can continue the innovation that Coopers’ has achieved with Pale Ale to develop other blue ocean opportunities (Burke et al, 2010). To be sustainable Coopers needs to review the following recommendations:

Red Ocean Recommendations


Develop an imported beer brand

Coopers needs to investigate an alliance with a foreign brewery to import a beer to generate a competitive advantage (Kaplan et al, 2010, p.115). An example could be Coors which currently doesn’t have an Australian distributor. Coors shares a similar company structure and core competencies to Coopers meaning that it could be a good strategic fit for not only importing from Coors, but also exporting from Coopers.

Expand light beer sales

Cascade Light (Fosters) and Hahn Premium Light (Lion Nathan) are the two dominant light beer products. Although Coopers offers a premium light beer it is in the same shaped bottle as the rest of its range. There is an opportunity for Coopers to take on its rivals with a new bottle device to reflect current fashion and evolving customer needs (Jacobides, 2010, p.83).

Blue Ocean Recommendations

New product lines

Coopers have taken market leadership in the development and promotion of the Pale Ale brand. However, Coopers can find some blue ocean if they are prepared to become a first mover in new styles of beer (Hegarty, 2010, pp. 46-48; Shaw & Kotler, 2009, p.23). Recently, this was seen in the 1862 and Clear products. Coopers needs to continue this activity to capture first mover advantage and to develop a new range of beers unique to Coopers.

Relocate

Currently Coopers is competing away from the Australian East Coast Market. The value chain indicates Coopers are currently at the mercy of South Australian producers and incurs large distribution costs to ship product to the growing east coast market. However, if Coopers locates a plant in this area it can increase its resource pool by recruiting from a larger population of skilled employees for R&D. Additionally, this increases its ability to buy raw materials outside South Australia. This uses the comparative advantages capturing value within the value chain (Jacobides, 2010, p.83) to reduce the cost of goods thereby allowing lower prices and increased market share.


I hope that this may be some interest to beer drinkers, especially those partial to a Coopers Sparkling or Pale Ale. Cheers!


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