Heineken (Netherlands)


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Family-controlled Heineken is the world's third largest brewer and owns the best-selling premium beer brand. It manufactures its own products through a huge and wide-ranging network of more than 140 breweries in 70 countries, and licenses the operation to other companies where it doesn't have its own plant. The company also owns a wide variety of subsidiary beer brands including Amstel and Murphy's Irish Stout worldwide, Tiger in Asia, Cruzcampo and Moretti in Europe, among many others. After a slow start, Heineken has entered wholeheartedly into the consolidation of the global beer industry since 2007. That year, it launched a joint bid to break up the UK's Scottish & Newcastle in partnership with Carlsberg. Completion of that deal the following year established Heineken as the leading brewer in the UK. In 2010, it expanded its footprint in Latin America with the acquisition of Mexico's second largest brewer FEMSA, adding Sol, Tecate and Dos Equis to its worldwide portfolio. Two years later it agreed to take full control of Singaporean subsidiary Asia Pacific Breweries.

Selected Heineken advertising

Advertising

Who handles advertising? Click here for Agency Account Assignments for Heineken. Ad Age estimated global measured advertising expenditure of $517m in 2012. Including unmeasured media and other costs, the group declared marketing and selling expenses of E2.25bn in 2012. In France, Kantar/Strategies estimated advertising expenditure of E83m in 2011. 

Competitors

see Alcoholic Beverages Sector index for other companies

Heineken NV
Tweede Weteringplantsoen 21
1017 ZD Amsterdam
The Netherlands
(PO BOX 28
1000 AA Amsterdam)
Tel: +31 (0)20 523 92 39

Brands & Activities

Rapid consolidation within the global brewing industry in the late 1990s and early 2000s allowed other companies such as InBev and SABMiller to seize Heineken's crown as the world's most international brewer. As a semi-private company, it was much slower than its rivals to risk transformational deals, although it continued to add to its its impressive network with smaller bolt-ons, especially in Russia and China, expanding markets which counter-balanced declines in Heineken's core territories of Western Europe and North America. Nevertheless, profit margins came under intense pressure, leading to a shake-up of the group's management team and reporting structure in 2005. This led to Heineken taking a far more aggressive stance. In 2007, the company teamed up with Carlsberg to launch a break-up bid for Scottish & Newcastle of the UK. After several months of stand-off, S&N agreed to recommend the takeover in early 2008. It was followed almost two years later by a deal to acquire Mexico's FEMSA brewery, and then in 2012 by acquisition of the outstanding shares in Singaporean joint venture Asia Pacific Breweries.

Heineken is now the world's #3 brewer, with control of more than 140 breweries in 70 countries, and a large portfolio of brands. In 2013, Heineken and its subsidiaries sold more than 195m hectolitres of beer worldwide, down slightly on the year before in all regions except Asia Pacific. The company was already the market leader in the Netherlands (with 50% share), Italy (33%), Greece (82%), Austria (52%) and Nigeria (60%). Following the acquisition of S&N it became the #1 in the UK and Portugal, as well as part-owner of the #1 brewery in India. It is also claims to be the #1 brewer by total revenues in France, but #2 by volumes behind Carlsberg.

There are two main international beers, Heineken and Amstel, both available worldwide. Heineken is the world's #1 premium beer brand, and can be found in 170 countries. It accounts for around 20% of the group's volumes, and a quarter of sales in Western Europe. It is available in a small number of different formulations, including Special Dark in the Netherlands and USA and Old Brown in the Netherlands only. The group introduced new variant Heineken Premium Light in the US in 2006 with a significant marketing spend, followed by Heineken Extra Cold in several international markets during 2008, and has also launched a number of draught beer systems for home use, such as the portable DraughtKeg or home Beer Tender dispenser. 

