In the beginning...
No doubt you already know the company serves up one of the most popular beers in the world- but the famous pale lager is not the only thing the Heinken® brand has on tap. With over 300 brands and a strong global presence, even in developing countries, Heineken shows no signs of slowing down.
When we take a look at some of Heineken's key data, its status as a power player in the market becomes clear:
- Widest reach in the beer industry - currently available in more than 190 countries
- Revenue of $26.5 billion in 2021
- 231.2 million hectoliters of consolidated beer volume sold in 2021
- Employee count of more than 82,000 as of Q3 2022
- 167 breweries across 70+ countries as of 2021
- #2 top selling beer in the world in 2022
- #3 highest-selling imported beer in the U.S.
In this growth study, we'll chart the journey of how Heineken rose to become one of the most iconic beer brands in the world. The Heineken Story is a masterclass in how to succeed with market selection, strategy execution, branding, and innovation.
Long before Heineken became an internationally recognized beer, the name belonged to a young man from Amsterdam. At the tender age of just 22, Gerard Adriaan Heineken had a vision that would propel future generations of his family to the pinnacle of an industry worth over $731.6 billion in 2022.
In 1864, Gerard took note of the crumbling Dutch beer industry he saw around him, with breweries closing down left and right. But in a rapidly growing city, Gerard saw an opportunity. With help from his wealthy mother, he bought the local Amsterdam-based Den Hoybergh ("The Haystack") brewery.
Despite a lack of brewing experience, Gerard Heineken had what truly counts: an entrepreneurial spirit, the courage to do things differently, and the skill to execute his vision. Unlike the rest of the market in the Netherlands, he knew his new brewery was taking a huge risk because he was making lager. At the time, the Dutch were more accustomed to drinking ale, brown, and porter.
However, in just a year, Gerard brewed 5,000 barrels of Heineken beer. After two years, he generated enough profits to purchase more land, where he created a larger steam-powered brewery. But even as the early success continued, Gerard had no desire to rest on his laurels. Within five years of starting the Heineken brewery, Gerard made his first major pivot.
The young entrepreneur discovered a Bavarian lager made by a competitor in an international exhibition. Its sparkling flavor was a sharp contrast to the flat-tasting ale he had been making. Inspired by this novel discovery, Gerard began brewing Bavarian lager. By 1873, it was the only beer he was producing.
The Beginning of Expansion
In 1874, Gerard partnered with the Rotterdam-based d’Oranjeboom and built a new brewery. Now, with breweries in the Netherlands' two major port cities, the company was muscling its way up in the Dutch beer industry. People started to take notice, at home and abroad. In 1875, Heineken won its first award the Medaille d'Or in the International Exhibit of Marine and River Industries in Paris.
At this stage, Heineken had a greater capacity to brew a lot more beer. Ever the visionary, Gerard decided that it was time to market Heineken for global consumption as a "gentleman's beer." This clever marketing would set the brand apart from the litany of working-class beer brands, which were seen as simple commodities.
The Birth of the Modern-Day Heineken Beer
Gerard was determined to uncover "the secret of beer," so he started to brew new varieties of beer again in 1880. Heineken invested in researching and experimenting with the latest technology throughout this decade, and by 1886, the company found its golden ticket.
A chemist working for Heineken by the name of Hartog Elion created a pure type of yeast- known as A-yeast- which has since become an essential ingredient of Heineken's beer.
After launching with its new recipe, Heineken won the Grand Prix at the Universal Exposition in 1889 for its newly developed pure yeast. This award would be the first of two significant coups, as the company landed the Hors Concours Membre du Jury in 1900.
“The Invention” - Heineken ad based on 1889 Grand Prix
This unique yeast remains the signature ingredient of Heineken's recipe, which defines the rich, balanced taste and subtle fruity notes you can still taste today.
Handing Over the Reins
By 1893, the brewery produced 200,000 hl per year, well above the average 3,000 hl per year of most Dutch breweries. Heineken was soaring, and the future looked bright. But that year, tragedy struck, thrusting the company into a new and unexpected chapter.
Gerard suddenly passed away at the age of 51. With its passionate leader gone, the thriving beer enterprise could have faltered like so many other breweries had done before. However, Heineken remained in good hands with Gerard's son, Henry Pierre Heineken.
Key Takeaway #1: Innovation Fuels Early Growth
Heineken's early growth is defined by a commitment to innovation and decisive action. The founder may not have been an expert brewer, but he was a visionary with big ambitions. With intelligent branding and by taking chances with new ideas and technology, you can stand out in your market.
