Table of contents

Introduction…………………………………………………..…………………………….2
I- Company presentation………………………………………………...………………3
1.1 Essential information on the company……………………………………………...3
1.2 History of the company………………………………………………………………3
1.3 The specificity of the Trappist beer…………………………………………………3
1.4 Chimay beers…………………………………………………………………………4
II- The beer market……………………………………………………………………….4
2.1 The beer sector………………………………………………………………………..4
2.2 The Belgium’s beer sector……………………………………………………………5
III- Import and Exports………………………………………………………………….6
3.1 Import…………………………………………………………………………………6
3.2 Export………………………………………………………………………….………6
3.3 Goodies………………………………………………………………………………...7
3.4 Infrastructure and logistic……………………………………………………………8
IV- Problematic…………………………………………………………………………..10
4.1 Analysis of the product………………………………………………………………….10
4.2 The selection of the best market………………………………………………………..11
4.3 The selection among the different prospects…………………………………………..12

Conclusion…………………………………………………………………………………14

Bibliography………………………………………………………………………………15

Appendix…………………………………………………………………………………...16

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Introduction

As part of our master in International Management at ICHEC (Institut Catholique des Hautes
Etudes Commerciales), we have been asked to analyse a company through different aspects
by focusing on the international level activities. This work is part of the “Managing
International Operations” course supervised by Mrs Heinen and is a way for us to put the
theory we have learnt into practice.

Therefore, we contacted a lot of exporting companies and the firm « Chimay » agreed to work
with us. We were really enthusiastic because of our interest for this kind of business. Indeed,
Chimay is a company that is specialized in high quality beers and cheese. But for this report
we have decided to only focus on the beers because we wanted to work on a real Belgium
product.

Let’s now move on to the different elements we will develop in this file. This work will be
divided in three parts:

First of all, we will give a brief presentation of the company and present the main competitors
of the company on the world and on the Belgian market.

The second part deals with a brief assessment of the company’s activities at international
level. In fact, we will develop three main points: the imports of raw materials, the exports that
the company does all around the world and the risks and opportunities faced by Chimay.

Finally, we will develop our problematic and try to establish a concrete selection process
which can help Chimay selecting the best market and trading partner possible.

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 I) Presentation of the company

The purpose of this part is to give an overview of the company we chose to analyze.

1.1 Essential information on the company1

Name of the company : Bières de Chimay SA

Identification number : BE 0438.560.655
Address of the company : 8 Route de Charlemagne
6464 Baileux
Creation date : 21 September 1989
Sector : Brasseries et assimilées
Turn over (2002): 23 million Euros
Number of employees : 75

1.2 History of the company2:

See in the Appendix page I

1.3 The specificity of the Trappist beer:

One of the competitive advantages that Chimay has compared to the other companies in
the brewery sector is that it produces Trappist beer. But what is exactly a Trappist beer? It is
“a beer brewed by or under control of Trappist monks. Of the world's 171 Trappist
monasteries (as of April 2005), seven produce beer (six in Belgium and one in The
Netherlands). Only these seven breweries are authorized to label their beers with the
Authentic Trappist Product logo that indicates compliance to various rules decided by the
International Trappist Association. This private association created a logo that is assigned to
goods (cheese, beer, wine, etc.) that respect precise production criteria. For the beers, these
criteria are the following:

• The beer must be brewed within the walls of a Trappist abbey, by or under control of
Trappist monks.
• The brewery, the choices of brewing, and the commercial orientations must obviously
depend on the monastic community.
• The economic purpose of the brewery must be directed toward assistance and not
toward financial profit.

This association has a legal standing, and its logo gives to the consumer some information and
guarantees about the produce. There are currently seven breweries that are allowed to have
1
Most of the informations were found on the following web site:
http://www.trendstop.be/FR/detail/438560655/bieres-de-chimay.aspx
2
This paragraph is inspired by the Chimay web site (10/10/08)
http://www.chimay.com/en/the_origins_110.php

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their products wear the Authentic Trappist Product logo: Bières de Chimay, Brasserie
d'Orval, Brasserie de Rochefort, Brouwerij Westmalle, Brouwerij Westvleteren,
Brouwerij de Achelse Kluis, Brouwerij de Koningshoeven3 (in the Netherlands).

