final, boston beer co inc., in japan
TRANSCRIPT
Boston Beer Co Inc. Entering Japanese Market,
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Erica Basile
Analysis of Boston Beer Co Inc. Entering Japanese Market
March 30, 2015
ADV6405: University of Florida
Boston Beer Co Inc. Entering Japanese Market,
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Product and Market Situation
Company Products and Market: The Boston Beer Co Inc. is the sixth largest beer brewery in the
United States, and is the largest American-owned independent brewery. Their product Samuel
Adams has been the third largest Better Beer Brand for over five years. In the year 2009,
Boston Beer Co Inc. reached the 2 million barrel production cutoff, which means in the brewery
market they are considered mass-produced. The company’s products are positioned to compete
with other nationally popular Craft beers. The current market is also heavily saturated with
many of other brewery companies that offer the same type of beer at for the same price.
Although Samuel Adams is now starting to be sold in other countries, there is still no company
subsidiaries established outside the United States borders.
Current Advantages of Marketplace: Boston Beer Co Inc. is constantly reinventing themselves
by not only making new flavors of traditional beer, nut also creates new flavors in other types of
malt beverages. This type of versatility and innovation will take this company far in the national
marketplace. Further advantages of the company’s current marketplace, which includes the
brewery starting to sell around the world; they now have the opportunity to really expand their
business across borders where there is less brewery company saturation in the national
marketplace. They have already seen profits from investing in and opening new subsidiaries
within the United States. I see a great opportunity in capitalizing on the company’s expanding
market, and would like to see the company expand to outside countries, including Japan.
Company Goals for Future National Expansion: The company’s goals in the future are to further
expand their business, which is why they have been opening more subsidiaries in the United
States. Expanding their company across national borders will lead to higher profits, especially
within national markets with little American-brewed beer company saturation. The company’s
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long-term goal is to be the national number one crafted beer company in the world. Boston Beer
Company would like to further their popularity into national waters, and have American owned
beer brewed, distributed, and sold internationally starting with Japan. The company wants its
brand to be known and easily remembered throughout the world; and to be well known as an
outstanding, handcrafted, American beer-making brewery.
Competitive Trends Affecting Company Currently: Craft beer is a competitive industry for a
brewery to compete in, which includes many very popular national brands. These other brands
sold in the United States are priced similarly as Samuel Adams, increasing this competition. The
graph below depicts the company’s biggest competition within the United States Market:
SAM BUD TAP HOOK Industry
Market Cap: 793.34M 77.95B 9.16B 43.20M 8.19B
Employees: 780 116,489 14,350 N/A 14.35K
Qtrly Rev Growth (yoy): 3.30% 11.50% 11.1% 3.20% 16.10%
Revenue (ttm): 415.05M 36.76B 3.03B 123.11M 3.03B
Gross Margin (ttm): 51.52% 53.21% 43.05% 22.93% 51.52%
EBITDA (ttm): 72.24M 12.72B 592.10M 10.36M 592.10M
Oper Margins (ttm): 13.33% 27.30% 13.35% 2.47% 15.20%
Net Income (ttm): 31.12M 4.61B 729.40M 887.00K N/A
EPS (ttm): 2.168 2.896 3.875 0.052 2.17
P/E (ttm): 26.10 16.92 11.36 48.65 26.48
PEG (5 yr expected): 1.65 N/A 0.89 N/A 0.89
P/S (ttm): 1.94 2.13 2.70 0.36 1.94
BUD = Anheuser-Busch InBev
TAP = Molson Coors Brewing Co.
Industry = Beverages - Brewers
HOOK = Craft Brewers Alliance, Inc.
Economic Standpoint: Boston Beer Co. Inc.’s economic standpoint between 2006 and 2009:
2009 2008 2007 2006
EPS 2.17 0.56 1.53 1.27
P/E 21.50 50.34 24.61 28.43
Boston Beer Co Inc. Entering Japanese Market,
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Market Data
Market Cap $804.69M Total assets $263M Profit Margin 7.5%
Most categories seem to be slowly increasing, which means more shareholders are
investing and receiving higher profits. Debt seems to be slowly decreasing, which is good for
hopes of expanding in the future. High competition within an American market is negative for
the company in the United States, but there are many countries outside of the U.S. that do not
have nearly as much industry competition. Populations from foreign countries will be interested
in the American brand because they most likely do not have many other choices in their home
country like it.