Taking Heineken International
Under Henry’s leadership, Heineken grew aggressively. The company acquired six new Dutch breweries and looked to gain strongholds in other countries to gain access to new markets around the world.
A Fateful Voyage to Asia
In a 1932 trip to Singapore, Heineken's export manager- Pieter Feith encouraged two Scottish businessmen to expand their lemonade business to produce beer as well. Shortly after, Heineken partnered with the Scottish men to form Malayan Breweries Limited. Their flagship product, Tiger Beer, would go on to become the best-selling beer in Asia.
Heineken continued their regional expansion by acquiring an Indonesian brewery and started producing Bintang. Today, Bintang is almost synonymous with the word "beer" in Indonesia.
Bintang beer on a beach in Bali
The reason for Heineken’s massive growth in Asia was simple- the brand did something that no other brewer was doing at that time. It introduced beer into countries that previously had no locally brewed beer or the means to create their own.
Heineken nurtured an interest in beer by investing in local brands and grew the domestic demand for these new locally-brewed beverages. Once the company established a foothold in the local market, Heineken imported its other brands to the country.
As the company introduced locals to these superior recipes, demand rose in comparison to the domestic options. This strategy resulted in a one-two punch that enabled Heineken to corner the markets in these countries quickly. With this move, Heineken had the blueprint to take over another huge market.
The American Dream- The First Legally Sold Beer in the U.S. Since Prohibition
From 1920 to 1933, exporting beer to America simply wasn't plausible as the Prohibition laws made alcohol illegal. But Henry Pierre Heineken, like his father before him, was a determined man with a vision of taking the company to places no other beer brand had gone before.
And so, when Prohibition ended in December 1933, the company wasted no time in laying claim to the American market. After a long 13 years of secret haunts and poor quality homebrews, Henry and his colleagues thought the people of America would enjoy a real beer. Just three days after the ban on alcohol sales was removed, a ship loaded with Heineken crates docked in Hoboken, New York.
A ship full of Heineken heading to New York right after the Prohibition
By being fast out of the blocks, Heineken became the first legally sold beer in the U.S. since Prohibition began. Just as it had worked in Asia, being the first-to-market proved wildly successful in the U.S., allowing Heineken to dominate U.S. beer sales for decades.
Surviving World War II and Overcoming German Competition
At the close of the 1930s, the outbreak of World War II forced many factories to reinvent themselves to aid the war effort. All breweries suffered as beer production in Europe plummeted by 70%. Worse still, the war board started charging taxes on beer to help fund the war effort.
And yet, Heineken endured. By 1941, growing Anti-German sentiment across the world handed the Dutch brand a considerable advantage in the ailing beer market. Before then, the German-owned Beck's Brewery was a huge competitor, but as international demand for German beer waned, Heineken became the world's largest beer exporter throughout World War II.
During this time, the British seized Beck's factories in Jakarta. Heineken soon took over these breweries and became the primary provider of beer to Allied troops throughout Asia. This consolidation of its hold on the Asian market occurred at a critical time when demand was increasing, as beer was becoming more well-known and accessible.
Entry to Africa
After World War II ended, Africa was Heineken's next expansion objective. In 1949 they partnered to build a brewery in Nigeria, and Star lager was born. It became the most popular lager in Nigeria, and by the 1950s, nearly half of Heineken's export profits came from Africa.
It was during this period that Henry Pierre’s son, Alfred Henry Heineken, came on board. Better known as Freddy, the grandson of the company founder joined the family business in 1941 at the age of eighteen.
Freddy Heineken transformed the brewery and became one of the richest men in the Netherlands
As Henry Pierre entered the autumn of his career, a young Freddy got started on one of the most defining periods of Heineken’s history.
A New Focus on Acquisitions and Advertising
At first, Freddy's extravagant lifestyle left many people at Heineken wondering how suitable an heir was for the company. In 1946, the company board sent him to the U.S., where he gained valuable experience and maturity before his father retired in 1951.
Soon after, despite the early reservations about his maverick character, it became clear that Freddy Heineken was cut from the same cloth as his father and grandfather before him. Innovation and growth were among his core values. But what stood out were his skills as a marketing man.
Freddy personally established Heineken’s advertising department, introducing the patented “smiling e” on the branded text, as well as the iconic star logo.
Can you spot the ”smiling e”?
As the driving force behind advertising at the company, Freddy helped Heineken acquire other brewing companies as part of its strategy for global beer domination.