Because of this specific niche in the beer market, we will only consider those six
companies as potential competitors to Chimay as, according to the Export director of Chimay,
it is not relevant to compare Trappist beers with more traditional beers or even abbey beers.
Abbey beers try to compete with Trappist beers licensing their names from abbeys but they
are in fact commercial brewers so they do not have the same quality as authentic Trappist
beers.

1.4 Chimay beers4:

See Appendix page I

II) The beer sector

In this section, we are first going to analyse the beer market at world level and then in
Belgium and secondly determine the market share of Chimay in those markets.

2.1 The beer sector

The beer sector is today a high competitive disputed market. Large companies with a
worldwide presence are competing for the “pol-position”. There are different types of
competitors: some of them are international players, such as InBev, Heineken, Budweiser...
while others just want to win market shares on the national field like Ch’ti, Unibroue…

From year to year there is a constant rise in the beer consumption. Consequently, there is an
increase of the international beer production. As we can see on the graph in the Appendix 5,
Asia is the most important producer and inside this continent, China is the first producer.

Due to the multiple mergers of those last five years, “brewer giants” emerged on the
international market: the Belgian-Brazilians Inbev, the Brit SABMiller, the American
Anheuser-Busch and of course the Dutch with Heineken. Today, as we can see on the chart in
the Appendix6, the beer world market is dominated by three major competitors and InBev has
become number 1 since the acquisition of Anheuser-Busch (previously n°4).

2.2 The Belgium’s beer sector

3
www.Chimay.be (21/11/08)
4
This paragraph is inspired by the following web site :
http://en.wikipedia.org/wiki/Chimay_Brewery; (23/10/08)
5
Appendix page IV
6
Appendix page IV

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We will now deal with the beer market in Belgium and analyse Chimay’s market share.

• Consumption’s trend

Belgium is well known for its delicious beers. Yet, it seems that the Belgian drink less
quantity of beer year after year. It also seems that they prefer quality to quantity. Therefore,
Trappist, blond and abbey beers are performing well compared to the other traditional beers
and have not decreased yet.7That decrease in the beer’s consumption is due to the high prices
of the raw materials and energy (repercussion of the oil price in the energy cost) which affect
the price of the final product too.

More precisely, beer consumption in our country went down by 10, 8% between 1997 and
2007. On the contrary, the export demand is still booming (+ 93, 58% between 2000 and
2007)8.

In Belgium, the “Pils” accounts for 70% of the total beer consumption. The other 30% are the
special beers, “bières spéciales” in French. Those are les “bières de dégustation 9”, Trappist
and Abbey beers10.

Finally, we can also notice11 that although there have been some changes in terms of
quantities consumed in the segment of the “bières spéciales”, the market shares between the
“Pils” and the “bières spéciales” remained the same.

• Volume and turn over

In the Belgian’s Top 150 00012, Chimay is ranking 10th in the beer sector according to its
turn over in the sector. Actually, Chimay enjoys that excellent position due to the enthusiasm
of the Belgians who pay more attention to the quality and the authenticity of the product
rather than the price. More precisely, Chimay realized in 2003 for its three beers, a market
share of de 13,2% in the segment « bières spéciales ».13

Chimay’s volume of production and turn over increases year by year. They offer a production
level of about 123.000 hectolitres per year and since 2002, the turn over increases at least by
5% each year. “The income in 2006 amounted to 31 millions EUR (+7, 5% compared with
2005), which was principally due to the increase in export (50 % of the 2006’s revenue). Its

7
http://www.statbel.fgov.be/press/fl044_fr.asp (30/10/08)
8
the Belgian brewers website : http://www.beerparadise.be/emc.asp?pageId=526, (30/10/08)
9
In that segment are beers with an exotic taste: “la Gueuze”, beer with fruit’s taste, etc….
10
See the table of belgian beer consumption in the annex
11
Appendix page V
12
http://www.trendstop.be/FR/detail/438560655/bieres-de-chimay.aspx (12/11/08)
13
http://event.chimay.com/fr/010301.php?page=news-
infos.php&id_news=8&statut=&catid=&ancpos=&sort=&keyword=&affi=&numdeb=0&thislangue=1&affonlin
e=&numtott=11&limit=all (15/11/08)

