COMMENT: SABMiller - Czech out Frisco
Plzensky Prazdroj has launched a completely new RTD product.
Leading Czech brewer Plzensky Prazdroj is broadening its horizons with a new, low-alcoholic ready-to-drink beverage. This is a move away from the company's core beer producing activity, though it could well be a prosperous move since the RTD sector remains largely untapped in the Czech Republic.
Plzensky Prazdroj, part of SABMiller, has diversified its activities away from beer through its recent launch of Frisco, a low-alcoholic beverage with a lemon-apple flavor. Frisco is a combination of malt and fruit, similar to alcoholic apple cider. It is marketed as a competitor to wine and cocktails, or premium brand RTDs such as Smirnoff Ice and Bacardi Breezer. Frisco is therefore aimed at young women in their 20s, rather than Plzensky Prazdroj's traditional beer-drinking consumers.
Plzensky Prazdroj is known in the Czech Republic for its flagship beer, Pilsner Urquell, as well as high-growth beer brands Velkopopovicky Kozel and Gambrinus. The company is also the largest Czech beer exporter, selling to almost 50 countries worldwide. In 2003 Plzensky Prazdroj sold over 9m hectolitres of beer. The new RTD brand should help to expand the brewer's healthy sales growth, up 11% for the year to 31 March 31 to CK11.5 billion (€353.8m).
The ready-to-drink sector is starting to stagnate in markets such as the UK where leading alcohol brand owners have concentrated on the RTD segment for the last decade. However, in the Czech Republic and other central and eastern European markets, the RTD segment remains a largely untapped area for future growth. While overseas brands such as Smirnoff Ice and Bacardi Breezer are widely distributed in the Czech Republic, their premium prices have restricted sales growth. A locally-produced RTD brand, such as Frisco, should be able to offer a more reasonably-priced alternative to the premium brands, resulting in greater sales.
The key advantage of Plzensky Prazdroj's new product is that it will not draw beer-drinkers away from its current product offerings. On the flipside, however, the brewer will have to learn to target a completely new market - wine and cocktail drinkers - that, as yet, it has little experience with.
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