Hook Norton Brewery: History, Products, And Entry Into The Taiwanese Market - An Essay.

About Hook Norton Brewery

Hook Norton Brewery is an independent and passionate family business established in 1849 and based in Oxfordshire, UK. This organization has been brewing beer for six generations using old and new procedures to make different cask, bottled, and barrel beers for its consumers. Currently, the brewery has about 61 staff and 36 pubs in the local community and has an estimated revenue of £8.1 million by 2019, with total assets of about £15 million. Hook Norton Brewery provides alcoholic beverages based on three categories, keg beers, ciders, and cask ales (Hooky, 2021). Hook Norton is still in the initial domestic-internationalization activity phase despite its impressive performances because it operates in the only domestic market. Therefore, when a company has an online store, it is primarily used for local consumers. Although Hook Norton has a significant social media presence, it is still considered for gaining international customers. Its Red Rye beer has become an iconic beverage for its unique flavor and bottle design.

Hook Norton Brewery products have won numerous awards in the UK. For example, in some classic beers, Old Hooky 4.6% ABV won ten awards between 2009 and 2019, and Hooky 3.5% ABV won eight awards from 2010 to 2017 (Hook Norton Brewery. 2022). However, only UK customers can experience the nature and quality of Hook Norton products. Thus, Taiwan has been chosen as the most suitable destination to start international expansion on a multifaceted basis.

Hook Norton may be cautious of restrictions imposed by the Taiwanese government on foreign control of organizations in Taiwan. The government forbids foreign investment in several industries. The corruption is one of the concerns for any businesses, but corruption is not a significant barrier to doing business in Taiwan. The corruption score of 65 indicates that the government of Taiwan has worked hard to resolve minor corruption in significant businesses. However, corruption can be detected in politics and business that can affect business operations and license acquisition in Taiwan (Transparency Organisation, 2021).

Taiwan has been severely affected by economic tensions between the United States and China, while the Covid-19 outbreak has become a threat to the economic development of the nation. But Hook Norton Brewery will benefit from the fact that the inflation rate in Taiwan was low at -0.1% in 2020 but is projected to grow to 1.2 in 2022. In addition, disposable income of individual in Taiwan increased from 9256300 TWD Million in 2019 to 9532700 TWD Million in 2020. However, taxes have been imposed on foreign goods. In addition to the 5% VAT, there is a 72% excise tax on beer, the excise tax for fermented and distilled liquor are 30% and 72%, respectively (Buxton and Chen, 2021).

The country is significantly urbanized, with 60% of the populace living in cities. From 2012 to 2019, the disposable income of households in the country continues to increase. As a result, customers have expanded their preferences for premium and imported beverages, increasing foreign wine and alcohol shipments by $837 million (Buxton and Chen, 2021).

Hook Norton Brewery Products and Awards

Hook Norton will benefit significantly from the technological growth of Taiwan. The country has been designated as the fourth largest electronics manufacturer. This is also considered the future technology hub due to its high-tech excellence. The government of Taiwan has developed an industrial technology development program to assist in developing the technology (Eckhardt, Fang and Lee, 2017).

Hook Norton should be concerned about the different laws and legal instruments implemented by the Taiwanese government. For example, in 1997, the Statutes for Investment by Foreign Citizens (SIFN) was amended primarily to persuade foreign investment in Taiwan. However, the government has banned foreign investment that conflicts with public health in Taiwan (Chen et al., 2021). Alcohol production is primarily controlled under the Tobacco and Alcohol Administration Act.

The Taiwanese government has enacted an environmental protection tax that all companies have to pay. However, the government also provides tax deductions of around 50% for the expenditure that assists in protecting the environment, ensuring sustainable livelihoods, etc.

The barriers to entry into Taiwan's alcohol industry are comparatively low. Although the cost of entry is influenced by how fast the industry matures, overseas organizations are assisted by local representative agencies and foreign trade chambers. Therefore, it will enable it to quickly protect regional partners to perform as a representative or distributors for its businesses. The number of suppliers, including foreign retailers, like Costco and Carrefour, reduces the bargaining power of suppliers within this marketplace. Additionally, many convenience stores in Taiwan indicate a dense distribution network (Melewar and Skinner 2020).

However, the bargaining power of the consumers is relatively high. It is primarily due to customer loyalty towards specific brands, low alcohol tolerance, and numerous beer brands within the nation, which means that customers will only consume alcohol that can be efficiently metabolized. Taiwanese beer products compete with wine, spirits, and other alcoholic beverages. Instead, customers generally prefer innovative, local, and sweet flavors. Low-alcoholic and non-alcoholic beers have also risen because of health trends. Thus, competition with many foreign brands in the Taiwanese alcohol industry is significantly more difficult. As a result, beer prices are reasonable. To enter the Taiwanese market, Hook Norton has to compete with twelve locally recognized Taiwanese beer brands, which have been standing in the marketplace for a long time (The News Lens International Edition, 2016).