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Chimay Blue accounts in general for 55% of their total sales, then it is the Chimay Red and
finally the Chimay Triple.” 14

• The competition

In fact, as seen previously, Chimay’s competitors are the entire “bières spéciales” segment.
Yet Chimay decided to specialize in the strong beer segment with high alcohol degree instead
of also producing lighter or fruity beers. That is why they only considered the other Trappist
beer’s producers as their competitor15. Unfortunately, we did not find the market share of all
the Trappist beer producers. Yet, as far as Chimay is concerned, they were the first to export
and today they are only two in the international market with Orval.

III – Import and Export16

3.1 Import

Chimay imports some raw materials which are important in their production. The bottles are
imported from France and the glasses from Deutschland or Portugal. Let’s now talk about
some ingredients. They import the hop which gives the bitterness and the aroma of the beer
from Deutschland and the malt is imported from France.

3.2 Export

Chimay exports in over forty countries around the world. The internal organisation of the
commercial sector is a bit specific. They have two different departments to manage
independently the exports:

• Benelux department

Chimay does not consider Belgium as an individual market. The internal market is
composed of Belgium, Luxembourg and Deutschland. We can explain this by the fact that the
behaviour of Luxembourg and Walloons populations and the Dutch and Flemish populations
are very similar.
The Belgium market is the most stable if we consider the demand because of the important
place of the beer in our country. Moreover, Holland and Luxembourg do not represent an
important part in the Benelux sales if we compare it to Belgium.

• The export department

14
http://www.lecho.be/dossier/bieres_trappistes/article/Chimay__la_boite_a_couleurs_des_peres_brasseurs.7174
213-1875.art (15/11/08)
15
http://www.dhnet.be/free_dossiers/interactif/biere/interview.htm (15/11/08)
16
The information given in this part are coming from the interview with mister Marangon (see Appendix page I)

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 In this department, the exportations are shared with around forty different countries and
with various importances.

- The first importing country in terms of history is France. Chimay is located near the
French border. So because of the proximity, France is the first place where the monks have
exported their beer. Moreover, the culture of the north part of France is very similar to the
Belgian culture and people are use to drink and appreciate the Belgian beer.

- The first importing country in terms of volume of exportation is the United States. The
United States also have an historical link with Chimay and they are having a long and a good
partnership. As a result, Chimay beers have a relative important share in the American beer
market. Those excellent results are mostly due to the image of the product, the quality and
also the fact that people are now more and more looking for typical traditional beers instead
of big famous commercial ones.

- Then we have Italy which is less important in terms of volume but where there is also an
historical past. The product is well-know in Italy because of the great number of Italians
expatriated in Belgium that have brought back Chimay beers to their family.

- Another country is Japan. It is quite a new relation and they do not know yet why the
Japanese are interested in Belgium beers. But we can say that in Asia they are use to drinking
beers and now there are looking for quality products, well-know brand and a good part of the
population have the money for that kind of luxury goods.

- Finally, Chimay also export in other countries like Denmark, England, Ireland,
Sweden, Norway, Finland, Germany, Switzerland, Greece, Cyprus, Spain, Portugal, China,
Hong-Kong, Thailand, Russia… It is less important than the above countries in terms of
volume.

To conclude on the exportations, we can say that Chimay export 50% of his production 17.
The French and the United States markets represent the biggest part of Chimay exportations,
around 75% in terms of volume. And the other 25% of the exports are shared between
countries of the European Union and over sea countries.

3.3 Goodies18

Chimay wants its beers to be different and represent quality. Therefore, they are really strict
on the presentation of their beers. It is for example forbidden for a bar to sell a Chimay beer in
anything else than a Chimay glass. This is why Chimay offer with all the orders they have 5%
of the amount of the invoice in goodies such as glasses, outside signs, sunshades, Chimay

17
http://www.chimay.com/fr/le_departement_export_106.php, (11/11/08)
18
http://www.discobeer.be/produit/artpub.htm, (11/11/08)
See some examples of goodies in the Appendix page III

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trays, badges, flags, stickers… All those elements are making the brand visible and are good
marketing tools.