Here are the most notable acquisitions over that period:
- 1968 - Heineken acquired Dutch brewing company Amstel, its largest competitor
- 2010 - Heineken acquired and merged with Mexican brewing company FEMSA, expanding its footprint in Latin America
- 2015 - Heineken purchased a 50% stake in U.S.-based Lagunitas Brewing Company
- 2017 - Heineken bought Kirin's 12 Brazilian breweries
- 2017 – Heineken bought the remaining 50% of Lagunitas to become the sole owner
This appetite for international expansion was ingrained in Heineken's organization, with each generation of the family set out to take the company to the next level. By focusing on ambitious partnerships, acquisitions, and fostering demand for their beer around the globe, Heineken cemented its status as one the biggest beer brands in the world.
Key Takeaway #2: Building Relationships and Trust is Crucial
When you have a product that has global appeal, acting quickly makes all the difference between being a market leader or just another competitor. If you can build trust with local audiences and emerging markets at the right time, you can create demand and establish your brand as the de facto choice before anyone else has a chance.
Understanding Heineken’s Market
An engaging, inspirational brand story offers an excellent foundation for almost any business to grow, but it is not enough on its own. As you cut through the glamour of branding and the clever ideas of a talented advertising team, you still need a product that can survive in a competitive market.
A recent study found that, in 2020, the global beer market size soared to a value of almost $594 billion. Heineken owns about 12% of the overall market share.
In the years ahead, the beer industry is set to grow significantly, with projections of a CAGR (Compound Annual Growth Rate) of 3% for 2021-2026. This growth will drive the market's value north of $709 billion by 2026, presenting the vast potential for increased profits- if Heineken can increase their market share.
Let’s take a deep dive into the reality of the market Heineken plays in with a SWOT analysis to get a better understanding of the company's strengths, weaknesses, opportunities, and threats.
Strong Brand Name
Heineken has a strong brand name that is globally recognized as a quality beer across the world. Beer drinkers know what to expect when buying a Heineken. The brand's reputation has grown for almost 150 years. Furthermore, the product presentation reinforces its unique identity, with the instantly recognizable green bottle and a red star.
The Heineken Group owns 300 various brands in markets around the globe. Through decades of acquisition and mergers, the company has gained the power to leverage international markets, appealing to consumers who may not prefer Heineken. Some of the stronger brands include Tecate and Amstel.
A lineup of some of Heineken's worldwide brands
Heineken generates sales in over 190 countries. With only five countries currently not selling Heineken products, the company has a 98% global market penetration. Years of hard-earned expansion now mitigate the risk of economic decline in any given region and allows Heineken to pursue continued growth in almost any market on the planet.
In 2019, Heineken spent $404 million on advertising efforts—in the U.S. alone. This giant budget helps Heineken spread brand awareness and position itself as a premium alcohol brand people consider first when they reach the bar.
One key marketing angle is the company’s alignment with sports that have massive global audiences, such as the UEFA Champions League, Rugby World Cup, and Formula 1.
Heineken Rugby World Cup 2015 sponsorship
Continuous Innovation and Development
Heineken stays true to its history by constantly seeking out ways to create better products and experiences. This relentless drive to be the best enables the company to charge higher prices and maintain the premium beer image- "the Gentleman's beer," as Gerard once envisioned.
Here are a few recent examples of Heineken's innovation:
- iLABS: This accelerator program is an in-house effort to encourage innovation within the Heineken company culture.
- The Brewhouse: This digital platform allows the company to create innovation challenges among its team. Each challenge has a unique focus, such as design or sustainability.
- Product Innovation: Heineken is always on the hunt for new products to bring to market, like the Heineken Blade. This countertop draught beer dispenser gave the company an entry point into the casual diner sector, effectively changing the rules for draught beer.
Heineken Blade - an innovative mini-draft beer machine
Beneath the clever branding, Heineken is a formidable enterprise built on solid business foundations. But every company has weaknesses.
Ailing Market Share in America
Heineken may have a tremendous global footprint overall, but despite getting in early after Prohibition, the company's performance in the United States leaves a lot to be desired. In 2021, the U.S. came second in beer consumption only after China. Yet Heineken has experienced less-than-stellar performance in the States, leading to downsizing 15% of their U.S. workforce in 2019.
Vulnerability to Currency Rates
Heineken has excelled at leveraging currency exchange rates by setting up production facilities in developing countries. However, in 2016, the Mexican Peso crashed, negatively affecting performance in one of the most important consumer markets in Latin America. This setback was a stark reminder that low local labor costs can't always offset the lower local buying power.
Heineken may already generate billions in revenue and have an enviable worldwide presence that makes competitors go as green as Heineken's bottles. However, there are still some significant opportunities for the business to pursue.
