Steeling market share
A British Steel case study

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Page 1: Introduction

British Steel 2 Image 4It is easy for consumers in a changing world to take availability and choice for granted. This can be best characterised by examining markets in the private sector, where it is clear few organisations are free from wide scale competitive pressures. Competition exists wherever products are developed as close substitutes for others. Some competition is more direct than others. As an example, two brands of micro washing-up liquids would be considered to be in direct competition. However, indirect competition might involve deciding to go to the cinema on a Saturday afternoon instead of visiting the local pizza bar. Competition occurs when consumers are faced with a range of alternative options and where choices have to be made.

Competition exists at all times in all industries and the best organisations devise a series of competitive tools which enable them to deal with their competing forces. It must strike a balance between market opportunities and competitive threats, since wherever market opportunities exist competition tends to be fierce. Once a business has analysed and understood the nature of its competition it has to make decisions about what elements it wishes to adapt or change, so that it can strengthen and develop its competitive position.

This case study looks at how an organisation, utilising a range of strategies, added value to each part of the supply chain and won market share in a highly competitive market. It focuses on the competitive activities of British Steel Tinplate in the canned drinks beverage markets and illustrates how the Company successfully combined innovation, technological skills and focused marketing activities to improve its market position.

British Steel Tinplate is one of Europe’s leading suppliers of high quality steel tinplate, with two manufacturing plants in South Wales. Tinplate is supplied into a comprehensive range of packaging markets including that of the carbonated soft drinks and beer markets.

The market for cans

British Steel 2 Diagram 2The market for cans is counted not in millions but in billions! The UK canned food, drinks, petfood, aerosol and paint markets generate 16 billion units each year. The UK canned beverages and drinks market in 1995 accounted for 8.9 billion units, comprising 5.2 billion soft drinks and 3.7 billion alcoholic beverages at a rate in excess of 1500 cans per minute.

Although sales are marginally affected by climate, the market for beverage and drinks cans present many market opportunities, with overall annual growth in the UK averaging around two to three per cent. In Europe, the market exceeded 32 billion units in 1995, with growth approaching 11% on 1994. The UK & Eire share of this market is 26%, which makes it the largest consumer in Europe. There are three major beverage can makers in the UK with seven can manufacturing plants between them. Each plant has a number of production lines. In total there are 23 beverage can making lines in the UK, producing huge volumes of cans at the rate in excess of 1500 cans per minute. Beverage can makers are therefore amongst the most important customers of British Steel Tinplate.

In 1995 steel’s market share stood at 20%, with cans made from imported aluminium accounting for the remaining 80%. For British Steel to increase steel’s market share of this growth market, it had to win market share from the aluminium producers. This could best be achieved by adding value to its product, thereby making it more competitive and attractive, not just to can makers but also to fillers, retailers and consumers. Success would be measured when a can maker switched production from aluminium to steel lines and as a result British Steel Tinplate won market share.

In the early 1970s all cans were made from steel. These cans were relatively low technology products, made in three pieces and significantly heavier than the steel cans of today. During 1972, lighter two piece cans were introduced. This switch to two piece cans triggered the arrival of aluminium into the market, enabling it to compete head-on with steel for the first time, signalling a major threat to steel tinplate producers throughout Europe.

British Steel | Steeling market share