CERJUGO SA
Background
Cerjugo SA is the largest manufacturer and distributor of beer in a country in Latin America.* Started in 1960, Cerjugo currently sells 360 million bottles of beer annually with revenues last year in excess of $200 million. Cerjugo employs 2500 employees and its four beer brands account for 98 percent of the market share. The beer manufacturer has been growing steadily with the GDP of the country thanks to little competition and no new entrants in the market. Cerjugo has its own distribution fleet and manufacturing facility, its entire customer base is local, and customers are loyal to the flagship brand. Per capita beer consumption in the country had been stable for many years. In order to find new opportunities
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He is in charge of four departments, each headed up by a senior manager. These departments are distribution, trade marketing, market research, and sales. The sales department, which has 1400 employees, is further divided into urban sales and rural sales, and there are 13 rural sales managers reporting to the head of rural sales. Each sales representative serves a territory that usually consists of both licensed and non-licensed establishments. They supply retailers with product information and storefront displays. They also offer discounts and promotions, where appropriate, in an attempt to win limited retailer shelf space. A partial organization chart is shown in Exhibit A.
The Current Situation
Manuel is very concerned since the forecasted sales and profit targets for the juice business have not been met for the second year in a row. Perceptions in the market are that Cerjugo juice is not of a high quality, and consumers do not appear to be aware of the degree of “freshness” in the products. In addition, the sales force does not seem to fully understand the juice product attributes and tends to focus on selling beer rather than juice products. Turnover in the sales force has increased dramatically and there has been a great deal of in-fighting between Jose, Feliz, and Maria. They always seem to be at opposing ends of an issue and Manuel has to make decisions that inevitably angers one or other of them. The last straw
From the assigned reading it becomes clear that there are a number of symptoms which suggest that beverage manufacturer and distributer Cerjugo SA is a company in crisis. The main signal that Cerjugo is not living up to its expectations is that its forecasted sales and profit targets, for its juice division, have not been met for two consecutive years this is especially troubling for a company which in the past boasted a 98% share of the beer market in Latin America. Beyond the lack luster sales numbers there are many other symptoms that Cerjugo’s juice division is ailing, such as reports that potential customers are not aware of the
The sales person along with the CEO are responsible for bringing in new business and the administrative assistant is responsible for processing payroll, accounting functions and providing general administrative support. All other employees are hired on a contractual basis and are always billable to one or multiple clients. The recruiting and labor strategy for this company allows for low over head costs and high productivity. They strive to hire mid-senior level individuals that have the ability to please the clients they serve and support internal functions when needed. Everyone who is hired has to be a team player and be able to work toward the companies goals.
distributors, brewers and retailers. A change suggested in Grolsch’s historic strategy is not to adapt the market completely in this case because it is an industry that gives importance to the country-of-origin. Markets Targeted: South Africa: Monopoly Market, No.1 SABMiller (Market Share: 98%) Brazil: Occupied by major Brewery Groups. China: Competitive Market. How to Compete: South Africa Brazil China Additional Line with SABMiller Co-Promotion with SABMiller
Political –Governments tend to exercise significant control over beer as it contains alcohol which has caused many problems in society and has addicted people. This attention from the government will affect Heineken in sale volume in the market. Many governments have imposed heavy taxes on liquor and beer imports, and with globalisation many brewers are looking for new markets where they can gain maximal profits. This proves to be a threat for Heineken. Heineken must conduct thorough research on countries policies on alcohol such as drinking in public, alcohol contents in drinks, legal drinking ages and must strategically plan their integration into these markets based on the research.
Antigua already had a successful brewery that produced Tigua beer, a popular brand in Antigua and throughout the eastern Caribbean. In 2000, the Antiguan brewery had negotiated a 15-year income tax holiday with the government of Antigua on income earned from sales of Tigua beer. The combination of the central location of Antigua in the eastern Caribbean, the success of the Tigua beer line, and the tax concession on Tigua beer made Antigua a good choice for Gera International; it purchased 75% of the Antiguan brewery, Caribbean Brewers Inc., in 2005. The remaining 25% of the common shares of Caribbean Brewers remained held by senior management and other employees. Caribbean Brewers is one of the many subsidiaries of varying sizes under Gera International’s control. The production facilities of Caribbean Brewers were expanded in 2008, thereby effectively doubling the productive capacity. This expansion was funded through a 10-year amortized loan from Gera International at a fixed interest rate of 10%. All of the production of Gera beer for the eastern Caribbean region was transferred to Caribbean Brewers after the plant expansion. The resulting production figures for Caribbean Brewers are provided in Figure 1.
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James Sprague is the newly appointed district sales manager for the northeast. Upon arriving he had dinner with Hank Carver and John Follet, two senior sales representatives, and discussed his plans to review the company’s data prepared by the national sales manager and better the area’s profits. Carver, the most experience sales representative, took offense to analysis saying that his 34 years of experience obviously does not count for anything, and threatened to leave and go to a competitor. His district has a large number of potential accounts that are not being utilized. The sales by account and gross profit of the northeast
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