Compañía Cervecera de Nicaragua case studies (A) and (B): Branding and adaptive management

At the end of May 2001, the executive sales team of Compañía Cervecera de Nicaragua (CCN), Nicaragua's leading beer company in production and sales, was evaluating growth options that would reverse the company's declining sales trends. After several years of good results, reactive adjustments in prices due to changes in the country's tax policies had negatively affected the company's performance. During the 18months following the price increase, the average monthly sales volume had decreased by 10%, in light of which the company made the recovery of its sales volume one of its main business objectives. Even though the sales team at CCN had examined growth options in the low-income segments, they still had not defined the best way to access them. After reviewing market research, the sales team decided to focus on two potential alternatives. The first alternative was to launch a new brand with a lower price than existing brands, and with functional and emotional attributes designed to match the tastes of the targeted socio-economic segment. The second option was to offer the company's traditional brands in larger sizes with a lower price per ounce than current available options. Both alternatives implied risks, but the company had to make a decision in order to reverse their declining sales trends. The team had to present and justify its decision at the next management meeting where, together with the finance department, they would agree upon a final recommendation to present to the general manager.