As the global population grows, so does the number of potential Heineken customers. For example, China offers Heineken lucrative new avenues for business. It is the biggest beer market globally, and people are buoyed to spend more by a rapidly growing economy. It was little surprise when Heineken struck a deal in 2018, sealing a $3.1 billion partnership with China Resources Beer, the country's largest brewer.
Mergers and Acquisitions (M&A)
Anheuser-Busch InBev (AB InBev) took over competitor SABMiller in 2016 to become the largest beer company in the world. As the industry continues to consolidate, Heineken can close the market share gap by acquiring other companies.
Evolving Consumer Trends
Just a few years ago, it was difficult to find 0% alcohol beers. You might have been able to order St. Pauli Girl (one of the only non-alcoholic beers available) in a fancy restaurant if you were lucky. Now, Heineken is winning the alcohol-free game with its Heineken 0.0 product.
By offering consumers the chance to participate in the social aspect of drinking beer without consuming alcohol, Heineken could finally enter the last few untapped countries and markets where alcohol is severely restricted or even illegal, such as the Middle East.
While Heineken has some great opportunities in front of them, the company must also keep an eye on rising threats.
Anheuser-Busch InBev (AB InBev) is the largest beer company in the world, with Budweiser and Bud Light among its immensely popular products. While Heineken must continue to fight for market share against AB InBev, they also face competition from other notable breweries, including Danish brewery Carlsberg and CR Beer- the largest beer company in China.
Political and Economic Challenges
The COVID-19 pandemic struck a massive blow to the industry, causing a downturn in beer sales. In several cities—and even some countries like South Africa and Mexico selling beer was outlawed during lockdowns. As some of Heineken's primary markets, these measures put a dent in the company’s revenue in 2020.
Customers choosing another beer over Heineken is one thing, but a government-mandated halt of alcohol sales is a prospect that can knock billions off the company’s valuation. While the world is easing its way out of lockdown mode, many economies will take a long time to recover. And with the looming threat of another wave or another pandemic in the future, no brewery can rest easy.
With more research available on the adverse health effects of alcohol than ever before, increased regulation or outlawing of beer could mount a sizable threat to company growth. In the future, organizations or governments may choose to distance themselves from alcohol sponsorships either by choice or external pressure.
Global awareness about climate change and the carbon footprint of large companies is another emerging challenge. There could be increased environmental regulation around transportation, packaging, and water usage—all critical elements of Heineken's business model. Luckily, Heineken has grown wise to this threat by embracing more sustainable packaging and manufacturing practices.
Shifting Consumer Behaviors
Consumer demands never sit still. As consumers experiment with new ideas like craft beers, they will look for a beverage that reflects their changing tastes and values. Reinventing not only its brand but its product offerings will be an essential strategy for Heineken going forward.
Heineken's Data Approach
With the SWOT analysis in mind, Heineken must leverage data to guide its business decisions. This strategy is vital to ensure their advertising efforts and acquisitions are smart investments that fuel the long-term growth of the enterprise. Heineken evolved its data approach in 2021 to get a better understanding of its customers' behavior.
When the brewer looks to add a company to their portfolio, they look at the following key factors:
- Penetration - Can they gain key consumers and increase consumption per capita?
- Local Expectation - In Europe, they buy premium brands, whereas volume-based brands do well in Asia and America.
- Business Acumen - How savvy are the current owners, and will they make strategic growth partners for the region?
- Representative Sample - Can they accurately sample the population and extrapolate their consumption across the wider region?
- Rigorous Clustering - Is there enough consumer density and demand that will support a new location?
- Geolocation Data - Provides granular insights about the region to guide smarter business decisions.
- Advanced Analytics - Use machine learning algorithms to track the impact of every action.
Gaining awareness in a new market is never easy. Yet Heineken has done it time and time again. This success comes down to this data-driven acquisition strategy.
Key Takeaway #3: You Can't Do It All Alone
A strong brand name and proactive attitude to innovation can quickly grow a company. However, you must look outside the company to continue scaling. With data at hand, you can identify new audiences, strong partners, and external investors that will help your company expand its territory and fend off competition.
The Product That Brings Heineken Global Recognition
Heineken fiercely protects its brand reputation. In a sea of competitors, the brewer has found ways to differentiate itself with a premium product. Moreover, with Freddy’s nous for advertising and smart branding, the company has excelled at creating a perception of superiority.
Let's unpack Heineken's marketing and advertising strategies that see billions of dollars of revenue flow into the company year after year.
An Iconic (and Somewhat Controversial) Brand Image
Heineken's brand image boils down to the red star on a green bottle. The stark contrast is instantly recognizable- Freddy was the mind behind this eye-catching idea.
