SWOT Analysis
Saku Brewery Company provides the best example of an organization that has gone
through a tremendous historical transformation since its establishment in 1820. The company has
recorded massive changes in a wide range of factors that have played a critical role in its overall
growth (Pierce and Mitchell 1). These factors are often summarized in the forms of a SWOT
analysis, which include strengths, weaknesses, opportunities, and threats that impact its overall
performance. Hence, the company’s SWOT analysis model is summarized below.
Table 1: Saku Brewery Company SWOT Analysis Model
Strengths
Enjoys a big market share in the domestic
beer industry. More than 65% of beer
drinkers had consumed its products over the
last 6 months. Control approximately 42.5%
of the market share.
Have a wide range and a broad variety of
beverages to meet customer’s changing
needs and preferences.
Enjoys a high brand loyalty with a positive
Weaknesses
Has a limited market share in the soft
drinks industry as a result of numerous
businesses and distraction from other
products, especially the beer.
Has never gained global recognition as
a result of failing to appeal to numerous
younger drinkers.
Relies on limited products.
Approximately 80% of its sales come
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association, including Carlsberg, Guinness,
and Kilkenny.
High quality products
from the domestic market.
Opportunities
Expand internationally by selling its
products in new markets, including Finland.
Can drive and increase sales by targeting
bars, hotels, and restaurants.
Introduction of energy drinks in the market.
Should develop a hard seltzer to reach the
young consumers.
Threats
Stiff competition from big brands such
as Tartu, which exclusively targets
Saku clients.
Probability of cannibalization of sales
as a result of targeting the Finish
market.
Imported beers are increasingly gaining
popularity.
An Examination of the Profit Margins and Financials of Every Saku Brewery Company’s
Products in their Portfolio
The following table offers a comprehensive outline of Saku Brewery Company’s
products’ growth rate, relative market share, and their corresponding annual sales in Euros.
Every product’s relative or comparative market share was determined by dividing their market
share with that of competitors, as illustrated below.
Product’s Relative Market Share = Its Market Share/Competitor’s Market Share
Table 2: Saku Brewery Company Profit Margins and Financials
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Type of Product The Rate of
Growth in the
Market in %
Relative/Compa
rative Market
Share
Annual Sales
in 2002
Annual Sales in
2003
Soft Drinks 5% 0.06 €1,138,000 €1,110,000
Imported Beer 12.5% 0.45 €688,000 €1,189,000
Cider 20% 1.20 €159,000 €943,000
Mineral Water 8% 0.65 €1,238,000 €1,381,000
Domestic Beer Less than 10% 1.22 €22, 581,000 €23,568,000
Long Drinks 30% 1.18 €690,000 €963,000
A comprehensive review of the case study revealed that Saku Brewery Company
recorded a 4.8% growth in revenue between 2002 and 2003, which led to the realization of total
revenue of 28,289,000 and 29,661,000 in the two year period, respectively (Pierce and Mitchell
3). The company’s gross margin for its domestic beers grew from 17.5% to 18.0% from 2002 to
2003 with a corresponding increase in its imported beers from 21.0% to 23.0% during the same
period. Saku’s ciders gross margin and long drinks also recorded a collective improvement from
23.0% to 25.0% while that of the mineral water declined from 8.5% to 8.0%. The gross margin
for the company’s soft drinks recorded a limited growth from 18.5% to 19.0% (Pierce and
Mitchell 5). Hence, the company can retain its best selling brands and drop those performing
dismally such as soft drinks and mineral water.
Saku Brewery Company BCG (Boston Consulting Group) Type Product Portfolio Analysis
The following figure illustrates the Saku Brewery Company’s BCG Matrix for its
corresponding products. This approach plays a vital role in positioning every product sold by the
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company via the comparison of their corresponding market growth rate and the associated
market share. This matrix is essential when planning and observing the overall potential growth
opportunities of every product sold by the company (Pierce and Mitchell 5). Every product’s
position on the matrix illustrates whether the company should invest, discontinue, or develop
new ones.
Saku Brewery Company BCG Matrix
High Low
High STARS
Long drinks
Kiss Cider
QUESTION MARKS
Imported Beer
Imported mineral water
Low CASH COWS
The company’s domestic beer
DOGS
Domestic Mineral water
Soft drinks
Relative Market Share
Recommendation
This section seeks to provide a comprehensive analysis of Saku Beverage Company’s
performance in the industry and develop an evidence-based product portfolio plan that they
should choose.
Products
A comprehensive analysis of Saku Beverage Company’s product portfolio played a vital
role in helping the research team to identify specific products that the company should retain and
those that ought to be dropped. Some of the products that should be retained include domestic
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beer, long drink, imported beer, and cider because they had a significant increase in their gross
margins (Pierce and Mitchell 8). Conversely, Saku Beverage Company’s management should
drop soft drinks and mineral water due to their decline in gross profit margin. This approach will
be essential in helping the company to attain its long-term strategic and financial goals, as
discussed in the case study.
Price
Saku Beverage Company’s should devise appropriate pricing strategies to attract and
retain more customers. A detailed review of the case study indicated that the company prices its
products comparatively close to its rivals at approximately €1.28 and retails its can at around
€1.02. Hence, the company should neither decrease nor increase these prices (Pierce and
Mitchell 13). Decreasing the cost of products will compel customers to associate them with low
quality while increasing them may inspire them to seek for alternative brands.
Advertisements and Promotions
The management of Saku Beverage Company has a critical role to play in ensuring that
their organization focuses exclusively on a wide range of promotional attributes of its products to
attain market sustainability. Hence, the company should hire influencers during concerts,
sporting events like soccer and hockey to promote their products (Pierce and Mitchell 15). Many
consumers tend to utilize products as a result of associating them with their celebrities. Lastly,
the company should use social media platforms, including Facebook and Instagram to attract
more customers.
Target Market Selection (Including Possibly Exporting to Finland)
It is increasingly becoming crucial for the Saku Beverage Company to identify and target
appropriate markets to grow its profitability and sales volume. Finland is one of the most vital
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markets that Saku Beverage Company’s sales team should target. Such markets have a wide
range of new customers that can help grow the company’s profitability.
Differentiation
Saku Beverage Company’s leadership should focus exclusively on promoting its products
across its target markets. Hence, identification of appropriate differentiation approaches can be
an essential step towards ensuring that the company sells unique and distinct items to rule out all
forms of competition in the market 9(Pierce and Mitchell 18). First, Saku Beverage Company
should focus on improving the quality, taste, and originality of its products as its main selling
points. Second, the company should use a wide range of cans that are unique in sizes and shapes
to attract customers. Lastly, Saku can focus exclusively on its tagline “brewing for you” to
transform consumers’ perception and value for its products.
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Works Cited
Pierce, Michael, R. and Mitchell, Jordan. Product portfolio planning at Estonia's Saku Brewery.
Richard Ivey School of Business: The University of Western Ontario, London, Ontario,
Canada. Harvard Business Review, October 17, 2005,
https://store.hbr.org/product/product-portfolio-planning-at-estonia-s-saku-
brewery/905A28 . Accessed on April 14, 2021.