Amid a craft beer revolution, maintaining a sense of cool at an established brewer and brand owner such as Heineken is not necessarily an easy task. Executive global director of marketing Søren Hagh, however, does not appear to be a man who feels the pressure of adapting to change despite being responsible for a portfolio of more than 250 alcohol brands.
Speaking to Marketing Week ahead of his presentation at Dublin’s Web Summit earlier this month, Hagh admits that the beer giant’s decision to switch the majority of its marketing budget into digital channels has not impressed all of his marketers, but it is a strategy he is driving ahead.
“Around 18 months ago, we completely rewired the entire organisation and its approach to marketing,” he says. “There has been a lot of complication for our people and agencies, and some are angry as it’s a big change, but it’s a wake up call and we must embrace digital to remain relevant. Digital spend is 25% of our ad budget but it will easily surpass 50% within two years.”
Established FMCG players turning to a digital strategy is not unexpected these days, but that is only one facet of Heineken’s renewed approach to growing the profitability of its brands, which include Amstel, Sol and Strongbow.
Heineken, which was crowned Cannes Lions creative marketer of the year in June, saw group revenues rise 8% to €5.5bn (£3.9bn) in the three months to the end of September 2015, while beer volumes also grew 6.7%. The latter is well above the industry average of around 1 to 2% growth.
Hagh credits recent sales figures to Heineken’s switch to “more diverse and surprising storytelling”, citing a recent ad for its product placement partnership with the latest James Bond film Spectre, where it made the bold move of making Daniel Craig’s spy a secondary character who is saved by a female Heineken drinker. Having held senior marketing roles at companies such as Lego and L’Oréal, Hagh is no stranger to getting the most out of a pop-culture sponsorship.
He explains: “We’re moving into a world where customers can swipe one way and rule you out of the conversation instantly. The world of okay marketing and doing the bare minimum with a sponsorship like Bond is a thing of the past – you have to consistently surprise consumers to remain relevant. Women are also drinking beer and there are just as many as there are men, so we must celebrate that moving forward.”
Hagh suggests Heineken has work to do on its storytelling in newer digital channels, especially given the level of investment being redirected there. “When I look at Instagram and Snapchat, I don’t believe we are using them perfectly but you have to make mistakes to evolve. We don’t want to use Instagram just to post a Heineken bottle as it doesn’t add value; we want to figure out how to tell emotive stories on it,” he explains.
The same is true of virtual reality. Hagh says: “I look at the apple orchards in Hereford for our cider and virtual reality would be the perfect way to transport people inside our story. That could be the future of our advertising. Ultimately, if Heineken is to be a pioneer in digital marketing, we have to accept that we will make mistakes along the way but that is crucial if we want to achieve true greatness.”
Being on trend
Heineken’s “surprising storytelling” also extends to its smaller brands and is a way to tap into the rise of independent craft brewers, says Hagh.
“We have a brand called Affligem and the brewing process isn’t owned by us but by monks, who have been brewing for hundreds of years in an old monastery in Belgium. You couldn’t make that story up and that sort of quirky heritage is changing our approach to storytelling,” he explains.
In September, Heineken bought a 50% stake in American craft producer Lagunitas Brewing Company. However, Hagh admits craft beer is potentially a risk for Heineken as the consumer will quickly work out if the bigger players are simply trying to ride on the bandwagon.
“You can’t just jump on craft beer as it looks inauthentic, so we are taking a considered approach,” he clarifies. “Craft beer has made consumers ask more questions about provenance like ‘what is inside?’.
“We’ve been soft on telling our history over recent years. People want to see what makes our beer different and we’ll start to communicate those unique stories in an improved way over the coming years.”
The public’s thirst for new drinking experiences, meanwhile, has led Heineken to launch a home beer machine, The Sub (pictured below), which can be loaded with cannisters holding 2 litres of beer. These are known as Torps, short for torpedoes. The machine and refills can be purchased from the brewer’s website. The Sub enables consumers to pour their own glasses of Heineken, Affligem, Desperados and several other Heineken beers in the comfort of their home.
Although it is early days, Hagh says taking the “niche” idea of having a beer tap at home into the mainstream is a wise move, and presents a new means of distribution to add to traditional pubs and retailers.
“You can only fit so many beers into Tesco,” he jokes. “We can potentially allow consumers to brew thousands of different beers, so the idea of a fresh brew at home is exciting. It will become the norm but not overnight. It won’t be a billion-pound business by next year, sure, but we’re confident we will find a way to make it one.”
Craft beer is not the only trend Hagh has noted. He says that expanding Heineken’s cider ranges internationally, especially within markets such as the US and Africa, is a focus, while non-alcoholic beer also presents “huge opportunities.”
“As an industry, we have perhaps been guilty of embracing innovation less than other industries but brands such as Foster’s Radler, which is a mix of lemonade and beer, are bringing new people into bars and pubs.
“We’re also super excited by non-alcoholic beers. They were considered dull and unexciting before but the products we will launch over the next 18 months will change the game.”
Heineken may soon need a game changer more than ever, after the world’s largest brewer Anheuser-Busch InBev agreed a deal last week to buy rival SABMiller. Currently third biggest in the world, Heineken’s production volumes would be dwarfed by the new super-brewer, which would enjoy huge economies of scale and an unprecedented portfolio of global beer brands.
“That deal didn’t surprise me because it has been rumoured for a while, but we are quite confident in the direction we are heading and our amazing brands and stories,” says a defiant Hagh. “You can’t spend your life getting frustrated by looking at others; you must focus on yourselves to succeed. We won’t cut corners in our brewing and that’s why we’ve been so successful for the past 150 years.”
The next 150 look hopeful too. Hagh says “the jewel brand” of Heineken’s portfolio, Heineken beer itself, is “constantly surprising” the business with its growth. He expects it to continue to grow in 2016 together with beer and tequila mix Desperados, which is delivering “comfortable double-digit growth”.
However, with Heineken’s ongoing shift to digital marketing, its focus on new kinds of storytelling and its forays into new territory with The Sub, Hagh is clearly looking well beyond the next year.