Guinness: how can the iconic Irish beer brand compensate for declining sales in the home market?

Beer is an alcoholic beverage made by brewing and fermenting cereals, especially malted barley, usually with the addition of hops as a flavouring agent and stabilizer. One of the oldest of alcoholic beverages (there is archaeological evidence dating to c. 3000 bc), beer was well known in ancient Egypt, where it may have been made from bread. At first brewed chiefly in households and monasteries, it became a commercial product in late medieval times and is now made by large-scale manufacture in almost every industrialized country. Although British, European and American beers can differ markedly in flavour and content, the brewing processes are similar. A mash, prepared from crushed malt (usually barley), water and, often, cereal adjuncts such as rice and corn, is heated and rotated in the mash tun to dissolve the solids and permit the malt enzymes to convert the starch into sugar. The solution, called wort, is drained into a copper vessel, where it is boiled with the hops (which provide beer with its bitter flavour), then run off for cooling and settling. After cooling, it is transferred to fermenting vessels where yeast is added, converting the sugar into alcohol. Modern beers contain about 3-6 per cent alcohol. After brewing, the beer is usually a finished product. At this point the beer is kegged, casked, bottled or canned. Beers fall into two broad categories: Lighter beer (lagers). Lagers use yeast that ferments more slowly at cooler temperatures and tends to settle, and they are aged at cold temperatures for weeks or months, hence the name (german, lager = storage place). Lagers are the most commonly consumed beer in the world, with brands like Budweiser, Heineken, Fosters, Carlsberg, Beck's, Carling, Kronenbourg and stella artois. Darker beer. Included in this broad category are ales, stouts and porters. stouts (and porters) are dark beers made using roasted malts or roast barley. Porter is a strong and dark beer brewed with the addition of roasted malt to give flavour and colour. stout (today more or etc.

QUESTIONS

As an international marketing consultant, you are asked to give an independent assessment of guinness's opportunities in the world beer market. You are specifically asked the following questions:

1. How would you explain the guinness pricing strategy and the underlying assumptions about consumer behaviour when Diageo reports for 2005 that in the uK and ireland guinness sales volume fell by 3 per cent, but a value growth of 4 per cent was achieved in both markets, mainly due to price increases?

2. Motivated by the success of this pricing strategy, should diageo continue to increase the price of guinness?

3. in Choueke (2006), an anonymous beer retail buyer comments on guinness's decreasing sales volume: Guinness has an older profile of drinker and with an ever-increasing availability of continental lagers and a fast-growing range of alcopops, the younger generation of drinkers simply haven't bought into it. Innovation - widgets and gadgets - will keep the brand alive for a while but where else can Diageo go? Flavoured Guinness? No thanks. It is in decline and Diageo's best minds can't do much about it. The brand may have only a couple of decades' worth of life in it and I would milk it for everything before getting rid of it and concentrating on spirits. Do you agree with this statement? Explain your reasons.

4. What elements of the guinness international marketing strategy would you focus on in order to increase both global sales volume, value and profits? 5. What do you think about the '1759' marketing idea? should guinness introduce more special edition beer brands with a limited lifetime for special occasions or as a gift product?