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

ENGLISH ABSTRACT: The study project investigates various approaches to the distribution of beer within achanging 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 forthe temporary registration of shebeens for a period of 12 months. The aim of thislegislation is to normalise the liquor retail industry. Instead of having sUbsistenceillegal shebeens operating, the governments thrust is to assist shebeens convertingto formal legitimised taverner businesses. Over 14000 temporary licenses weregranted in the Eastern Cape area. The aim of these temporary licenses was to giveshebeens 12 months in which to apply for a permanent license without harassmentfrom the authorities. This now gave liquor suppliers like South African Breweries(SAB) the opportunity to deliver directly to these taverns thus shortening thetraditional supply chain and reducing price margins.SAB has seen this change in the environment as a strategic opportunity. It hasincluded market penetration as one of its key thrusts in its strategic 3 year businessplan. Market penetration simply means assisting shebeens with their licenseapplications, customer attraction through value adding sales and distribution serviceofferings, penetration through delivering beer to every licensed customer ordering 10cases or more and the retention of these customers through the offering of a worldclass service. Through an extensive literature review and the ground breaking workcompleted at SAB, a five pillar market penetration model has been developed. Thesepillars include the completion of a market potential survey, the assistance withlicensing, taverner training to ensure successful businesses, distribution penetrationand lastly competitor analysis.The SAB Perseverance Depot in Port Elizabeth has been used over the last 10months as a pilot site to test the market penetration strategic initiative. The impact ondepot key performance indicators and cost are investigated based on differentservice offerings. Due to the delivery base more than doubling in 6 months, resourceand capacity models are also introduced.All indications show that this market penetration strategic initiative is going to beSAB's future business model in South Africa.Stellenbosch University http://scholar.sun.ac.za