Just two years after turning its back on UK television, Heineken is returning to the small screen (MW last week) to convince UK beer drinkers that “get the head right and the rest will follow”.
Attempts to persuade pub-goers to order European-style 2cm heads on their pints is the latest stage of Heineken’s strategy to introduce Continental drinking habits around its draught premium beer. It is a far cry from the days when the beer brand sought to “refresh the parts other beers cannot reach”.
The Dutch brewer introduced its premium 5% ABV Heineken Export brand in 2003 after scrapping its 3.4% beer, which was developed to cater for a UK market dominated by ale drinking. Its 3.4% lager was launched in the UK in the 1970s and brewed under licence for more than 30 years by Whitbread until the UK was brought in line with other European markets. Heineken UK marketing director Iain Newell says: “Heineken around the world has always been 5% ABV apart from in the UK and Ireland.”
Newell says the best way to drink Heineken is in the Continental style of smaller measures with a thicker head, a strategy he believes will set the company up for the next ten to 15 years.
The brewer plans a number of activities to claw back some of the market share lost when it became solely an export brand. According to Mintel, in June 2005 Heineken sold 69 million pints when it repositioned as a premium lager at premium prices, compared with 528 million pints when it was a low-margin standard lager.
Iain McLernon, business director at the consultancy Drink Works, says the company chose a difficult time to reposition as a premium brand, although the change was also likely to have been decided when Whitbread was taken over by InBev, a brewer that houses rival premium beer Stella Artois in its portfolio. “Heineken has been rather unlucky in that there’s been a lot of public debate in the press and from government about the high ABV in beers. You also no longer have to have a premium ABV to be a premium beer,” he says and points to Becks which has two variants, a 5%, and a 4% that “proves you can have a premium beer with an everyday 4% ABV”.
More than 95% of lager in the UK is consumed in pints according to Newell, who says the company wants to push smaller Continental measures, and is preparing to launch new half-pint glassware. “There’s a way of drinking lager on the Continent which we think is a better way,” he says.
Although some analysts question Heineken’s strategy, McLernon believes moving into the premium end of the market could work for the brand. “I think it is a good move because the ABV is not as important to consumers as three years ago.”
The company has a long history of targeting the premium end of the market after being founded in 1864 when 22-year-old businessman Gerard Adriaan Heineken bought The Haystack brewery. In 1868 he stopped producing the top fermented “workman’s ale” and switched to the Bavarian method of bottom fermentation, known as “gentleman’s beer”. Four years later the company was renamed Heineken Breweries. Over the century the company grew at a phenomenal rate and by 1914 was looking to expand into foreign markets.
Today Heineken has become something of a national institution in its native Netherlands where in 1999 it was voted “Brand of the Century” and Alfred Henry Heineken was named “Advertiser of the Century” for spearheading many of the company’s latter-day campaigns. It now employees more than 57,500 people, has 170 brands, although the Heineken family retains a majority stake in the company.
“The company is very much controlled from The Netherlands and for a brand like Heineken, which is trying to get consistency around the world, that is a good thing,” says McLernon. “If you have a lot of local offices you have a lot of versions. Guinness has been a great success internationally in terms of consistency around the world.”
He adds: “Having a family behind it means taking a long-term view rather than [seeking] short-term profit. They will realise that it’s the family jewels,” with an agenda that could be successful for future generations, he says.
In recent years the UK subsidiary has concentrated its marketing activity on press and poster ads and its sponsorship of the UEFA Champions League. Yet the new television ads – created by The Red Brick Road and showing a woman cavorting with a lobster – and the launch of a new Heineken draught keg to be used at home could lead the company to regain some of the market share it enjoyed as a standard lager.
One industry insider says: “I think Heineken could be dominant in the UK with the premium beer but it will take time. I don’t think it will ever have the same value as its earlier beer but it will have a strong position.”
Facts and figures
1864 Gerard Adriaan Heineken, a 22year-old Dutch businessman, buys The Haystack brewery
1873 Heineken Bierbrouwerij Maatschappij NV (Heineken Breweries) is incorporated
1914 The company sells 300,000 hectolitres a year, an increase of 30% on the beginning of the century
1928 An aircraft writes a Heineken ad in the sky above the Amsterdam Olympic Games. The company is fast-becoming an international brewer
1929 An international logo is introduced with the “Heineken lips”, two red semi-circles enclosing a black stripe and the name
1989 Heineken is the second-largest brewer in the world and sells in more than 170 countries
2003 Heineken stops licensing a 3.4% beer to InBev in the UK and starts exporting its premium 5% lager
2007 Heineken plans to air new TV burst after a two-year break to promote its strategy of serving the beer with a thicker, Continental-style head.