Heineken aims to go where other beer brands cannot reach

Heineken has unveiled plans to extend its non-alcoholic beer brand Fayrouz into western markets and is understood to have handed the brand’s £25m advertising account to TBWA/ London. The agency has been tasked with creating a Europe-wide advertising campaign that is expected to target primarily the European Muslim population because of the drink’s halal-compliant status.

Having developed a strong following for the fruit-flavoured malt drink in its home market of Egypt, Heineken is now gearing up to launch the brand in five “key” European markets, likely to include Germany, France, and the Netherlands. It follows Heineken’s acquisition of the brand from Egypt’s sole brewer, Al Harham Beverages (ABC) in 2002 for more than $220m (£180m). Fayrouz differs from other non-alcoholic beer brands, including Diageo’s UK market leader Kaliber, in that its production avoids fermentation so alcohol is never produced, making it suitable for observant Muslims.

There has been recent growth in the number of products targeting Muslim consumers. Last year global pharmaceuticals giant GlaxoSmithKline (GSK) took the unusual step of obtaining halal status for its Ribena and Lucozade drinks following rumours in Islamic countries that they contained alcohol and were therefore forbidden.

In the soft drinks category there are several Muslim colas positioned as alternatives to mainstream equivalent Coca-Cola, while financial products conforming to Sharia law are now widely available in the UK from both high street banks and the wholly compliant Islamic Bank of Britain. Heineken is now preparing to use its existing distribution channels and marketing clout to penetrate this market. There are thought to be about 1.8 million Muslims in the UK, with around half of these living in the London area, and about 12 million Muslims living in the European Union, principally concentrated in France and Germany.

Interbrand managing director Graham Hales says Heineken could “create a profitable stream of income using its existing distribution channels”. However, to achieve this the company will have to overcome social sensitivities around marketing products to the target audience. Observers view the roll-out as a “radical” step for the brewer, warning that the move could cause serious damage to the parent brand if it fails to execute the campaign in a discreet fashion. There are also questions around whether there is sufficient consumer demand for the product among a population that has not traditionally had cultural associations with alcohol. Allan Salmon, a consultant at branding agency The Value Engineers, says: “In the past there has been controversy around whether alcohol should be marketed to Muslims and if they should be buying non-alcoholic beverages from companies that manufacture beer.” The non-alcoholic lager market as a whole also poses its challenges, with other brewers facing performance issues after struggling to deliver on taste. Hales says that, while in the past these products worked well with the responsible driving push, there is now a broader acceptance that people do not need to drink alcohol in social situations. However, despite this shift, there is still strong demand for the social lifestyle image associated with alcohol brands, particularly among younger consumers, that their soft drink counterparts are unable to offer.

And then there are broader challenges surrounding innovation. Salmon describes the beer category as an “incredibly conservative sector” which over the past decade has lacked serious innovation but instead been characterised by minor changes around pack formulations, ABV levels and the resurgence of certain categories, such as the cider market, driven largely by changes to consumer tastes. While Heineken’s move represents a bold step for the category, the likely outcome is uncertain.