Although Taiwanese are increasingly leaning towards foreign alcoholic beverages, customers in the alcohol industry are more complex. The results of Porter's Five Forces show that these customers tend to sweet drinks, are reliable to particular brands and have lower alcohol acceptance. So, the company should consider such aspects in its promotion tactic.

There are four kinds of market segmentation: geographical, behavioral, demographic, and psychological. However, demographic is the most suitable segmentation approach for Hook Norton Brewery in the alcohol industry in Taiwan. This segmentation strategy is applied to the selected target market based on material status, age, gender, level of education and income. In Taiwan, young customers (between the ages of 20 and 40) primarily consume pizza, burgers, bread, grills, and other Western foods. In terms of food-related lifestyle, Mersol and Luo (2018) mentioned that older people in Taiwan (45 years or older) prefer traditional and local drinks and foods over the younger generation (between the ages of 20 and 35), who have a tremendous passion for Western lifestyle and food. Furthermore, Anderson et al. (2018) explored that the younger generation is smarter and more adventurous when eating new products. Jernigan and Ross (2020) further showed that the younger generation in Taiwan prefers Western food sold in fast-food chains. Thus, the results demonstrate that the younger generation (20- to 40-year-old customers) is the most suitable target for Hook Norton's Red Rye Beer.

Hook Norton Brewery's International Expansion Plans

Hook Norton needs to consider various aspects.  First, customers in Taiwan are loyal to a specific brand that means foremost brands are expected to govern the marketplace. Second, customers are more price-conscious that means that a brand that increases its price is expected to lose buyers quickly. According to these behavior characteristics of Taiwanese customers, Hook Norton must target its customers based on demographic characteristic. For example, the organization must target those customers amid the ages of 20 and 40 because they are a group of customers who can be more adventurous and may not be price-conscious about foreign products (Jernigan and Ross, 2020).

Hook Norton is positioned as an easy-to-drink and fresh beer with a solid pleasure (alcohol proportion above 8%). Hook Norton strives to attract the 20–35-year-old population because this consumer age bracket is highly impressionable and health-conscious. They are excited to share their passions and concerns and are the most active social media. Hence, the organization targets young people concentrated in major cities with high-income levels and a fun and happy lifestyle. An attempt has been made in communication to connect with the modern youth's highly adventurous personality (Tomski and Dunay, 2019). Although the texture has been kept smooth (feeling of sophistication) for attracting the target segment, the proportion of alcohol has been kept at 8%. The packaging should be a sophisticated look that matches the location, but it remains to be realized how effective it will be in the market. The upper-end of the market are sophisticated and conscious people who prefer to associate with renowned foreign brands instead of extensions from domestic brands that serve the general public (Carvalho et al., 2018).

Because of the low alcohol tolerance of customers in Taiwan, Hook Norton has to manufacture beer products in each category, including Brewers Choice Cask, Classic Cask, Cider, KEG, and Lager, to meet the demands of Taiwanese consumers. Hook Norton should consider other aspects, including the fact that the people of Taiwan prefer to drink a sweeter beverage while brewing the beer for the destination market. This strategy allows Hook Norton to capture the Taiwanese market to expand its consumer base by addressing their diversified tastes and styles. Hook Norton should develop a unique product for the Taiwanese market considering the preferences and needs of the local market. This product strategy in the foreign market has allowed Hook Norton to control a substantial percentage of the marketplace, with the leading position in the beer industry (Stack, 2020).

The positioning of products in the foreign marketplace has been strengthened by developing reliable and efficient distribution channels to deliver products to their respective markets precisely. As a result, retailers like Costco and Carrefour and other retail stores have appeared as the places in which most liquor is sold in the country. Hook Norton Brewery can also sell its beer product in bars and pubs to reach more young customers. However, Hook Norton could sell most of its beer products online during the Covid-19 outbreak, as most customers spent their time on social media and preferred to visit online stores (Shakina and Cabras, 2022).

Challenges of Operating in Taiwan's Alcohol Industry

This strategy allows Hook Norton to serve the target market with the Red Rye beer that matches Taiwanese customers' tastes, affordability, and preference. The organization has employed an effective placement strategy through extensive marketing of Red Rye beer, available in all restaurants, bars, and convenience stores. The product distribution is also done through independent distributors to make the product delivery quick and on time (Stack, 2020).

Hook Norton has set the price level for Red Rye beer to ensure that the product is competitively priced within reach of customers. In particular, the organization has taken the initiative to provide a competitive and affordable price for its beer. In Taiwan, the average price of beer is NT$150 to $200, which is approximately US$5 per 500ml bottle. But the cost of beer is expected to rise in the country as beer consumption increases (Maehle and Capitello, 2021). Therefore, Hook Norton must implement the market-based pricing approach to avoid pricing its beverage more than the market cost. It is based on the buying behavior of Taiwanese customers, which indicates that most customers in Taiwan are price-conscious and cannot purchase products from brands that are more expensive. This pricing strategy allows Hook Norton to offer affordable products to the lower and upper class in the Taiwanese market. Therefore, the customer base has proliferated, resulting in increased revenue and sales (Garavaglia and Swinnen, 2018).

