A strategic approach to beer distribution in a changing South African environment

Jurgens, Ben (Stellenbosch : Stellenbosch University, 2005-12)

Abstract

ENGLISH ABSTRACT: The study project investigates various approaches to the distribution of beer within a changing South African environment. The Eastern Cape Liquor Act (Act 10 of 2003) became operational on the 14th September 2004. Section 71 (6) to (10) provides for the temporary registration of shebeens for a period of 12 months. The aim of this legislation is to normalise the liquor retail industry. Instead of having sUbsistence illegal shebeens operating, the governments thrust is to assist shebeens converting to formal legitimised taverner businesses. Over 14000 temporary licenses were granted in the Eastern Cape area. The aim of these temporary licenses was to give shebeens 12 months in which to apply for a permanent license without harassment from the authorities. This now gave liquor suppliers like South African Breweries (SAB) the opportunity to deliver directly to these taverns thus shortening the traditional supply chain and reducing price margins. SAB has seen this change in the environment as a strategic opportunity. It has included market penetration as one of its key thrusts in its strategic 3 year business plan. Market penetration simply means assisting shebeens with their license applications, customer attraction through value adding sales and distribution service offerings, penetration through delivering beer to every licensed customer ordering 10 cases or more and the retention of these customers through the offering of a world class service. Through an extensive literature review and the ground breaking work completed at SAB, a five pillar market penetration model has been developed. These pillars include the completion of a market potential survey, the assistance with licensing, taverner training to ensure successful businesses, distribution penetration and lastly competitor analysis. The SAB Perseverance Depot in Port Elizabeth has been used over the last 10 months as a pilot site to test the market penetration strategic initiative. The impact on depot key performance indicators and cost are investigated based on different service offerings. Due to the delivery base more than doubling in 6 months, resource and capacity models are also introduced. All indications show that this market penetration strategic initiative is going to be SAB's future business model in South Africa. Stellenbosch University http://scholar.sun.ac.za

AFRIKAANSE OPSOMMING: Die studieveld bestudeer verskillende maniere om bier te versprei in 'n veranderende Suid Afrikaanse omgewing. Die Oos Kaapse Drank Wet (Wet 10 van 2003) is bekragtig op die 14 September 2004. Artikel 71 (6) to (10) laat dit toe vir 'n shebeen om 'n tydelike lisensie vir 12 maande te bekom. Die doel van die wetgewing is om die drank industrie te normaliseer. In plaas daarvan om onwettig te bestuur laat die regering toe vir shebeens om wettige tavernes te bedryf. Meer as 14000 tydelike lisensies is in die Oos Kaap uitgereik. Die doel van die tydelike lisensies was om 12 maande grasie te gee aan shebeens om aansoek te doen vir permanente lisensies sonder enige inmenging van die owerhede. Hierdie besluit het dit moontlik gemaak vir drank verskaffers so os Suid Afrikaanse Brouerye om direk by die shebeens af te lewer en dus die verskaffingsketting te verkort en prysmarges te verminder. SAB het die verandering in die omgewing as 'n strategiese moontlikheid aanvaar. Mark penetrasie is een van SAB se doelwitte soos gedefinieer in die 3 jaar besigheidsplan. Die doel van mark penetrasie is om shebeens met lisensie aansoeke te help, goeie verkoop en distribusie diens te offer, en om die kliente te behou deur 'n wereld klas diens te offer. SAB het na intensiewe studies die "pillar" mark penetrasie model ontwikkel. Hierdie pilare sluit in die mark potensiaal studie, die lisensie hulpverskaffing, taverne opleiding om suksesvolle besighede te verseker, distribusie penetrasie en laastens die studie van mededingers in die mark. Perseverance Depot in Port Elizabeth het die afgelope 10 maande intensief gewerk aan die strategiese doel. Die impak op die depot se sleutel prestasie-areas en kostes word gemeet teen verskillende dienslewerings opsies. Aangesien die kliente basis meer as verdubbel het oor die afgelope ses maande is daar verskeie hulpbron modelle in werking geplaas.

A Study Project presented to the Graduate School of Business of the University of Stellenbosch In partial fulfilment of the requirements for the degree of Master of Business Administration

Thesis (MBA)--Stellenbosch University, 2005.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/18186
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