In virtually every market except its home country of the Netherlands, Heineken is priced as a premium lager. Total volumes were around 31m hectolitres in 2013, including 28m hl as a premium brand. Until comparatively recently the only other non-premium market was the UK, where a lower strength mid-price version of Heineken had been produced since the 1960s under license by Whitbread. Following Whitbread's exit from brewing in 2002, there was some question of who would take on the UK license. Eventually the group took the decision to abandon UK production and switch to imported supply from the Netherlands (previously known in the UK as Heineken Export). At the same time, Heineken was repositioned as a premium product. As a result of the higher sale price, though, sales fell significantly, making the UK one of Heineken's poorest-performing European markets. That weakness was eventually fixed by the takeover of Scottish & Newcastle's domestic operations, a deal which boosted Heineken into the leadership position in the UK (see separate profile). 

Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 22nd May 2014: Ads of the Week "Uncage". Droga5 Sydney has launched a bold pan-Asia campaign for Heineken's celebrated Tiger Beer, with a set of stunning films that spotlight the creative triumphs of three Singaporeans who defied convention to pursue their particular creative dreams. It's a well-used approach, but rarely executed with such style and elegance.

Adbrands Weekly Update 15th May 2014: Ads of the Week "The City". This week marks Wieden & Kennedy's 10th appearance this year among Ads of the Week, out of 19 Weekly Updates, and frankly we could easily have picked at least another 10 spots to feature since January. That's not favouritism (or bribery!) but just the agency's extraordinary creativity, always expressed at its best in film, and which seems to be positively overflowing this year, especially on behalf of cornerstone clients Nike and Heineken. It will be interesting to see how fully that excellence is reflected in next month's Cannes Lions festival. We certainly hope so. This latest Heineken spot from Wieden & Kennedy Amsterdam is typical: inventive, sexy, funny, thrilling, and ticking all the technical boxes for brilliance in direction, photography, design, editing, casting and music. (Especially music. This is like hearing Elvis's Bossa Nova Baby for the first time). Sheer class throughout.

Adbrands Weekly Update 6th Feb 2014: Heineken named Nuno Teles as its new chief marketing officer for the US. He replaces Lesya Lysyj, who left the company last year. Teles was previously CMO for Heineken Brazil. 

Adbrands Weekly Update 31st Oct 2013: Lesya Lysyj, chief marketing officer of Heineken USA, is leaving the company to become North America president of Weight Watchers

Adbrands Weekly Update 5th Sep 2013: Droga5's new office in London won its first account, assigned with managing Heineken's Strongbow cider brand across Europe. St Luke's keeps the UK account. 

More from Adbrands Weekly Update

Another key market is the US. Heineken was toppled as that country's leading import in the 1990s by Corona and it has struggled to climb back out of second place despite a substantial marketing spend. In 2004, the group strengthened its US portfolio by taking over distribution duties for Corona's Mexican arch-rivals Sol, Dos Equis and Tecate beers, then produced by FEMSA. As a result, it became the #4 beer distributor in the country. Shipments for 2012 were almost 8.5m barrels, equivalent to 4.0% market share. (Corona importer Crown had 5.7%). 

In 2010, the group expanded its presence in Latin America by agreeing to buy out FEMSA's Mexican brewery division. The deal, paid for with around $5.5bn in Heineken stock, completed in May 2010. That business, Cerveceria Cuauhtemoc Moctezuma or CCM, is Mexico's #2 brewer behind Grupo Modelo, the producer of Corona (itself now in the process of being acquired by AB InBev). It operates six breweries in Mexico, producing three of the country's top five beers in Sol, Tecate and Carta Blanca. Other brands include Superior, Indio, Bohemia, Dos Equis and the local license for Coors Light, as well as a collection of regional and specialist brews. In 2007 it introduced Mexico's first non-alcoholic lager, Sol Cero. However, CCM's local performance has been in slow but steady decline since the 1980s. It was overtaken as the country's foremost brewer by rival Modelo during the 1990s. It currently has around 38% of Mexico's beer market, behind Grupo Modelo's 59%. (Rather like soft drinks marketers in the US, the two brewers each have exclusive contracts with bars and restaurants, so most outlets sell only the brands of one or other company).