3.4 Infrastructure and logistic

● Importing:

In general, there are two main beer distribution channels. The first one is the Horeca channel
and the second one is the mass marketing channel.

On the one hand, Chimay have one importer and one customer for each country. Chimay
have two different ways to get in contact with the customers from the two channels.

- The importers are working directly with the customers. The importers have a
warehouse to stock the beers and they then use their commercial power to find new
customers. After that, the importers sell the beers through a subcontractor (importer =
distributor).
- The importers are working with distributors. This second solutions is a mix of two
things. On the one hand the importers are directly delivering a part of their products to
the customers. On the other hand, for geographical or commercial reasons, they use
distributor network to deliver the other part to the customers.

On the other hand Chimay works with several importers in a country.

- The first reason is that in that country, one importer is very good in the Horeca sector
and the other one in better in the mass marketing sector. So it is better to divide the
market directly between the two importers. It is the case in Spain where they have two
importers and in Italy where they have four importers.
- The second reason is that one importer is the best in the distribution of bottles and the
other one in the distribution of barrel. If they sell beers in a foreign country, the bottles
are lost but they have to bring the barrel back in Belgium. That is the case in Russia.

Chimay is really implicated at each step of the process. They want to meet in person the
several speakers who are part of the selling process. Furthermore, according to the monk
principles, they want to offer a quality product which means that every step of the process
have to be control, from the production to the final customers. Consequently, each distributor
has to respect some basic criterions in order to maintain the quality of product and a strong
relationship based on trust has to be created between Chimay and its partners.

● Distribution process

Chimay has a very strict commercial policy. The customers have to pay before receiving the
goods. It is something very unusual but due to the image, the brand and the quality of the
beer, Chimay has the possibility to impose their conditions to the customers.

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 ● Delivery process: Incoterms

In general, Chimay does not deliver the products to the customers. So when a customer
make an order and pay it, they have to wait for Chimay to tell them that the order is ready and
they have to organize themselves to transport from the Abbey to their warehouse.
They are using 2 different ways of delivering:

The ex-work:
Chimay gives the responsibility of the goods directly from the company to the customers.
- Chimay contact directly the transporters if they have a regular contact with a
customer.
- The customers contact the transporters and tell to Chimay when they are going to
come.

The Free on Board “FOB”:

Chimay takes the responsibility of the goods from the company until the harbour of Antwerp.
- Chimay only use that Incoterm with big costumers such as Japan who buy a whole
container or more.

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IV) Problematic

Now that a good overview of our company has been given, it is time to turn to the
problematic we have chosen to develop. As the previous parts of this report have shown,
Chimay is doing very well both on the Benelux market and on the international market.
Indeed, its situation is close to ideal: the demand is higher than the offer, they constantly have
proposals for new commercial partnership, their turnover is increasing… Therefore, it was
hard to find a real problem they could face. However, during the interview with the director of
export, we noticed that they did not have a specific procedure in order to choose the best
trading partner possible on a given country and that they were relying more on subjective
matters rather than objective criterions. Therefore, we decided to focus on that subject in the
problematic part of our report. We will try to establish a concrete selection process that
Chimay will be able to use in order to select the best trading partner possible that will be
based on what we have learned during our Managing International Operations course and on
some other books (cf bibliography).

4.1 Analysis of the product19

Here are some questions that Chimay must ask itself before considering exporting.

→ Functional Analysis

● Production function: analysing the company’s capacity

- Does Chimay have enough quantity left after satisfying their actual customers?
- Is it possible to maintain the quality of products and meet the needs of foreign
customers?
- Does the production line allow the adaptation of the product/packaging to the norms
and needs of the country considered at a reasonable price?

● Financial function: analyse of the company’s financial capacity at three levels

- Investment: No need because Chimay is running at full capacity

- Working capital needs: No need because Chimay is running at full capacity
- Financial risk: For the moment Chimay does not care about it because they do not
have any risks. Indeed, the costumers have to pay the order before it is send to them.
But it is right to say that if their new prospect go bankrupt after six months, all the
time spent doing the selection is lost.

