By Mark Ritson
Business Review Weekly
When SAB Miller launched its $12 billion cash bid for Foster’s in 2011 itcaused much disquiet both domestically and overseas.
Locals fretted that some of our great beer brands were about to fall into foreign hands.
Meanwhile, global investors in SAB were concerned that the global beer giant had significantly overpaid for a troubled operation in a mature beer market.
SAB justified its investment by pointing to three key “business enhancement areas” – industry speak for “how we are going to make our money back”.
The first two areas consisted of the usual suspects of cost-saving synergies and better revenue management.
But the third crucial element behind the transformation of Foster’s was what SAB termed “a better approach to consumers and brands”.
That last point rang true for many marketers here in Australia. For many years the word on the street was that Foster’s was a “branding basket case” and SAB’s due diligence and subsequent discovery confirmed much of those dark mutterings to be true.
Three months after arriving at Southbank in 2011, chief marketing officer for Foster’s, Andy Gibson, described to investors a cavalcade of branding errors that he had encountered on arrival.
Gibson, an Aussie clearly relishing the chance to fix some iconic Australian brands, explained that he had encountered a portfolio that was very poorly positioned.
Many of the Foster’s brands overlapped each other, thereby targeting the same segments. Foster’s was effectively competing with itself, on price, because of its messy and unclear portfolio.
Linked to that, Gibson also discovered that Foster’s brands were simply not that well positioned in the market.
The brands were not clear about what they stood for and were not able to communicate their identity to target consumers, a fatal flaw in the world of beverage marketing where brand equity is the difference between profit and loss.
To add insult to injury, Foster’s had compensated for the lack of appeal in the market with sales promotions that had been used to “prop up” fading market share.
Too many brands
It was a damning indictment of Foster’s but a commonplace one for corporate Australia. I could list another dozen big Australian companies that currently suffer from exactly the same malaise: too many brands.
An unclear, overlapping portfolio. A lack of clear brand positioning.
Overuse of price promotions to retain sales. A gradual and eventually fatal destruction of brand equity. And a glaring lack of realisation at senior levels that any of this is going on.
Thanks to SAB Miller, however, Foster’s has been given something that most Australian brands lack – a CMO who is senior enough and capable enough to fix things.
Gibson and his marketing team at Foster’s began applying the SAB Miller Marketing Way back in 2011.
The process began with extensive market research. Second, a complete segmentation of the Australian beer market.
Third, the team decided where each of the Foster’s brands would be positioned and what each would stand for.
Clear positioning would then drive distinctive execution and integrated marketing activities and the whole process would culminate with brand tracking and consumer insights that fed the next planning cycle.
Eighteen months on from the acquisition and the Foster’s portfolio is starting to return to form. So far, the Australian media has only picked up on the successful revitalisation of VB and its resurrection as Australia’s best-selling beer.
If you read the brand-ignorant Aussie press, this return to form is simply because VB has restored its original ABV. They are missing the point.
The reason VB is growing market share for the first time in a decade is not just down to change in alcohol strength.
It’s because the team behind it know what they are doing and have made a raft of correct marketing choices, driven by insight and strong brand management, to resuscitate the brand.
That same excellence of brand management will also restore Carlton to its former glories and propel Crown to new heights too. Just give the SAB team a bit of time to get it all done.
And while you are waiting, get used to the idea that we are going to need foreign companies like SAB Miller to save our once-great brands. Ideally our own organisations would embrace brand strategy and compete with the foreign invaders.
But I gave up on that idea a long time ago. We lack the leadership, the know-how and the corporate culture to manage brands well.
So I regard the SAB story as an Australian branding success.
At least we have an Australian CMO managing great Australian brands well.
The fact he can only do that by working for a foreign company is just something we will all have to get used to. We will see a lot more of it in the future.