Stock prices have also been rising over the years, which also allow higher company
profits and debt elimination. A review of gathered data provides results showing that the
Price/Tangible Book 3.87 2.88 4.04 4.78
Price/EBITDA 9.06 8.00 11.83 15.79
ROE 19.9% 5.9% 18.6% 18.7%
Debt/Assets 0.28 0.31 0.30 0.27
Current Ratio 1.5 1.0 2.3 2.9
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company is in a fairly well economic state. Therefore it can be concluded that it is a prime time
for the company to expand into outside countries. Since the company currently has a decreasing
debt and an increasing number of shareholders, people will be more willing to invest in the
company’s national expansion.
Product Analysis in Relation to Culture: The consumer need Boston Brewing Co. products
satisfy is the American populations desire to consume better beer beverages as craft beers. A
large population of the American culture chooses to unwind at the end of the day with an ice-
cold beer, which is a perfect consumer market for Boston beer Co. The Japanese culture is very
similar to the United States in this cultural aspect of drinking beer socially and to unwind at
home after work. Compared to other Asian cultures (like China, Korea, and Taiwan) Japan, as a
culture group tends to drink more often.
Communication Analysis: According to an article found on the Advertising Age website
describes current marketing strategies for their famous product Samuel Adams Boston Lager.
Their marketing campaign is labeled “Growing Up Small” where messages of traditional small
time American brewed messages are portrayed. Their current marketing strategies are very
different from strategies of competing craft beer companies who claim they are nationally
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known. The Sam Adams marketing team decided to go a different route and amplify the fact that
their beer is not mainstream. Many of the current television commercials for Sam Adams
portray normal everyday Americans being asked interview style questions about their guesses of
company’s stock share, or how many different beers they produce. They show the people being
interviewed guessing wrong, pointing out the misconceptions about the beer. It seems to be an
increasing trend in America to sometimes rebel against the mainstream and go back to
traditional, well-made beer. There are also many images of the beer being made from natural
ingredients, and the mood during the whole commercial is very laid back, and relaxing.
American cultural values associated with the company’s marketing messages are
traditional values of American products being well made. Another cultural American value their
media reflects is the value of family members and friends wanting to unwind with a beer at the
end of the day; or maybe instead going out with friends to drink a beer and relax.
Host Country General Analysis
General Country Information: Japan is made up of more than 6800 islands, four of them making
up more than 99% of the total country. Japan’s population last counted in 2010 was 128 million
people, which is the tenth highest population amount in the world. Japan also has one of the
largest life expectancies in the world. This means companies wanting to break into this Japanese
market will have a large population of consumers to sell to. Japan is a very urbanized country,
86% of its population are cities. Unfortunately, Japan is also known for the many natural
disasters that have devastated their nation in past years. Japan is also considered a
homogeneous culture with many traditional values, but with religious freedoms.
General Economic Environment: Japan is considered a free market, is a member of the UN, and
considered a developed country with major economic power. Japan is the world’s third largest
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economy in reference to GDP. They are one of the world’s largest importers and exporters of
goods, therefore well established in national business. Japan is very well known for exporting
cars, and importing fossils fuels. Their economy thus far does not have a large percentage of
beer being imported and exported. The population of Japan is also considered to have a
medium-income rate, which means more spending money for the population. Minimum wage is
$11 in Japan, which is one of the highest in the world.
General Political Environment: After World War II came to an end in 1945 after the atomic
bombings of Hiroshima and Nagasaki, Japan adopted a revised version of their constitution in
1947. Since then, Japan has maintained a unitary constitutional monarchy with an emperor and
an elected legislature called the National Diet. The emperor Akihito and his follows must adhere
to the laws within the constitution. The Liberal Democratic party within the National Diet has
contained the majority of the votes since 1955. The Japanese legal system is influenced by
Chinese Law, which is based in Confusion philosophy of social control.
Government Policies for Advertisement Regulation: According to Japanese culture, Japanese
government usually prefers the influence of local firms when it comes to foreign businesses
migrating into their country. Government written policies do not always necessarily enforce this
view, but authority figures rather use broad discretionary power to utilize these policies.
Japanese authority also prefers to have many consultations with company officials in order to be
able to successfully regulate joint ventures. There are increasing amounts of foreign businesses
starting in Japan, and therefore many of these regulations are beginning to loosen.
