1 / 37

Country Market Analysis

Country Market Analysis. Lipton Iced Tea in Argentina. Price. Argentina’s Economy. Economic recession from 1998 to early 2003 unpredictable inflation (see chart) devaluation of the paeso Mounting social problems Unemployment rate of 17.3% for 2003

arvid
Download Presentation

Country Market Analysis

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Country Market Analysis Lipton Iced Tea in Argentina

  2. Price Argentina’s Economy • Economic recession from 1998 to early 2003 • unpredictable inflation (see chart) • devaluation of the paeso • Mounting social problems • Unemployment rate of 17.3% for 2003 • 51.7% of the population is below the poverty line (2003) • Past inconsistency of the economy may have an impact on the size of our target market.

  3. Price Argentina’s Economy • Nominal GDP has grown from $289 billion in 2001 to $435.5 billion in 2003. • GDP real growth rate: -14.7% (2002) to 8.7% (2003) • GDP per capita: $10,200 (2002) to $11,200 (2003) • While there have been economic problems in the past, the recent upswing of the economy is encouraging with increasing disposable income of consumers’ and, in turn, increased consumption.

  4. Price MERCOSUR • Customs union that includes Argentina, Brazil, Paraguay and Uruguay, with Chile and Bolivia being associate members, and Venezuela has requested membership. The General Agreement on Tariffs and Trade (GATT) • Allows for free trade between member states • Both of these groups would allow for easier importation of needed materials into Argentina for production of iced tea. • Even though, trade is open to all potential exporters and importers however unclear customs requirements, inspections and product standards licensing procedures increase the cost of trade.

  5. Competition Soft Drink Competitors Pepsi (including Pepsi, Pepsi Light, 7-Up, 7-Up Light) are popular soft drinks Coke is another popular carbonated beverage in Argentina Navita (manufactured by Coke) is a soft drink that is flavored with the national beverage mate Sukita is a popular orange soft drink in Argentina Pomelo an increasingly popular fizzy grapefruit drink Main focuses: youth, pop-culture, celebrity endorsers Average retail price of a 473ml soft drink is $.99 Price

  6. Price Competition • Juice Competitors • Kasfruit Juice, Kas, Tropicana and Gatorade • Orange juice is a popular drink that is extremely expensive • Nectar concentrates which is a sweet juice based drink • Apple juice is another beverage of choice in Argentina • A popular combination is fruit juice and milkshakes in areas of the country where more exotic fruits grow • Average retail price for 946ml juice is $4.79

  7. Price Competition • Bottled Water • Eco de los Andes • Glaciar • Nestle Pureza Vital. • Main focuses: pure, natural, and good for your health. • Average retail price of 500ml of mineral water is about $1.00

  8. Price • Decrease in growth rate percentage → Economic recession (1998-2003) • Stabilized growth rate → Upswing in Economy • This should not be a deterrent in entering the new age beverages market in Argentina *New age beverages includes herb based drinks, iced coffees and iced teas.

  9. Product Labeling Requirements • Name (description of product) • Country of origin • Quality, purity, or blending description • Net weight • Metric System • Spanish Language (exception: foreign words and phrases of common usage) • Differs from Mexican or Chilean Spanish • It would be in the best interest of Lipton Iced Tea to use Spanish language media and labels in Argentina. • Business Implications • Due to all of these restrictions on labeling Lipton Iced Tea will have to change not only the language of it’s labels but also the content of their labels and the measurements of the product. A local adaptation of the packaging will be necessary.

  10. Product Bottle Composition • Pop – plastic • Water – plastic • Gatorade (sports drinks) – plastic • Usually small convenience sizes that may be consumed on the go • Juice – Cartons • Aluminum isn’t as widely used because it’s hard to come by • Recyclable packaging • By knowing the common forms of packaging in Argentina Lipton will be able to decide which material to use to package it’s iced tea. Percentage Volume Retail Sales

  11. Product • Mate is the national drink of Argentina • Benefits- a hot tea and stimulant • Being such a popular drink in Argentina it might be wise to consider a mate flavored iced tea to appeal to that segment of the market. Coke has successfully done this • Popularity of Mate may cause problems in introducing cold tea

  12. Place Disadvantages of Importing • Imports vs. Exports for food and beverage market • Imports 5% • Produces 95% • Major challenge → knowledge • Higher retail price