CCM is also the umbrella for Brazilian brewer Cervejarias Kaiser. Previously co-owned by Molson Coors and Heineken, control of the business was acquired in 2006 by FEMSA (although Heineken had retained a minority shareholding). The buyout of FEMSA gave Heineken full control. However the business has slipped into 4th place among local brewers, with an estimated 8.7% share in 2012, well behind local market leader AmBev, a unit of AB InBev. FEMSA operates eight breweries in Brazil. Brands include Kaiser, Bavaria, Xingu and the local license for Heineken. Sol was launched in Brazil during 2006. Heineken also has joint control with Quinenco of Chile of CCU, a leading brewer in Chile and Argentina. 

Heineken's #2 international brand is Amstel, available in 90 countries worldwide. It is the #3 beer brand in Europe by total volumes. The main international formulations are Amstel lager and Amstel Light (the #1 imported light beer in the US), but there are eight other variants in the Netherlands (where it is the #2 beer behind Heineken) and selected European countries, including Amstel Bright, Amstel Gold, Amstel Malt and so on. In Spain, it is marketed as Amstel Aguila, having absorbed heritage brand El Aguila in the late 1990s. Another key market is South Africa, where Amstel is the top-selling premium beer. Until recently, the brand was managed in that country under license by SABMiller. Heineken reclaimed local rights during 2008, and transferred them into Brandhouse, an existing joint venture in Africa (see below). However one key logistical implication of that change was that Amstel had to be imported from the Netherlands for more than a year rather than brewed locally, until the company's own new factory was completed in 2009. The group sold 10.3m hectolitres of Amstel worldwide in 2011. 

Sitting behind these brands is an extensive portfolio of more than 80 other regional or local beers, including Brand and Wieckse Witte (Netherlands), "33" Export, Pelforth and non-alcoholic Panach (Heineken France), Affligem (Belgium), Cruzcampo (Spain), Moretti and Ichnusa (Italy), Alfa (Greece), Zywiec, Tatra and Warka (Poland), Primus, Gulder and Star (in Africa) and Staroprno (Czech Republic). Other recent introductions include tequila-flavoured Desperados, available in several European markets, vodka-flavoured Kriska in France. Strongbow cider, originating from the UK, has been launched in several mainland European markets with some success. The group controls top-selling Foster's lager in the UK, among other brands. (See Heineken UK profile). A new blend of beer and fruit juice was introduced in the UK in 2012 as Foster's Radler as well as in mainland European markets under the umbrella of other local brands, including Zlaty Bazant in Russia, Warka in Poland and Zipfer in Austria. 

In addition, the group controls a number of other businesses in affiliated sectors, such as Dutch soft drinks company Vrumona (which has the local Pepsi and 7-Up licenses, as well as other soft drinks brands), and several wholesalers and distributors, including France Boissons in France.

Russia has become another key market. The group has bolstered its position in the country since 2004 with the purchase of seven local breweries across this huge territory. It is now the #3 brewer in Russia (after Carlsberg's Baltika and InBev's Sun Interbrew) with 11% share. It controls 10 breweries producing national brands including Ochota, Botchkarov, Buckler, Stepan Razin, PIT, Three Bears and Dr Diesel and a huge collection of local beers, as well as Heineken itself, and Guinness, Loewenbrau and Kilkenny under license. In 2007, Heineken acquired Czech brewery Krusovice, followed by four additional breweries in 2008, whose brands include Zlatopramen.

The group's position in Central & Eastern Europe was strengthened in 2003 by an agreement to merge its operations there with Brau Union, a conglomerate jointly owned by several of Austria's brewing families. Heineken acquired Brau Union for around E1.9bn, and then transferred its own operations in 14 central European territories into the business. The company has a strong position in Austria and several eastern European countries through international brands including Goesser and Zipfer. In Austria it is also the local licensee for Kaiser, Guinness and other brands. A separate company, Brau Holding, a joint venture with Schoerghuber Group, markets a variety of regional beers in Germany including Paulaner, Kulmbacher and Karslberg Urpils, and acquired Fuerstenburg and Hoepfner in 2004. In 2008, the group acquired the Swiss brewery Eichhof as well as several other smaller breweries in Central and Eastern Europe.

