Kingfisher Beer Company Case Analysis Essay

Kingfisher Beer Company (KBC) has enjoyed being in top send in premium beer segment for the past fifty years and is now facing a potentially identitychanging repugn the traditional premium beer trade has been declining due to changes in consumer preferences at a compound annual cast of 4% and KBC for the first time is experiencing a decline in revenue, whilst a change in leadership infuses new energy to bring a change in their reaping line.Jake Hope, son of the retired president and owner of KBC faces the challenge of whether to introduce a light beer in a growing beer segment, as maintaining status-quo would no more be an option to sustain their existing position in market placeplace in the next few years (see queer 2). I recommend that Jake would go for the light beer product venture. The recommendation is found on a complex assessment of the guilds financial viability and of more qualitative reflections.Even if for the year 2007 (the case is restrictive for still a 2- year horizon quantitative analysis) projected Operating Margin does non reach levels KBC had enjoyed in prior years, it is positive and growing substantially. Growth from $599,734 to $2,205,235 ($1,605,601 in absolute growth) from 2006 to 2007 with adit of Light Beer versus of decline from $4,015,024 to $3,414,586 ($600,438 in absolute decline).If KBC result manage to reduce its lost sales of famous lager beer (due to market conditions in the premium beer market) from 20% to slightly lower levels then the company could bunk-even in 2 years (Exhibit 1). From the cases limited selective information it is still certain that introducing Light Beer and managing relatively moderate levels of cannibalization (20% or under Exhibit 3) of the Lager sales opens opportunities to increase the firms financials. Moreover, it is natural to capitalize on growing light beer market (4% annually) which also provide help fuel possible future expansion or to declare sustainability.According to market research, targeted segment where light beer drinking segment holds anti-big-business values, is already aware of the KBC brand so the firm can leverage on being independent family owned small regional company. In addition, the introduction of a new product willing eliminate the take a chance of being on a single product brand and reduce risk of being in an unfavorable position with regards to distributors who favor more product offerings. On the other hand the introduction of the light beer will have-to doe with the brand image, alienate core customers, and squeeze margins.In addition, it is most seeming the Company will not be able to sustain advert and distribution cost against bigger competitors (high entry barrier, competitors strong presence in light beer market). This will lead also to additional unwanted cannibalization of Lager sales and more uneven relationships with distributors and retailers. My recommendation rests on several assumptions (exhibit). The trace assumption is that the KBC will attain the 0. 25 market share to break even in 2007. Another assumption is that the light beer market will sustain its growth and consumer preferences will hold in the nearest future.