  13. Food Product Production Centers: Florida Plant (Buenos Aires Province): produces soups, purees, pastas, salsas, prepared meat Principal products include: Knorr Mendoza Plant ( Mendoza Province): produces dehydrated vegetables Pilar Hellmann’s Plant (Buenos Aires Province): Produces mayonnaise, mustard and salsa Principal products include: Hellmann’s AdeS, Ri-K, Fanacoa, Wilde Pilar AdeS Plant (Buenos Aires Province): produces AdeS a soy product La Rioja Plant ( La Rioja Province): produces olive oil, garlic and pasta, mustard Principal products include: Arisco, Beira Alta, Copisi, Malaguena, Petisco, Palmeiron, Savora, Ri-K, Fanacoa Distribution Center Located in Ubicacion, Florida Plant, Buenos Aires Province Receives finished products from the plants and distributes to clients and other countries. Daily dispatches a maximum of 280 trucks including a maximum of 270,000 boxes 14 loading docks Despite the fact that Unilever produces and distributes many food products in Argentina, they partner with Argentinean firms for their beverage production and distribution. Place Unilever’s Production Facilities

  14. Place Production Facilities • Baesa • Main bottling company in Argentina for Pepsi • Controls 87% of Pepsi’s bottling in Argentina. • Currently in negotiations with Embotelladora Los Andes. • Vast distribution chain with over 25,000 points of sale around the country.

  15. Place Production Facilities • Ambev • Sixth largest beverage company in the world and largest beverage company in Latin America • Argentine branch received Champion in the Manufacturing Excellence Program award: • Now considered a reference standard of excellence • AmBev’s network: • 11,000 resellers • Fleet of 16,000 trucks • 41 beverage production plants Production and distribution facility in one.

  16. Place Distribution • Tibbett and Britten Group • Seventh largest logistics service provider in the world. • Operations in 33 countries in 5 continents. • Revenues of approximately $2.2 billion last year. • Unicargo Group (acquired in 2001), based in Buenos Aires, Argentina. • Transports and Distributes food and drink products, throughout Latin America • Existing contracts with Unilever Bestfoods and Baesa (First largest Pepsi bottler in Argentina) • Handles 72 million cases per year • A fleet of 500 commercial vehicles • In 2000 revenue was $19 million

  17. Place Business Etiquette • More formal in Argentina than in the U.S. • Business usually conducted in leisurely manner • Prearranged meetings are a must and promptness is also important • North American vs. American • The business etiquette of Argentina is important to know since Lipton will be dealing with intermediaries if iced tea is introduced into the market.

  18. Place Political Implications • Contracts: • No specific format - can be executed verbally • However, usually given in writing through exchange of reversal letters • May not elect foreign laws to govern agreement • Argentine courts will not recognize the contract

  19. Place Distribution • Two types of traditional sales channels: • large-scale • specialized retailers • The food retail market separated into three categories: • Traditional (“mom and pop”) retailers • Self-service mini markets/Convenience stores • Supermarkets/Hypermarkets

  20. Place Traditional Retailing • Decrease in popularity: • 1970 – 90% of total sales • 2003 – 20% of total sales • Inefficient logistics: • Outdated • Costly • Longer delivery times

  21. Place Self-service Mini Markets/Convenience Stores • Self-service mini markets = 26% of total sales (2002) • Convenience stores = 4% of total sales (2002) • Convenience stores becoming more popular • Increased competition for traditional retailers • Typical customers and customer habits: • Middle and upper-class as well as youth • Impulse purchases

  22. Place Supermarkets/Hypermarkets • Market dominance: • 36.7% of total sales (2002) • Lower priced items: • Purchase directly from producers • Stock larger quantities (economies of scale) • Consumer Behavior: • Price vs. Value • Decline in Import purchases • Convenience

  23. Place Infrastructure • 80% of products transported with trucks • Shelf Life = 18 months • Storage = closed container, cool dry place • There are no special needs to have refrigerated trucking to ship Lipton Iced Tea in Argentina however, special care will be needed to ensure that the tea is not transported/stored in extremely high temperatures. • National Highways Rehabilitation and Maintenance Project: • $450 million loan to rehabilitate the national road network. • Paved Highways=215,434 km • Unpaved Highways=151,881 km • Argentina is spending money on their infrastructure so this will be an aid in getting our product to the consumer.

  24. Promotion • Population = 39,144,753 • Median age = 29.2 • More youthful promotional campaign. • 1 female to .97 males • Target both males and females equally • Urban areas = 80% of total population • Buenos Aires (and suburbs) = 35% of total population • Cordoba, Rosario and Mendoza = 10% of total population

  25. Promotion Past Economic Recession Affecting Promotion • Effect of economic recession on media sector: • Circulation volumes, subscription fees, and the level of advertising spending decreased • Effect of economic recession on consumer behavior: • Argentine consumers: • More demanding and knowledgeable • Starting to look more at quality, novelty, flexibility, fast-delivery, and after-sales service • Stabilizing inflation = more attention to small price differences

  26. Promotion Consumer Behavior • Argentine consumers resemble Europeans very closely • European promotions may be used with a slight localized adaptation • Segmentation is key: • Typically drink wine or mineral water with meals • Lipton Iced Tea Target = impulse purchase drink that can be enjoyed “on the go.” • Lack of storage space and small disposable income = more frequent trips to the store • Environmentally friendly attitudes: • brand image with differentiated segmentation will be crucial.