As a result of the S&N takeover, Heineken inherited three other European businesses, in Belgium, Portugal and Finland. (However S&N's 50% holding in Baltic Beverages Holdings, the dominant brewer in Russia and several CIS markets was transferred to Carlsberg). Alken Maes is the #2 brewer in Belgium (behind InBev) with around 12% local share. It was formed from the 1988 merger of the Alken (originally acquired by Danone in 1977) and Maes breweries. Its main brands are Maes and Cristal lagers, and speciality beers Brugs and Grimbergen. The latter, a traditional abbey beer, is gradually becoming an international brand, available in more than 20 countries by 2006. Central De Cervejas is now the #1 brewer in Portugal (behind Unicer), with 43% share. It  was formed in 1934 by a merger of four of the oldest and most famous breweries in Portugal. The company produces seven of its own brands of beer, including market leader Sagres, Imperial and non-alcoholic Jansen. It also markets Joi and Star soft drinks, best-selling mineral water Luso and Cruzeiro spring water. S&N acquired an initial stake and management control of the company in 2000, and agreed to buy out the remaining shares it didn't own in 2003 for around E342m. 

The third of the businesses inherited from S&N was Hartwall, the leading beverage company in Finland, which had been acquired by S&N in 2002. The company has an overall 44% share of Finland's beverages sector and 30% of the local beer market. Brands include Lapin Kulta and Karjala beers, the #2 soft drink Jaffa, and Novelle mineral water. In 2013, Heineken agreed to sell the business to Royal Unibrew of Denmark for E470m.

Asia Pacific Breweries, which produces Tiger beer, was for many years a joint venture with diversified Singaporean conglomerate Fraser & Neave. Heineken had around 42% to F&N's 40%, with the remaining shares publicly quoted. In 2012, Heineken offered to buy out its partner after rival brewer ThaiBev took steps to acquire a stake in F&N. An even stronger rival, Japan's Kirin, was also a shareholder in F&N having acquired a 15% stake in 2010, a situation with which Heineken had long felt uncomfortable. Heineken was forced to raise its offer to the equivalent of around $4.6bn in summer 2012 in the hope of swinging a majority of F&N shareholders. ThaiBev eventually conceded defeat and agreed to support Heineken's offer. That deal completed in November 2012, raising Heineken's holding to 95%. AP controls 30 breweries across the region, including New Zealand group DB Breweries, makers of Export Gold. Other key brands include Anchor and Baron's in Singapore, and ABC Stout in Cambodia. 

The S&N takeover also gave Heineken a shareholding in India's leading brewer United, whose brands including the local #1 beer Kingfisher as well as Sandpiper and Zingaro. In 2009, Heineken bought out the Indian subsidiary of the Asia Pacific Breweries joint venture and injected it into the partnership with United Breweries. As a result, United took over local production and distribution of the Heineken brand in India, alongside Kingfisher. Heineken now has a shareholding of just under 38% in United Breweries, equal to that of United's original owner Vijay Mallya. The remaining shares are publicly held. In 2012, the group began negotiating with Mallya to buy some of his shares to raise its stake to over 50%. The group is also active in China and began local production of Heineken in 2004. It acquired sizeable stakes in local brewers Kingway in 2004 and Jiangsu DaFuHao in 2005. Those two companies produce a variety of regional Chinese beers. 

There are numerous other partnerships around the globe. Brandhouse is a joint venture in Africa with Diageo's local brewery business to manage both Heineken and Guinness, as well as local company Namibian Breweries, whose products include Windhoek and Tafel. Brandhouse is now responsible for Amstel in South Africa. Also in Africa, Heineken has majority stakes in Nigerian Breweries, whose local brands include Star, Gulder and Maltina; and also Consolidated Breweries (33 Export, Turbo King). Those two businesses are to merge as one in 2014. In Australia, Heineken merged its sales and distribution operations in 2004 with those of local brewer Lion Nathan to create joint venture Heineken Lion Australia. In Japan, Heineken is marketed under license by Kirin. It also has holdings in Jamaican brewer Desnoes & Geddes (makers of Red Stripe); and in various breweries in Central America. 

