In the future, the operational excellence that enables them to scale these strengths so successfully, especially in high-potential emerging markets, will be more important than ever.
Accenture High Performance Business Research methodology1 has been enhanced to take better account of positioning for the future. Our recent analysis of the alcoholic beverages industry, which will be refreshed regularly, covers the period 2011 to 2014.
The Future Outlook
Over the next five years, growth in both beer and spirits is expected to decelerate dramatically in Europe, slow significantly in other developed markets—and soar in Asia Pacific, Latin America, the Middle East and Africa. Players that can overcome the great consumer trade down in mature markets by persuading shoppers to pay more for “lighter” alcohol in novel flavors that they can drink at home will be well placed to maximize value. In emerging markets, China, India and Indonesia offer strong growth opportunities, especially for premium spirits, while Africa’s taste for stout is expected to intensify. Incorporating local champions into a portfolio that caters to local needs at both ends of the affordability spectrum will be key to boosting market share. A challenging global economy means that robust cost control, tightly managed product portfolios and highly focused marketing campaigns will be essential in both types of market.
Industry Background
Alcoholic beverages have been through a period of intense consolidation. Spirits, which account for almost half of sector value, are almost as concentrated. As players struggle to digest recent acquisitions, the quest for operational excellence has assumed special significance.
In developed markets, cost conscious consumers continue to stay home—with adverse consequences for both premium sales, especially spirits, and the profitable on-trade distribution channel. Mounting taxes on alcohol pose an additional threat to the industry. In emerging markets, however, despite some shift toward local beverages and away from relatively expensive imports, premium sales (especially of whiskey) have remained buoyant. And increasingly affluent middleclass consumers continue to drive organic growth opportunities.
The High Performers
Against this background, high performers have been able to consistently increase revenues while maintaining strong profitability over a five-year period. They have also delivered higher returns on invested capital over both three and five years—a reflection of their higher levels of capital efficiency.
The Building Blocks of High Performance
These high performing companies owe their success to the mastery of three building blocks.
-
Market Focus & Position
The high performers have achieved strategic market leadership through a process of rigorous portfolio management that focuses on winning in both high-value developed markets and high-potential emerging markets, as well as in both premium and economy categories. They support The High
Performers this process—and fill strategic gaps in their portfolios—with a strategy of selective local acquisitions.