Name of brand

Red Rye beer (Hook Norton Brewery)

Why are we communicating?

The creative concept is to produce a new line of limited-edition bottles made from recycled glass and plastics.

Who are we talking to?

The target audience will be young people and office workers. In addition, Hook Norton will appeal to those with a tremendous passion for Western lifestyle and food. The majority of the target segment comprises individuals from the middle and upper-middle classes.

What do we want them to ‘think’ and ‘feel’ because of our communication?

The campaign will help raise awareness and get traction for Red Rye beer. We want customers to think that they support the plastic crisis on the earth by buying this product. Hence, they can feel good about themselves without really doing anything apart from buying a drink (Hart, 2018).

What are the key benefits or values of our offering?

Customers receive the beer at a reasonable price made from all organic ingredients and come in a small bottle.

What do we want our customers to do?

After seeing the advertisement, we want consumers to be interested in Red Rye beer and take samples available at various convenience stores as a first step toward the brand.

Direct marketing is done through YouTube and Instagram, where direct relationships with customers are made. Hook Norton uses public relations methods, like blogs, SEO, and social media campaigns to use influencers to promote its products. The SOSTAC framework is used in digital marketing to evaluate the advertising objectives, current situation, implementation strategies, steps taken, engagement strategies, as well as control over the ad and situation (Swinnen, 2017).

Opportunities of Operating in Taiwan's Alcohol Industry

The same marketing mix above will be used in Taiwan, a digital and traditional marketing mix. Traditional marketing attracts a wider audience, while digital marketing attracts young people. TV commercials will help reach a wider audience. It will be very effective in creating brand awareness as potential customers who watch the ads focus only on television, which will remember the brand for a long time. Social media has been selected as a new medium to market to the young population, as they are primarily the primary users of Instagram (Xie et al., 2018).

Fig: Cultural values of the United Kingdom and Taiwan as per Hofstede's framework

Source: Hofstede Insights, 2022

Hofstede's Cultural Dimensions shows that Taiwan has significantly different cultural dimensions than the UK. For example, the UK is considerably more individualistic, while Taiwan adheres to a collectivist culture. As shown in the above figure, there are considerable differences between the two nations in terms of uncertainty avoidance, long-term adaptation, and power distance. These factors could easily affect the business of Hook Norton in Taiwan. For example, Hook Norton operates its business in the UK with an individualistic score of 89 means that it must alter its business culture to be successful in Taiwan, with an individualistic score of 17 (Hofstede Insights, 2022). Furthermore, this is essential to consider a change in the pattern of alcohol consumption in Taiwan, with most individuals emerging a perception for imported drinks. The marketing communication plan will be changed due to differences in eating habits and culture. There should be a change in the communication mix to make the product healthier and less emotional content in ads (Hsieh, 2019).

The checklist will be used to understand any issues considered before planning initiatives. The company should measure the efficiency of the promotional campaign because it enables the company to assess the performance of different advertising campaigns, giving essential insights for the formation of the next campaign. Additionally, it provides marketers time to develop alternative strategies if the current campaign doesn't work well and look for ways to improve the effectiveness of the advertising campaign at the same time (Garavaglia and Swinnen, 2017).

Hook Norton will make awareness and image through uniqueness and consistency in the provision of its products. The company focuses on providing quality products that generate good referrals, which can increase revenue. The company will always keep a relatively heavy personal selling element in its marketing strategy. Therefore, the organization should be active in relationships with strategic partners and customers and keep their desires and needs in mind (Huang et al., 2020).

The Taiwanese brewing market has been steadily growing over the last few years because of the increase in disposable income of the people and the economic growth. With that in mind, the organization will expand its marketing programs accordingly. As a result, the organization projects sales growth consequently. Over time, Internet presence and participation in local trade shows will be key milestones in expanding the potential of marketing and sales through identifying potential consumers and using new channels (Majabadi et al., 2016). Furthermore, the company intends to conduct regular evaluations of its marketing programs throughout the year to ensure consistency with its objectives. In short, Hook Norton would like to take the following:

• To maintain the discipline to track the results of the marketing plan and ensure that implement it.
• To say no to special deals that take its focus away from the market goals and are unprofitable.
• To have the discipline to keep the focus of the market segment.

Market Segmentation in the Taiwanese Alcohol Industry

Conclusion

The Taiwanese beer industry has been verified as the most suitable international marketplace for Hook Norton Brewery. However, the organization should consider multiple factors in the Taiwanese market. The cultural and social characteristics of Taiwan are one of these aspects compared to the United Kingdom. Based on the UK's individualistic society, Hook Norton should find a way to operate effectively in collectivist society of Taiwan. It would be reached through developing a strategic alliance with Redpoint Brewing. This partnership development has been confirmed to become a significant market entry approach. This will assist Hook Norton in minimizing risks related to the corruption of political representatives and gain knowledge about the buying behaviour of Taiwanese customers towards alcoholic beverages.

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