The company is a major sponsor of music, film, tennis, football and rugby events worldwide. The Heineken brand is the long-established sponsor of the US Open tennis tournament and took over sponsorship of the UEFA Champions League football tournament in 2005 from stablemate Amstel. It has renewed that deal twice, now until the end of the 2015 season. It has supported the Rugby World Cup since 1995, and renewed that arrangement in 2011 until 2015. It also secured a role as the official beer of the 2012 Olympics in London. Heineken also has the most established social media presence of any beer brand, with a dominant presence on Facebook, well ahead of any rival. A concerted push by agency AKQA lifted the number of the brand's Facebook friends from around 900,000 at the end of 2010 to 5m by Dec 2011. At the same time the "Entrance" ad campaign by Wieden & Kennedy Amsterdam was the world's second most awarded during the year, an unprecedented feat for any beer brand. Since the late 1990s Heineken has also had a co-marketing partnership with the producers of the James Bond franchise, and this resulted in a special push to coincide with the launch of the most recent installment Skyfall. For the first time, James Bond was seen drinking a Heineken beer rather than his usual martini. Heineken Music is the umbrella for a global network of sponsored music events. Amstel still sponsors the Africa Cup of Nations football tournament, and Amstel Light is a major sponsor of golfing events in the US. 

Financials

Group revenues have risen sharply since 2008, largely as a result of acquisitions. For 2011, the bolt-on of FEMSA generated a 6% increase in reported revenues to E17.1bn (organic growth was 4%). However, net profit slipped 1% to E1.4bn. Revenues for 2012 rose 7% to E18.38bn. Reported net profit more than doubled to E2.95bn as a result of an exceptional gain from the revaluation of its APB shareholding. Excluding that one-off benefit and other financial charges, EBIT rose 8%. 

Total group revenues for 2013 were E21.26bn, up only 1% on a comparable basis. Consolidated proportional revenues rose 5% to E19.20bn, but reported net profit more than halved to E1.36bn because of the year-earlier exceptional gain on APB. Comparable net profit excluding adjustments slipped 5% to E1.59bn. The acquisitions of FEMSA, APB and other businesses are steadily reducing Heineken's reliance on Western Europe, although that region still contributed 35% of total revenues. Central & Eastern Europe added another 16% in 2013. The Americas generated 25% and Africa Middle East 14%. The APB purchase boosted Asia Pacific's share to 11%.

The group has a complicated shareholder structure. Heineken NV is the main trading business. This is controlled via a stake of just over 50% by Heineken Holding, which is in turn 89% controlled by the Heineken family's investment company L'Arche Green. Freddy Heineken, the company's charismatic chairman, died in 2002, passing ultimate control to his daughter Charlene de Carvalho. She vowed to maintain the business under family ownership. The Heineken family is represented on the group board by Charlene de Carvalho's husband, investment banker Michel de Carvalho. Their son Alexander was appointed as a director in 2013. Under the terms of the buyout of FEMSA's brewery business, the FEMSA parent company ended up with a direct 12.5% stake in Heineken NV, and an additional stake of almost 15% in Heineken Holding. Around 34% of Heineken NV and 37% of Heineken Holding are publicly owned.

Management

Jean-Francois van Boxmeer is chairman & CEO of Heineken; Rene Hooft Graafland is CFO. They comprise the company's executive board. Following a reshuffle in early 2013, members of the executive committee include Alexis Nasard (president, Western Europe & chief marketing officer), Jan Derck van Karnebeek (president, C&E Europe and chief sales officer), Didier Debrosse (managing director, Brazil), Stefan Orlowski (president, Americas from July 2013, replacing John Nicholson), Siep Hiemstra (president, Africa & Middle East), Theo de Rond (executive director, partnerships) and Roland Primez (CEO, APB & president, Asia Pacific).

Other senior executives include Marc Koster (executive director, group business development), Chris Barrow (chief strategy officer), Cyril Charzat (sales & marketing director, Asia Pacific & senior global brand director for Heineken brand), Gianluca di Tondo (senior director, global Heineken brand), Floris Cobelens (marketing director, Italy), Bram Westernbrink (marketing director, Netherlands), Ralph Rijks (marketing manager, Heineken brand, Netherlands), Sandrine Huijgen (global communication director, Heineken brand), Diana Agudelo & Sarah Nisenbaum (global communication managers, Heineken brand), Josefien Olij (global brand communication manager), Christopher Carroll (global media & communication manager), Michelle Bertens (global brand design manager, Heineken brand) and Hans Erik Tuijt (global director Heineken activation). Nuno Teles succeeded Lesya Lysyj as chief marketing officer Heineken USA in early 2014.