It doesn't matter whether it's on a can, bottle, 6-pack cover, or logo for an advertisement. You will never see a branded asset from Heineken without the red star and green color combination.
But where did this famous design come from?
As far back as the Middle Ages, brewers used five-point stars (yes, people from the Middle Ages knew what stars were) to symbolize the five ingredients of beer: barley, hops, water, yeast, and the "magic of brewing."
The red star was added to Heineken labels around 1883 and remained until the 1950s. At that point, the brand image came under scrutiny, as the red star was associated with communism in the wake of World War II.
Under public pressure and fear of losing face, Heineken temporarily changed the logo to a white star with red borders. But after the fall of the Soviet Union in 1991, the company reverted to the red star image.
Since then, Heineken has been loyal to its coveted design, even as the communism associations lingered. In 2017, the Hungarian government threatened to ban the beer, claiming that the red star was associated with totalitarianism.
Yet through it all, Heineken remained steadfast. And they have a good reason for sticking with the image, too. The great design supports the brand's identity. In Heineken's case, the 150-year-old heritage is elevated further by the red star and green bottle.
Why Heineken Uses Green Bottles (Despite Theories of Skunked Beer)
On the company website, the team explains that this preference for green bottles originated when Heineken established its name overseas.
“The quality was so good that while it was more expensive than local beers, people preferred the premium, imported product. To ensure consumers immediately saw the difference between the regular domestic beers and the premium quality Heineken, the bottle was made green instead of the usual brown.”
While most other beers opt for cheaper brown bottles, Heineken has stuck with the green bottles, even amid widespread theories that green bottles will end up with skunked beer because of more exposure to UV light.
Heineken’s famous green bottle
Not to be swayed by the thinking of the masses talking about a potential foul taste, Heineken essentially created its own narrative about green bottles:
"Green was chosen because it radiates freshness, naturalness, purity, and premium quality – just like the delicious, cold Heineken beer inside."
Various elements of the brand's design have changed, such as lettering and other colors, but the two most important ones remain. Together, the bottle and the logo have been instrumental in creating a brand that is instantly recognized as an authentic, quality beer.
Today, most people associate Heineken with good times, friends, and social gatherings. When consumers see Heineken's logo, they know they're in for a good time. And that brings us to our next chapter, where we’ll explore an integral aspect of the beer brand’s advertising strategy in the last generation.
Key Takeaway #4: Staying True To Your Brand Makes You More Authentic
Sometimes, standing out means going against the grain. Even in the face of controversy, bad press, or a question of the viability of your methods, loyalty to your brand image and identity can empower your brand in the long run.
Heineken Marketing Strategy - Relatable Advertising and Powerful Partnerships
Heineken is famous for its ad campaigns. A running theme in many of its ads is the focus on community. As Freddy Heineken once said, "I don't sell beer; I sell warmth."
The Social Focus
In 2017, Heineken felt the need to drive social change due to how little we interact with each other in a technological age. The company launched an ad campaign around the concept of people connecting and understanding one another. This campaign involved a social experiment where two people with opposing beliefs found common ground.
As part of the experiment, Heineken teamed with The Human Library, an organization focused on defeating stereotypes. The project loans out people (aka "books") from different backgrounds for conversation.
This focus on the social aspect of tolerance and connection is a powerful branding tool, even if it has nothing to do with beer itself.
Ingenious Product Placement
Product placement is a big part of Heineken's marketing strategy. It arguably wouldn't be the brand it is today without its subtle (and not so subtle) appearances on the big screen. Heineken has shelled out big bucks in the past for product placement in UEFA Champions League football matches, Formula 1 races, and even James Bond movies.
James Bond swapped vodka martinis for Heineken
With a $45 million deal, Heineken secured sponsorship for Skyfall in 2012. Whereas 007 is traditionally known for drinking vodka martinis, he was featured drinking a Heineken in the film. This promo was in addition to a Heineken commercial starring Daniel Craig (who plays Bond) and his co-stars.
And if being associated with the most "dangerous" man in the world isn't enough, Dos Equis (a Heineken brand) capitalized on this trope as well. The series of "Most Interesting Man in the World" commercials featured a handsome, classy, older gentleman drinking a Dos Equis beer—oozing an elegant vibe that conveyed a beer of superior taste and quality.
One of the most recognizable memes started as a Dos Equis campaign
This particular ad campaign was so successful that the character outgrew the brand, spawning memes as the Most Interesting Man in the World took on a life of his own. Eventually, Dos Equis moved in a different direction, using a younger actor and a new slogan.