Japanese advertisers stay away from comparative types of advertising, like many
advertisements are in the United States. Alcohol advertisements are allowed, but are not
permitted during children’s programs. The message “Drinking is accepted for those over 20
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years” has to be included in every alcohol advertisement broadcasted. Foreign advertising is
permitted in Japan as long as the advertisement includes some Japanese language. *In order to
successfully adhere to the advertising rules and regulations involved with Japan, the Boston Beer
Co Inc. must make sure they put the proper drinking age message within their advertisements,
translate their advertisements to Japanese, stay away from comparative sale promotion marketing
strategies, and make sure their advertisements are aired during age appropriate times.
Socio-Cultural Environment:
Language: Japanese
Religion: The two main religions involved within Japan are Shinto and Buddhism. Shinto
originated in Japan and Buddhism migrated from India. Religious values are portrayed through
Japanese advertising by being modest and non-offensive.
Social Stratification of Culture: Japan mixes both traditional and currently increasing
contemporary social systems for class hierarchy. On the traditional side, Japan bases societal
hierarchy on societal roles and family roles. Males still tend to contain the dominant role
positions. Looking at Japan through a contemporary lens, you can see Japan becoming
increasingly more industrialized/urbanized do to accelerating foreign interests.
Opinion Leaders for Japan: Japanese official leaders and government are certainly considered in
Japan important influential people for their society. Japan is considered a collectivist culture;
therefore they consider the feelings of the collective group. For a younger Japanese generation,
Western popular culture figures are becoming increasingly influential, which can benefit the
American born brewery within their culture.
Educational System: Although it is well known Japanese students test well nationally in math
and science, it is lesser known that the Japanese educational system has lately gone under
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reforms in order to improve its systems. Teachers hold a high status within Japanese culture;
therefore they have an abundance of ambitious well-educated teachers. Japan also has a high
literacy rate, which means a large portion of its population can understand media messages.
Japanese students are usually known for being highly motivated, very rarely are held back a
grade, or miss school.
Most Important and Valued Sub-Cultures: In general, within the Japanese people is a value of
the community/group over individual desires. Japanese culture also highly values their elderly,
and care about their opinions as well as keeping his or her relationships with their elders.
Japan According to Hofstede’s Variables:
Power Distance Index: Japan scores moderately high on power distance index due to the
importance and value of hierarchal positions.
Collectivist: Japanese culture highly values the opinions of, and relationships with, the
group as a whole.
Uncertainty Avoidance Index: Japanese culture would be considered on this index high
uncertainty avoidance due to their general desire to avoid conflicts and confrontations. They
would rather preserve their relationship, than be involved in conflict.
Masculinity: Japan is considered a masculine cultural because they value
competitiveness and assertiveness (only on a group level) rather than relationships and quality of
life.
Advertising Agency Environment: The intensity of competition within the Japanese business
world is high. Competition is based on collective desires for the community rather than
individualistic. People within Japanese culture tend to push each other in the business world in
order to produce superior results. Japan has been advertising since 1955, and has a long
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successful history in doing so. A self-regulatory system for advertising was set in place for
Japan in 1973. The largest marketing company currently in Japan is an agency called Dentsu,
and maintains top share status in the country.
Media Availability: Japan being a developed country reflects similar advertising mediums here
in the United States. Japan hold’s the world’s second largest media market, where the United
States is number one. Japan also spends large dollar amounts on advertising, which is also
similar to the United States. Newspapers are another very popular source for media in Japan,
especially since they have such a high literacy rates. This could potentially be a good thing for
The Boston Beer Co., because print advertising is more expensive than television
advertisements. Right behind the popularity of newspaper media is the use of Internet
advertising, especially with Japan having an increasing rate of technology. Many Japanese
advertising agencies choose to use strategies including large promotional budgets, direct
marketing, and event sponsorship. All of these strategies come together to create stronger
business relationships, and may offer different avenues of advertising to try for the Boston Beer
Company. Japan’s advertising is also self-regulated by the Japanese Fair Trade Commission,
and there is little state monopoly on their media. Because of the country’s high level of
development, there are affluent amounts of researchable data referring to the marketing
environment in Japan.
Suggested Market Entry Strategy: Boston Beer Co Inc. has already stepped one foot into the
Japanese market by exporting a few of their beer products to be sold in the country. If Japan
really intends to be successful in the Japanese market, they will consider a joint venture due to
the Japanese valuing some control over business and building relationships. Also, marketing can
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be very expensive in Japan, so it would benefit the American company to have help covering the
costs.
