Bundaberg Brewed Drinks - Case Study

Bundaberg Brewed Drinks (Bundaberg) has been delivering premium-crafted beverages from the town of Bundaberg in Queensland since 1960. The family-owned business has transformed itself from a small regional distributor to an iconic Australian brand, best known for its famous 'Bundaberg Ginger Beer'. Bundaberg's global business has tripled since 2006 making it the current largest Australian-owned soft drinks company and the fourth biggest in Australia overall behind foreign-owned Coca Cola, Schweppes and PepsiCo.

After continued success in the Australian market, Bundaberg turned its sights in the early 1990s to growing new markets in Asia. Bundaberg initially established itself in Singapore, which today is its largest Asian market, by focusing
 on Singapore's significant Australian expatriate community. Bundaberg then launched successfully in Hong Kong, Malaysia and Brunei. China was next on the list, with a 30 per cent annual growth rate in the Chinese food and beverage industry making the potential for success irresistible. "China presented a real opportunity for Bundaberg with a rapidly emerging middle-class, large disposable incomes and an increasing appetite for imported food and beverage products," says Bundaberg CEO John McLean. "However, what we learnt the hard way is that you really need to take your time."

"What we learnt the hard way is that you really need to take your time."
  • Don't rush, take your time with Asia. It is easy to rush into Asia to take advantage of the extensive growth opportunities. Bundaberg learnt that you need to explore and understand the market, while staying true to your values.
  • Find the right partner – do your research and choose carefully. Bundaberg uses a testing and sorting process to determine if a potential partner can develop the brand in the long-term, rather than just sell products short-term.
  • Build a successful partnership. Bundaberg responds to the different business cultures in Asia by setting clear expectations and objectives, while developing a strong relationship through guidance and support.
  • Don't bite off more than you can chew. It is important to have a clear and achievable entry strategy when considering Asia. Bundaberg segments markets and cities into zones, and only introduces a limited amount of products to avoid overwhelming consumers.
  • Build your own Asia Recipe. Tailoring your product for a long-term market presence is critical in Asia. Bundaberg is developing an 'Asian Brew' of its Ginger Beer and researching future unique products for Asian tastes.

Bundaberg entered the Chinese market in the early 2000s, taking on a local partner with limited research or preparation. The relationship quickly proved very one-sided, with Bundaberg unhappy with its partner's lack of transparency on sales, distribution and customer details. Different values, business ethics and a lack of control also raised concerns. Bundaberg had no input into product promotion and sales, or ability to manage quality or contribute to strategic direction; therefore they eventually terminated the partnership. At the same time, Bundaberg became increasingly aware of similar worries with its other partnerships in Asia. Its initial ad hoc approach to partnerships involved simply selling cartons of Ginger Beer to distributors throughout Asia to get the product into the region. No additional support was provided to partners such as help with branding or relationship-building. It was a basic purchase-order relationship with no product exclusivity. Challenges soon arose, with concerns about its partners' transparency as well
 as the impact of not having targeted market-entry strategies to take advantage of future growth opportunities. Bundaberg decided it needed to slow down and be more strategic. 'Go slow – it is harder to fix the mistake from rushing rather than making the right decision in the first place,' John advises.

Bundaberg's experiences demonstrate that entering Asia and building a strong presence comes with many challenges. The key to expanding into the Asian region is to understand the potential difficulties and adapt to the different modes of doing business. Having learnt from its mistakes in its initial attempt to enter China, Bundaberg is now focused on finding the right Chinese partner who meets its stringent selection criteria. Indeed, its increased knowledge of the complexities of the Chinese market has led Bundaberg to recognise that they might have several partners who will operate in the various regions across China, rather than simply one partnership.

This emphasis on growth extends beyond China. Bundaberg has recently secured partnerships in Indonesia and is in the process of finding partners in South Korea. Bundaberg is also increasing its product offerings in its existing markets of Singapore, Hong Kong, Brunei and Malaysia. Its Asian engagement will be an ongoing learning process, but with its commitment to going slow, understanding its markets, building strong partnerships, and tailoring its product to the region, Bundaberg aims to build on its success.

 

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