The Unofficial Beer of Sports Fans
Imagine you walk into a bar to watch a game, and you have a handful of beers to choose from. Which one do you choose? The one you associate with that sporting event, of course.
Sponsoring events with massive audiences is a smart way to amplify brand awareness and recognition. When it comes to brands aligning themselves with powerful partners, few do it better than Heineken.
Football fans around the globe will know that you can't watch a UEFA Champions League match without seeing countless Heineken commercials or hoarding around the stadiums. Over the years, Heineken has effectively become the unofficial beer of football.
And the sports affiliation doesn't stop with soccer. Heineken has a long-standing relationship with rugby union. From the Heineken Champions Cup to its official partnership with the Rugby World Cup since 1995, the Dutch brand is the beer of choice for many rugby fans.
In 2016, Heineken became an official partner of Formula 1 racing, lending its name to a sport filled with drama, excitement, and the adrenaline-fueled spirit of individuals striving to be a winner.
Brand ambassadors are key to Heineken's image. These ambassadors can come from anywhere, including customers on the Heineken Experience tour of the brewery in Amsterdam—a memorable visit that stirs up word-of-mouth marketing.
And now, in the social media age, partnering with the right people can put your brand over the top. To do that, Heineken has embraced influencer marketing with icons from sports and movies:
- Conor McGregor - The notorious UFC fighter rose to stardom not only as an MMA champion but also for his charismatic, brash personality. But a 2014 Heineken commercial featuring the Irishman unveiled his softer side. The ad promoted a talent competition and showed the fearless McGregor doing nothing more than folding origami in humorous contrast to his violent skillset. The commercial's tagline was "Everyone is Legendary at Something."
- Landon Donovan - In 2016, Heineken developed a campaign to celebrate the rising popularity of soccer in the U.S. The MLS (Major League Soccer) star Landon Donovan was featured in a 15-second spot highlighting his rise to fame. Heineken also offered 90 people prizes for every MLS game, further associating the brand with the growing American excitement for the sport.
- Benicio Del Toro - A 2017 commercial opens with the charming actor sitting in an upscale bar. He explains how it takes 15 years to become a Heineken brewmaster. While Del Toro speaks directly about the premium quality lager, the imagery subconsciously conveys the underlying message—drinking Heineken makes you as classy and well-liked as this famous actor.
While brand recall is at the heart of most sponsorship deals, Heineken has always sought to make its advertising campaigns more relatable and memorable with sporting partners and celebrities.
Key Takeaway #5: Great Ambassadors And Ads Can Make You Stand Out In A Competitive Market
Even the best beers are still a commodity. With the correct branding, story, identity, and positioning, you can get noticed in a competitive playing field. When you partner with respected influencers, it's possible to elevate your brand above the rest.
Creating a Product for Everyone
While most people only see the result, the real success of a story like Heineken’s is rooted in its processes. Unlike digital products, physical products like beer can't be scaled in seconds to millions of customers.
For Heineken to stay at the top, they've had to develop excellent logistics. AB InBev, Heineken’s biggest competitor, has more financial muscle, sells more volume, and claims more market share than anyone. Thus, innovating quickly has always been a central tenet of Heineken's strategy.
Jan Derck van Karnebeek sits on one of Heineken's advisory boards. He explained that Heineken makes up for being smaller than their biggest competitor by ensuring that they get to market faster than anyone and leveraging their advertising to convey that they have the best product.
An excellent recent example of this approach is Heineken 0.0, which launched in March 2017, changing the non-alcoholic beer market forever.
A New Market Worth Targeting
Alcohol consumption has dropped around the globe, especially with younger generations such as Millenials and Gen Z. Whereas drinking alcohol is typically associated with university life, about 20% of current uni students don't drink.
This gradual shift comes down to growing awareness of the harmful effects of alcohol on the body and brain—especially for younger people who have grown up with access to infinite information at their fingertips.
The COVID-19 pandemic also played a role, with governments restricting access to alcohol. And of course, there is the timeless concern about gaining weight or becoming unhealthy.
So, what was Heineken to do in an evolving market? Adapt, like they always do.
How Heineken 0.0 Reinvented the Alcohol-Free Market
The alcohol-free category has remained tiny for a long time, and that's not surprising. Despite many attempts, most alcohol-free beers don't taste the same as the originals or simply didn't taste very good at all.
Heineken launched Heineken 0.0 and a handful of other 0% alcohol beers such as Birra Moretti Zero and Old Mout Alcohol-free. The goal was to launch a cross-brand zero-alcohol campaign in order to make the category take off.