Creative Brief
Why Advertise in Japan?: The American advertising market is becoming extremely saturated
with similar craft beer companies. Despite the heavy competition, the American company is still
profiting, but who knows for how long. Japan is an excellent market for this beer company
because they share the same Western society value of relaxing with a beer. According to the
Japanese surveys, beer is the most common alcoholic beverage consumed in Japan; and they
drink more beer than surrounding Asian countries. The Boston Beer Co. portrays messages of
valuing tradition, which is a similar value in Japanese culture. The Boston Beer Co. has a real
advertising opportunity to build lasting relationships with Japanese consumers through media
strategies. Japanese consumers of this beer after viewing and experiencing the Samuel Adams
products should feel a loyalty and bond with the American company who similarly values
tradition.
Target Audience: The Boston Beer Co. target audience in Japan would be men and women,
middle class working force, between the ages of 20-50. The younger portion of this group is
similar to the youth population in the United States. They value bonding over drinking with
friends during social settings. The younger generations throughout many different countries are
seen as having many similar interests and hobbies cross-culturally. The older part of the
company’s target audience instead values drinking beer at home, while spending time with
family. This middle class audience should also be able to easily afford the cost of the crafted
beer. This creates a perfect opportunity for the American company in this Japanese market.
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Direct Advertising Competition in Japan: The four major beer producer in Japan are Asahi,
Kirin, Sapporo, and Suntory; which all produce mainly pale-colored light lagers, and other types
of lighter, bubblier malt beverages. This is very different from the recipes involved in Samuel
Adams products, which craft beers tend to be from medium to dark. This means there is very
little competition for this type and flavor of craft beer. This pairs well with the increasing
Japanese interest since the 1990’s in American craft beers. More and more American beers are
being important into Japan; therefore Boston Beer Co. would have a wide audience of interested
consumers to market to.
Creative Marketing Strategies and Brand Image: The goal of Boston Beer Co Inc.’s marketing
strategies is to establish itself within the Japanese beer market as the official traditional
American-made beer. When Japanese think of American-crafted beer, they will instantly think
of Samuel Adams; which was created in one of the oldest traditional American cities. Boston is
filled with rich historical American tradition that can be exposed to a willing Japanese culture. I
believe this traditional American brand image, mixed with the company being a part of a joint
venture with Japanese representatives and using some localization marketing strategies, will
create a positive message of harmony between the United States and Japan.
I would advise the Boston Beer Co. to use many of the same logos and visuals because
Japan is already somewhat successful within the culture. I would further my marketing
strategies to become a mixture of localization and globalization strategies. It is important the
Samuel Adams brand keeps its brand image of traditional American values, but also combines
this with the company’s willingness to adapt to Japanese culture. Specializing marketing
messages includes tailoring advertisements to reflect more collectivist and traditional views,
rather than individualizing and comparative advertisements the company has used in the past.
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The Japanese culture is more interested in the feelings and experiences one has while using a
product. With this in mind, media strategies should reflect positive, relaxing, family oriented
experiences one will have while drinking Samuel Adams products. Samuel Adams already has
created Japanese inspired beverages, but I would encourage them to create more special recipes
that reflect traditional Japanese beverages. This way, Japanese consumers have the option of
traditional American beer or experience beverages that reflect tastes they are already use to. This
combination of globalization and localization is bound to have great success within Japanese
consumers.
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References:
Frost, A. (2013, February 28). Japanese Culture and Hofstede’s Five Dimensions. Retrieved
March 1, 2015, from http://restaurantkyoto.dk/blog/en/japanese-culture/ Inews. (n.d.). Asian Market Research Gathering - InterfaceASIA. Retrieved March 1, 2015, from
http://www.interfaceasia.com/i-news/news_58.html
Masai, Y. (2014, December 15). The role of government. Retrieved March 1, 2015, from http://www.britannica.com/EBchecked/topic/300531/Japan/23256/The-role-of-government
Mullman, J. (2010, April 1). Sam Adams Wants to Show You Just How Small It Really Is.
Retrieved March 1, 2015, from http://adage.com/article/news/sam-adams-show-small/143086/
NCEE » Japan. (2012, January 1). Retrieved March 1, 2015, from http://www.ncee.org/programs-affiliates/center-on-international-education-
benchmarking/top-performing-countries/japan-overview/ Publicitas a leading international Media Sales company. (n.d.). Retrieved March 1, 2015, from
http://www.publicitas.com/en/global/services/useful-tools/international-ad-rules/
Taylor, C., & Raymond, M. (2000). An Analysis Of Product Category Restrictions In Advertising In Four Major East Asian Markets. International Marketing Review, 287-304.