● Human resources function:

19
PASCO C., Commerce international, 5ème édition, DUNOD, 2004, 155p

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 It is not relevant in Chimay’s case as they already have an entire department dedicated to
exports. They are consequently used to deal with foreigners.

● Marketing function

- If the product has a particularity, something that will make the product unique and so
easier to sell?
- Which image Chimay wants to give to its products?
- What is the development strategy?
- Every time they enter a new market will they have to translate into the national
language the sales literature, handling instructions or service manuals?

→ Competition analysis

As we said before, there are only seven Trappist beers in the world and out of them, only
Orval and Chimay are in competition for the international market. Furthermore, Orval exports
way less than Chimay so the latter has a competitive advantage over Orval.

4.2 The selection of the best market

→ Two different ways to develop their exportation

• Most of the time, Chimay receive proposals of potential new customers in a new
markets via their web site. They regroup the prospects from the same country and in order to
choose the one they will work with, they look at some key points that we will develop later.

• Sometimes Chimay is interested in developing their presence on other markets

because they consider that it is a country where they have to be present. In this case, they
contact themselves potential costumers and see if they are interested in their products. For
example, they are now looking for a contact in the Czech Republic because it is a country
where Chimay was present in the past but is not represented anymore which is a shame as
people have a strong beer culture.

→ Key points in order to determine the best market

• Accessibility of the market

An important factor is the culture/ religion of the people in the country. Indeed, it can be
helpful to know if this country has a strong “beer culture” or if the majority of the population
is for example Muslims as they are not allowed to drink alcohol. Consequently, Chimay
should take into account those cultural elements to determine if this market is viable and the
potential difficulties to inter the product in the country. Moreover, it is essential to take into
account the costumes dues of the country.

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 • Potentiality of the market

The company should have a look on the different statistics available on the country (GDP,
standards of living…). We can find those kinds of information in the national statistical
office, in the Embassy or in the consulates of foreign countries. Another solution is also to
talk and share experience with exporters already on the market. In order to complete the
information on the market, it could be a good idea to buy information from database
companies which could provide them more detailed data.

At this stage, the interesting new markets are defined. The next step is therefore to designate
the best trading partner in that market.

4.3 The selection among the different prospects

→ First step: Basic information

- What is your type of activity? (Cafés, restaurants, pub, liquor store…)

- Are you a well-established company or are you new?
- What is the range of beer you already have?
- Do you already have a Trappist beer?
- How would you store the beers?
- How would you present a Chimay to your costumers?
-Which quantity would you like to import? (Palette, container…)
-What would be the frequency of the deliveries?
-Are you more interested in kegs or bottles?
-Would you agree on our conditions (‘contrat cadre’) as they are not negotiable?

→ Second step:

• Motivation

Now they have already eliminated some prospects thanks to the basic questions and can make
a first selection. In order to have only one future customer, they contact the selected prospects
by phone or organize a meeting and they judge their motivation. That step is of course more
subjective as the selection is made according to the impressions of the responsible.

• Marketing strategy

What really matters is the image of the company and the product. As a result, because of the
Trappist appellation, some strict rules must be respected concerning the advertisement and the
marketing strategy (no monks in the ad, no controversial images, no shared advertisement
with other brands…). Furthermore, to respect the image of the product, the prospect must
serve the beers in the appropriate glasses and temperature, respect the Trappist logo length
and the colors’ code in their beer advertisings or communications. In fact, every marketing
project should be approved prior to his publication. All those requirements are explain in the

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sales manual on the B to B’s website of Chimay20. Communicating those rules to the prospect
is an important step as his reactions are an indicator of his commitment to the project.

