The infamous Heineken “bite” refers to the distinct aftertaste of the product. One could also make the argument that it refers to Heineken’s continued sales and revenue growth in the beverage market. I was recently fortunate enough to visit its original Heineken Brewery, which has now been converted into “The Heineken Experience” during a trip to the brand’s hometown — Amsterdam. After some fact-finding and personal experience, Heineken is clearly on top of its game. Sporting a fantastic business model that properly understood the power of crisp branding, they continue to expand their portfolio of beer and increase sales of staple brands, which interestingly enough, includes Amstel.
Heineken was founded in 1864 by the young and upcoming brewer Gerard Adriaan Heineken. Its key ingredient, developed 22 years later by a French apprentice of the famous chemist Louis Pasteur, is called “The Heineken A Yeast”, and is still the main yeast used in its current brewing process. The brewery, passed along family lines for the next 100 years, survived two world wars and prohibition in the United States, a key market for an organization that has always focused on exporting it’s product. After World War II, with many of the Netherlands major beer breweries closed due to extensive damage, Heineken and it’s rival Amstel emerged as the dominating brewers in the city.
In a bold move that has paid high dividends, Heineken eventually purchased it’s largest competitor, Amstel, solidifying Heineken as the #1 brewer in Holland and laying the framework for the business to become the 4th largest brewer in the world. Indeed, Heineken has grown the acquired Amstel brand into the #1 imported light beer in the United States and Heineken just completed a 2006 year that saw it’s flagship brands experience a 14% growth in revenue in the Americas. And you thought the days of Dutch imperialism were over! (political humor anyone? No?
The original factory tour itself is referred to by Heineken as “The Heineken Experience”. But what is that experience and why has it translated into such solid growth? What else has been driving this company’s brand awareness over the last five years? What marketing tactics is Heineken focusing on to continue to grow and swallow up market share?
The tour itself offered some key insights into the thought process of the organization. Everything was crafted with the brand at the forefront of the attention. The proud history of the brewery was carefully adapted for its modern marketing approach, and participants were encouraged to taste, explore and learn about its process in an entertaining atmosphere. Heineken even had an amusement park type ride that put you in a bottles perspective, taking you through the process in a unique and entertaining way. The tour included three Heineken brews and a souvenir at the end of the tour. The bar at the end of the tour was a scene of smiling tourist faces and immersed consumers. Clearly the tour had made a positive impression on its participants in a way that other marketing vehicles would struggle to accomplish over many months of hard work.
So from the very beginning, Heineken was off to a proper start. But it takes more than a single marketing pitch to make a long lasting impression. Heineken is excelling in other marketing vehicles where its competitors are not.
Of all it’s competitors, which namely include brews manufactured by InBev, SABMiller, Anheuser-Busch and Molson Coors Brewing Company, Heineken has certainly been the most innovative in creating superior branded packaging for their product line over the past decade. Its latest innovation, the 5.0 Liter Heineken DraughtKeg, essentially a miniature self-sufficient keg, has been a major hit with consumers. Demand for the product has enabled Heineken to triple its production of the design for 2007 and has undoubtedly increased brand awareness on store shelves across the globe.ii While I can not confirm this, I imagine that the Heineken Draught Keg could trace it’s origins to another innovative packaging design, The Heineken Keg Can, a wildly successful 12oz aluminum can that differentiates itself from its competitors on store shelves. Resembling a keg among bottles, a quick consumer glance most certainly influenced more than a few purchase decisions.
While the previous products almost certainly penetrated the minds of more than a few male drinkers, Heineken has also packaged products that appeal to the female demographic. It’s latest product — Heineken Premium Light, has a sleek, slender and sophisticated look. Heineken has seen significant market share since the products launch in the female demographic, and they intend to keep pushing down the pedal. According to their 2006 annual report, Heineken estimated that they would sell roughly 400,000 hectoliters during the year. Instead, they wound up with sales of an estimated 680,000 hectoliters – more than 70% above initial forecasts! ii
In the packaging category, there is no question that Heineken dominates the market in innovation. With the exception of a few innovations from Molson Coors, its competitors don’t even come close.
And to complete the marketing machine that is Heineken? Heineken has consistently focused on a steady diet of on site event promotion and sponsorships coupled with television advertisements. In building its sophisticated culture, all sponsorships generally include various cutting edge entertainment choices such Casino Royale, the latest installment of the James Bond franchise, and the boundary pushing and critically acclaimed TV show “Nip Tuck” – which Heineken paid the FX network to present commercial free. If the sponsorship opportunity is at the forefront of pop culture style and sophistication, Heineken is looking to be front and center — speaking intellectually to intelligent consumers. And it continues shining with their TV spots…
Contrast the scenes from a typical Heineken TV commercial to a Miller Light or Bud Light spot. Your typical Miller or Bud advertisement features young adult males generally doing something ridiculous – and it generally receives a laugh as the young adult male consumer relates to his inner desire to turn back time and relive the “glory days” of college and early post-college. Oppositely, Heineken’s advertisements feature the same demographic in more sophisticated party environments, with individuals clearly looking to mature and establish a future for themselves along with friends. The spots are not dummied down to appeal to that immature male that a girlfriend, wife, or mother would complain about – they appeal to an individual with a successful, forward thinking attitude.
These marketing strategies continue to push Heineken as a sophisticated high quality product. Conversely, Miller Brewing Corporation has pitched to the college and post college crowd with more juvenile tactics that may be extremely humorous, yet Miller sales have remained stagnant this year. One could argue that Miller’s approach of targeting 21-25 year old drinkers will pay off long term if they remain brand loyal, and their sales have certainly increased over its primary rival Anheuser-Busch the past decade. Time will tell.
New challenges are on the horizon for Heineken and it’s competitors. Craft beers are quickly snagging up market share, with sales up 10% this year alone. It is going to take continued innovation to maintain the foremost areas of the consumer mind-set. Fortunately for Heineken, all they have to do is more of the same.
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1:http://en.wikipedia.org/wiki/Heineken
2:Heineken Annual Report, 2006
3:http://www.boston.com/business/articles/2007/07/31/miller_brewing_sales_dip_07_percent/