Background

Produced from a superior form of specially developed yeast (which the company still produces exclusively in Holland and ships to its global breweries and partners), Heineken was first introduced in 1863. That year Gerard Heineken purchased "the Haystack", a brewery in Amsterdam that was already around 300 years old, and began brewing his own beers. By 1876, he was exporting to France and by 1894, to the US. The company was the first brewery to resume exports of beer to the United States following the repeal of Prohibition, and quickly established itself as the country's #1 imported beer. Meanwhile, Heineken was expanding its international operations elsewhere, forming a joint venture in Singapore in 1931, now called Asia Pacific Breweries. Other acquisitions followed in Asia, South America and Africa.

By 1955, half of the beer produced in Holland was manufactured for export, and the company continued to acquire breweries in other countries. In 1968 Heineken bought the Amstel Brewery in Holland and its own chain of international breweries. The company's growth accelerated even faster after 1971, when the business passed to Alfred "Freddy" Heineken. During the 1940s, he was sent by his father to the US to learn American marketing techniques. He put these into practice in the 1970s, making Heineken into a household name with a series of memorable marketing campaigns, not least the "Refreshes the parts other beers cannot reach" TV ads (originally created by what was then Lowe Howard-Spink in London), which ran in the UK for more than 30 years). In addition, in 1983, the brewery expanded its range to become a producer of stout through the acquisition of James J Murphy in Cork, Ireland, makers of Murphy's.

In 1991, the company cemented its position in the US, buying out long-established family-run importers Van Munching & Co. It also began to expand into Eastern Europe with the purchase of Hungary's Komaromi Sorgyar brewery. The 1990s saw a string of further acquisitions including Italian brewery Birra Moretti, France's Fischer Group, Slovakia's Zlaty Bazant and Poland's Zaklady Piwowarskie. In 1998, the group merged four Polish breweries to form Zwyiec Group. In 1999 Heineken agreed to acquire Diageo's majority stake in leading Spanish brewer Cruzcampo, merging that business with its existing El Aguila brand. However regulators forced the group to sell off all but its three leading beer brands, Heineken, El Aguila and Cruzcampo.

The group was also rumoured to be among the bidders for UK beer companies Bass and Whitbread. However Belgian arch-rival Interbrew acquired both. (Interbrew was later forced to relinquish Bass). The deal created a problem for Heineken, in that it was left without a licensing arrangement in the UK, one of its key markets. Whitbread had held the UK license for Heineken since 1968. Following the sale of its beer business to Interbrew, Whitbread leased back from the Belgian company one of the breweries included in the sale and continued to produce Heineken under license until the end of 2002 in order to satisfy their contractual obligations. 

Meanwhile Heineken continued to add to its portfolio elsewhere in the world, acquiring Gemer and Martiner breweries in Slovakia and Affligem in Belgium. Early in 2001, the group became majority shareholder in Nigerian Breweries, the #2 beermaker in Africa. It also took its first steps into Germany, acquiring a 49.9% stake in BrauHolding International, a subsidiary of German conglomerate Schorghuber. 

The group extended its reach in Brazil in early 2002, increasing its stake in local brewer Kaiser, the Brazilian licensee for Heineken, to 20%. At the same time the Dutch company gave its support to the acquisition of the rest of Kaiser by Canadian brewer Molson. The group also acquired Russian brewer Bravo International, whose brands include Ohota, Botchkarov and the local license for Lowenbrau; as well as Egypt's only brewery, Al Ahram Beverages. Other purchase included a 45% stake in Karlsberg International Brand, which ranks about 12th among German brewers, in partnership with its German partner, BrauHolding; and also a 50% stake in the holding company controlling CCU.

Last full revision 5th April 2013; updated 12th February 2014

Heineken Italy Heineken Switzerland
Heineken France Heineken Thailand
Heineken Germany Heineken (Japan)
Heineken Portugal Amstel South Africa
Heineken Spain Amstel Greece

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