To solve the taste concerns, Heineken invested in research that allowed them to maintain an almost identical taste between regular Heineken beer and the new Heineken 0.0, effectively creating an enjoyable alcohol-free alternative with fewer carbs and calories.
The brewer had to first brew the beer with the alcohol in it and then remove it instead of not letting the alcohol form at all. This approach keeps the end product from tasting too malty.
Now, consumers who want to fit in at a party or bar or even have a quick beer with lunch before driving to pick up the kids can partake. They can enjoy a tasty, low-calorie alcohol-free beer that doesn't make them feel like they're missing out.
This product has catapulted Heineken to the top of the alcohol-free market. Its solid footing became evident during the Euro 2020 football championships when French soccer star Paul Pogba removed a bottle of Heineken 0.0 from his table during a post-match interview. Remarkably, the stock price increased despite this apparent rebuke by one of the biggest social media stars in world football.
When your product is a commodity and consumers have a lot of choices, you must uniquely differentiate your product. Craft beer is a growing trend in recent years, thanks mainly to the explosion of artisanal culture.
Craft beer drinkers don't often buy the biggest name, but the best story. So when approaching the craft beer market, Heineken uses what they call a "reverse marketing approach."
In Heineken's case, traditional marketing is getting exposure by teaming with (or acquiring) large brands. In craft markets, the company found that starting with small breweries is a better strategy. Instead of sponsoring huge events like soccer matches, Heinken rolled the new craft beer out to smaller events and tasting sessions, letting the taste do the talking.
Beerwulf- Heineken’s take at craft beer
Take one of Heineken's brainchilds- Beerwulf. The company wanted it to have a brand of its own that wasn't associated with a giant company. Although still owned by Heineken, Beerwulf was set up as its own entity, makes its own decisions, and decides its own fate. The company acts as a retailer of not only Heineken products but competitors' as well.
Beerwulf’s website grew from 400 weekly orders to 400 orders per hour in just one year, winning them a 2018 golden Dutch Interactive Award (DIA) in the process.
Targeting New Audiences
In the 2000s, Heineken went on a shopping spree, snapping up 40 new brands from 2002 to 2012. Africa is an excellent example of Heineken's globalization success. The company has been able to localize its brand with a few key strategies.
First, they target wide locations. There is a diminishing return on marketing costs that fall in line with the size of the target region. A smaller area equals smaller returns. Heineken focused its attention on two quite specific data points: increasing beer sales (by incumbents) and the regional popularity of football (soccer).
Furthermore, manufacturing in Africa brings the added benefit of lower production costs. However, the brand can still sell its beer for the same (and sometimes higher) price than competitors due to Heineken's premium positioning.
This combination of factors makes Africa the "international business world's best-kept secret," according to former CEO Jean-François. And it explains why Africa is 50% more profitable for Heineken (particularly in Nigeria).
But for those who cry "exploitation," it should be noted that the brand donates millions each year to projects through its Heineken Africa Foundation. The foundation provides mosquito nets, improves sanitation and water access, and builds new schools to support the poorest people on the continent.
Key Takeaway #6: Always Look To Reposition And React To Market Changes
Many businesses stop when they’ve got “enough customers'' to keep them going. However, as markets change, so too will consumer tastes. The longevity of your brand and customer base depends on your ability to reposition yourself and offer new products to new, emerging audiences. Whether it’s a new location, new need, or a new twist on an old favorite, change is crucial.
The People Matter Most
As discussed in the previous chapter, Heineken has mastered the art of targeting local audiences in each region. From the 0% alcohol trend to the craft beer craze, the company is incredibly agile and intuitive in responding to the evolving tastes and trends in its market.
This ability to engage both massive audiences and micro-niches all around the world can be attributed to just how well Heineken knows its customers.
Geolocation Targeting to Discover Audience Needs
We must remember that Heineken is a manufacturer- not a retailer. They lack full visibility over all of the hotels, bars, and restaurants that sell its product. How could Heineken genuinely understand the impact of their brand awareness campaigns if they couldn't measure footfall at the point of sale?
There was always the chance of a blind spot in the marketing funnel. But with an intelligent geolocation strategy, Heineken used randomized control tests and advanced analytics to close that gap and gain the granular insights needed to infer causality from every action they took. In other words, the brand became much more in tune with its audience and learned which kinds of marketing worked best.
Establishing a Powerful Yet Relatable Voice on Social Media
Heineken has an impressive following on social media, especially on Facebook. The brand's 24M followers dwarf the numbers of their rivals - Budweiser, Guinness, and Carlsberg have 14M, 6.5M, and 3.3M respectively.
