Developing countries: PROMISING NEW MARKETS FOR THE ALCOHOL INDUSTRY

Globalization of the alcohol industry is steadily increasing. A few major companies dominate the world market with their branded products. Is it the goal of globalization that young people should be able to get drunk on Carlsberg regardless of whether they live in Norway, Sri Lanka or Malawi?

The old, saturated markets in the northern hemisphere, in Europe and North America, no longer hold out the promise of any significant growth. The alcohol industry is stagnating in those areas of the world where drinking has been most prevalent. Thus the alcohol companies are looking for promising new markets. They are basing their hopes on countries in the South, particularly on those countries where a new middle class is emerging from the worst problems linked to poverty. They want young people to spend their growing incomes on becoming part of the global alcohol culture – an alcohol culture that is exporting the binge drinking habits of Northern Europe.

Local, traditional beverages

It’s not that alcohol didn’t exist in the so-called developing countries before Carlsberg, Heineken, Smirnoff and Bacardi became part of the vocabulary. Arrack, Kassipu and Chibuku are among the alcoholic beverages that could be found in India, Sri Lanka and Malawi. However, many of the local producers and local beverages have also been taken over by the multinational companies. The small-scale local production that was a part of the bartering system or that contributed to the local economy is disappearing. Most alcohol production has been industrialized, be it local products, local variants of western types of beer and liquor, or global brands. Alcohol is destroying the local economy while benefiting a global large-scale economy and increasing profitability for the major industrial concerns.

The spread of these industrial corporations to every corner of the world and the growth of the biggest corporations have increased at enormous speed during the past 10-20 years. Large industrial corporations are buying smaller companies and the companies are buying one another. This consolidation of the industry is strongest in the beer and spirits sector, less in the wine sector.

The FORUT/GAPA booklet "The Promise of Youth" gives a picture of how the alcohol industry is targeting young people in developing societies with examples from Sri lanka, India and Malawi. Written by Ingvar Midthun.

"The Promise of Youth" can be downloaded here (pdf 2,2 Mb).

Hard copies of the English and the Norwegian versions ("Ung og lovende") can be ordered free of charge here: add@forut.no

The beer giants

Since 1997 the ten largest brewery groups’ share of the world market for beer has grown from around a third to 64 per cent in 2004. In 1989 the five biggest brewery groups had 17 per cent of the world’s beer sales, but by 2004 this share had increased to almost 50 per cent. The size can be calculated from sales, production figures or greatest geographical spread. At any rate the five largest beer companies are: Anheuser Busch, Inbev, SABMiller, Heineken, and Carlsberg.

The liquor giants

The global liquor brands have almost half (46%) of the market. 58% of this comes from the ten biggest companies. The companies often have names that have arisen as a result of mergers or changes or names that link them historically to some of their many brands.

The so-called emerging markets are becoming markets for globalized brands supported by massive lifestyle-oriented marketing, as well as for these companies’ local brands. Marketing aims at building identification between the consumer and the branded product. In addition to advertising on posters, in newspapers, magazines and on Radio and TV, a lot of marketing goes through other channels, such as sponsorship of sports and music, use of the Internet, clothing and other products using logos, product placement in films and TV series, as well as in the form of packaging and presentation at sales outlets.

Both the beer and liquor giants focus on winning young consumers by linking their products to sports and music, through sponsorship and by having attractive Internet pages. Budweiser, the world’s largest beer brand, is so eager to sponsor sports that they challenged local legislation during both the World Football Championships in France, without success, and the Olympic Games in Salt Lake City, with greater success. Carlsberg would like to be “part of the game” by sponsorship of Liverpool and of the European Cup in football. In Southeast Asia Carlsberg has also made its mark by linking up with music by sponsoring concerts, and is circumventing limitations on advertising by establishing Carlsberg Hot Trax music stores. The Heineken owned Amstel brand sponsors the UEFA Champions League. Heineken offers its customers a virtual bar on the Internet.

Concentrating on new markets

An inspection of the companies’ Internet pages reveals that most of them are concentrating on alcohol as their core area. They wish to be seen as global brands and are concentrating efforts on emerging markets in developing countries. Thus they are focusing on identifying countries experiencing economic growth. Further, they are working through their industry organizations, often receiving assistance from the authorities in their home countries, to support all initiatives aimed at free trade. Some methods include lobbying in the World Trade Organization (WTO) and challenging legislation preventing their expansion. Joint ventures or acquisition of competitors and of local producers, both to take over local brands and to market global brands, are also common. In the countries focused on in this booklet Carlsberg has an overwhelming market share in Malawi. They are also market leader in the premium beer segment in Sri Lanka, where they are part-owners of Lion Beer, which has an 80% market share of beer sales. In India the UB Group is the leading producer of alcohol for both beer and liquor. Kingfisher beer has a 29 per cent market share in India.