  27. Promotion Growing Consumer Segments • One-person households (17% of the total Argentine households) • Value practicality and often pay premium prices in return for service that allows them to save time. • Perform frequent and small purchases and use convenience channels. • Double Income Couples Without Children • High disposable income • Purchase high value-added products and services • Urgency to save time = increased services (such as delivery, automatic tellers and telephone banking) • Households sustained by a working woman • Consumers over 60 years old.

  28. Promotion Print • High literacy rates (97.1%) → print media is the most widely used and effective method of advertising. • International papers and magazines, including a wide range from the U.S., are widely available at the numerous kiosks to be found around Buenos Aires.

  29. High penetration rates: Paying TV subscribers in Latin America = 58% Potential audience approximately 21 million. 10 million TV sets in use The public and private sectors operate radio and television stations. 200 cable companies operate throughout the country. Generally aimed at the Buenos Aires market 46 television broadcasting stations Major National TV Channels: America TV Argentina Televisora Color ATC Libertad Telefe’ Artear Cable television channels: CNN International, CNN en Español, MTV, As well as channels from Brazil, Chile, Mexico, France, Germany, Italy and others Promotion Television

  30. Promotion Radio • 170 AM stations • 2000 FM radio stations • Approximately 12 million radio sets • Estimated average weekly listener audience = 21 million. • Generally aimed at the Buenos Aires market

  31. Promotion Internet • 4.1 million internet users in Argentina compared to 165.75 million in the U.S. • High access cost → limited use of the internet • Argentina hosts 11 of the top 15 most visited Spanish language sites • Approximately half of the 700 Internet start-up companies in Latin America are based in Argentina • Increasing popularity of Internet advertising • Beginning stages • Development of E-commerce is limited: • Internet illiterate consumers • Prefer the security of direct purchasing • Slow introduction of online retail

  32. Promotion Advertising Expenditure By Medium • Television $245 million • Radio $45 million • Print $204 million • Cinema $15 million • Outdoor $62 million • Online advertising is currently an untapped medium for advertising.

  33. Television (peak time): Avg. Cost for :30 is $2,996 Avg. Audience 129,153 = 2.3 cents per person Radio (peak time): Average cost for :30 is $441 Avg. Audience 34,533 = 1.3 cents per person National Newspapers (1 page black and white advertisement ): Average Cost is $15,370 Avg. Audience 149,942 = 10.5 cents per person Magazines (1 page four color advertisement): Average Cost is $ 5,984 Avg. Audience 63,866 = 9.3 cents per person Outdoor: Billboards Average Cost 1 month is $87,365 Posters Average Cost 1 month is $8,333 Subway Boards Average Cost 1 month is $ 161 Taxis Average Cost 1 month is $23,473 Cinema: Average Cost for :30 for 4 weeks is $95,500 Promotion Media Costs

  34. Promotion Introduction of Lipton Into Brazil • Flavors: lemon and peach • Sizes: 340 ml, tetra pack 1 liter, PET 1.5 liters, tetra pack 250 ml • Produced and distributed by Ambev • October 1999 Lipton Iced Tea reached the leadership position of the cold tea market • Given the geographical proximity and cultural ties of Argentina and Brazil this information is promising for the iced tea market in Argentina.

  35. Promotion Lipton’s Current Strategies • Worldwide Campaign: “Lipton is painting the world yellow” • Brightness, vitality, and fun with natural goodness • Lipton Flavors: “We’ve got your flavor!” • lemon, sweetened, unsweetened, green tea with honey, diet lemon, peach, raspberry, sweet tea with or without lemon, sweet tea extra sweet • UK Strategy: “Don’t knock it until you’ve tried it” • “Has a disarming honesty in that it courageously embraces the negative and openly admits that a lot of people knock the idea of drinking cold tea.” ~ Senior Brand Manager • Asian Strategy – Local Adaptation • RTD tea that may be served hot or cold • Introduction of Lipton Fusions

  36. Promotion Advertising Examples • United States Promotion = Evolutions and Influences in Hip Hop- Lipton Brisk Iced Tea • Music Mixer Website Applet: “Mix it up your way – Lay down the tracks, pump up the beats and be your own Mix Master” • UK Promotion = “Don’t knock it until you’ve tried it” • T.V. Commercial - Girl chatting on the phone with a friend reaches into fridge and inadvertently picks up and drinks Lipton Iced Tea and to her surprise enjoys it

  37. QUESTIONS?

More Related