A big part of Heineken’s social media growth comes down to how well it engages users. Here are some of the ways that the company does that:
Encourages interaction with real-time campaigns
In 2012, a real-time campaign on the Brazil fan page called “One Like One Balloon” went viral, driving engagement with a fun idea. For every new like on the page, the Heineken team in Brazil blew up a balloon in its office.
Brazil’s Heineken office full of balloons
Embraces Storytelling and Brand Heritage
While the Facebook content strategy does include some football-related content, it also explores more of the brand’s history. This helps it to bond with customers through its incredible brand story.
Uses Geolocation Targeting for Relevant Content
Heineken uses geotargeting on its Facebook profile, allowing it to serve relevant content and language for each region. As an example, the U. S. page uses the American-English term "soccer" rather than "football."
A Relatable Tone That Stirs Up Excitement
On Twitter, the focus is very much on football. By adopting a conversational and fun tone, casual language, football-related terms, and jokes and memes, entering Heineken's Twitter feed is like meeting one of your football buddies down the pub. As the action picks up during a game, the feed acts like a sports reporter making quickfire announcements, echoing fans' emotions with every kick of the ball.
Unconventional Hiring Practices
When Heineken announced that they wanted to hire an intern for the Event & Sponsorship Marketing team- someone who would be helping the company to prepare for the Champions League final- there was an influx of applications. 1,734, to be precise.
Picking the perfect candidate wasn't going to be easy. As most of the applicants knew, this role wasn't about money- it was about the chance to work with a dynamic, innovative, and social brand that’s always trying to make a difference. As such, the right person for the job had to be someone who could think outside of the box.
With that in mind, the team at Heineken decided that the hiring process should be a little unorthodox. The recruitment campaign, known as "The Candidate", was a publicized video compilation of the interviews. It quickly went viral. The company secretly filmed the interviews, which captured each candidate’s ability to respond to some unusual circumstances (there were a few bewildered reactions too).
As applicants arrived in Amsterdam for their interviews, they faced three stages:
- Kick-off - where their prospective new boss held the applicant’s hand on the way to the meeting room.
- Medical assistance - where applicants had to help the boss after he blacked out in the middle of the interview.
- Fire drill - where firefighters arrived to rescue a Heineken employee who got ‘stuck’ on the roof after a hoax fire alarm.
By throwing convention out of the window, Heineken showed that they could engage employees. This campaign and its viral video compilation captured the interest of future employees, triggering a 317% increase in job applications.
Key Takeaway #7: A Genuine Effort To Engage Your Customer And Employees Helps You To Stay Competitive
Every business wants to know its target audience, but many don’t go the extra mile to truly understand the customer journey. When you leverage the power of data and social media, you can gain the insights you need to forge a connection with your audience. You can also nurture stronger internal ties with a fun culture that makes people want to work for you.
Final Thoughts and Key Takeaways
Heineken’s strategy involves a unique approach to their market, product, people, and processes. Its success is deeply rooted in the family's visionaries, who transcended their ideas into strategies and implementation. They’re able to deliver innovative results, sustainable solutions, and campaigns that keep the user experience at their core.
Recap: Growth By The Numbers
The Ultimate List of Strategic Takeaways:
- Strategy fuels innovation
Founder’s vision transformed into a strategy that fueled Heineken’s innovative approach to market, product, and branding.
- Enter new markets with local support
Heineken’s story is all about people and connecting with the community. Their strategic approach was to enter at the right time and create a local network. This sped up its success in new markets by building trust and establishing its brand as the top market player.
- To scale your business, base your strategy on data
To continue scaling, you must look outside of the company and rely on numbers. With data on hand, you can identify new audiences, strong partners, and external investors that will help your company to expand its territory and fend off competition.
- Constant change must be part of your strategy
Markets are volatile. As they change, consumer tastes will evolve with them. The success of your business depends on your ability to adapt and offer new products to new audiences, while still progressing towards your goals.
With each generation, the Heineken family has pushed the limits of what people believed was possible in the beer industry. As its status grew, not even a 1983 kidnapping of Freddy Heineken could hinder the company’s rise.
After being held ransom for several weeks, Freddy emerged to talk to reporters, joking that "They tortured me. They made me drink Carlsberg!".
While Freddy has since passed, the company continues to be a dominant player in the industry. This is largely thanks to its unique ability to use advertising and branding to blend an air of superiority with a likable, relatable character.
In doing so, Heineken is not only the gentleman's beer, but also the choice of sports fans, non-drinkers, and craft beer lovers alike. With over 190 countries now enjoying its many brands, Heineken has become the beer of the world.