• Fulfilling the needs of the final consumer

Finally the last step is to make sure that the typical customer of the prospect would be
attracted by a Chimay beer. Chimay is concerned about the client’s needs and so it is
important to make sure that all the basic intangibles are covered:
- Functionality: Chimay is a special and uncommon beer that each costumer should take
the time to appreciate.
- Security: the product passed through all the process: controls and analysis
- Quality: as it is the main basic intangible that Chimay claims, this is where they
concentrate all their efforts. Indeed, several laboratory analyses are done at different steps
in the production process in order to ensure the quality is optimum. If by any chance a
test result would not meet Chimay’s standards, the entire mash tun would be destroyed.
- Continuity: the beer production is planned in advance. Moreover, the production must
take place at specific hours in order to respect the monks’ timetable. Finally, the three
beers are produced successively according to the demand.
- Conformity: It is important that the taste of Chimay remain constant. This is why the
formula of the brewery’s yeast is kept secret in a Belgian University.

After all those steps, one prospect should stand out and be the one chosen by Chimay. In
2008, according to market studies, the consumption of beer on their traditional markets will
be weaker. Indeed, the volumes on the American and French market have been reduced.
Consequently Chimay will this year have the opportunity to look for new interesting
prospects. So the selection process that we have developed will be useful for them. However
in 2007, the consumption of beer on the Benelux market was higher than usual and therefore
Chimay had to decline all the requests of new prospect. Nevertheless, it is a risky strategy to
say no to potential prospects who are interested for two main reasons:
- A good prospect, who is interested in Chimay, will complete his beer range with
another Trappist beer or with an abbey beer. As a result, they will be less interested in
Chimay because their range will be complete.
- Instead of buying the beer directly to Chimay, they will go to a Belgian distributor. So
Chimay will export to another country without knowing it. In this case, the problem is
that the capacity will not be better and Chimay will loose the control over its export.

Conclusion
20
http://export.chimay.com/

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The task we have been given was to analyse an import-export issue and try to find a solution
that can be implemented in the company.

As far as we were concerned, we have chosen to work with Chimay, a Trappist beer producer
and the problematic we developed was to propose a concrete selection process in order to find
the best markets and trading partners possible while keeping in mind the particular constraints
of Chimay which mainly is a limited capacity of production.

Thanks to the International Management Operation course we have attended this semester and
some other references, we were able to create as a solution to our problematic a concrete
selection process that Chimay will be able to use in their daily life in order to be the most
efficient possible concerning the selection of their future exporting market and costumers.

We really hope that this solution will fit them and we warmly thank Chimay staff and mister
Marangon in particular for the opportunity given to work with them and for their availability.
We also thank our school and teachers to allow us to take into practice what we learnt at
school.

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Bibliography

● Books:
- PAVEAU J. DUPHIL F., Exporter: Pratique du commerce international, 18ème
édition, Foucher, 2004, 655p
- PASCO C., Commerce international, 5ème édition, DUNOD, 2004, 155p

● Courses :
- CRACCO E. Getting started in export trade : excerpts & amendments, 2007, 94p
- HEINEN M-L, Managing international operations, 2008.

● Web sites:

Chimay’s website:

 http://www.chimay.com/en/the_origins_110.phpwww.Chimay.be (21/11/08)
 http://event.chimay.com/fr/010301.php?page=news-
infos.php&id_news=8&statut=&catid=&ancpos=&sort=&keyword=&affi=&numdeb
=0&thislangue=1&affonline=&numtott=11&limit=all (15/11/08)
 http://export.chimay.com/ (29/11/08), B to B website
 http://www.chimay.com/fr/le_departement_export_106.php, (11/11/08)

About the beer sector and Chimay in this sector:

 http://en.wikipedia.org/wiki/Chimay_Brewery; (23/10/08)
 http://www.statbel.fgov.be/press/fl044_fr.asp (30/10/08)
 The Belgian brewers website : http://www.beerparadise.be/emc.asp?pageId=526,
(30/10/08)
 http://www.trendstop.be/FR/detail/438560655/bieres-de-chimay.aspx (10/11/08)
 http://www.lecho.be/dossier/bieres_trappistes/article/Chimay__la_boite_a_couleurs_d
es_peres_brasseurs.7174213-1875.art (15/11/08)
 http://www.dhnet.be/free_dossiers/interactif/biere/interview.htm (15/11/08)
 http://www.discobeer.be/produit/artpub.htm, (11/11/08)

● Interview: With Steve Marangon on the 17/10/08 and on the 28/11/08

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