Heineken UK sees ‘serial innovation’ as key to turnaround
Despite declining sales, Heineken UK is committed to being a “serial” product innovator as it looks to grow the beer and cider category and maintain its premium pricing.
The brewer’s UK business has become the global innovation hub both within Heineken and the UK, releasing 17 new variants into the market in 2014 and over 55 stock-keeping units (SKUs).
Jacco van der Linden, marketing director for Heineken UK, told Marketing Week that Heineken will launch new product innovation next year, particularly on the Desperados brand, which is the fastest growing beer in the UK for the third year in a row.
“We want to keep up this momentum,” he says. “95% of segment growth comes from the Desperados brand, and we want to continue to drive the category.”
Twelve per cent of Heineken UK’s revenue currently comes from innovations which have been launched in the last three years, a significant figure when compared to Heineken’s global goal of reaching 6% by 2020.
Draft dispense innovation growing category
Van der Linden believes the work the company does on premiumisation and draft dispense innovation is growing the category.
The “Heineken Served Extra Cold” innovation, which ensures beer comes out of a sub-zero degree tap at -3 degrees, has increased the rate of sale by 70% in its 1000 UK outlets while total beer sales in the pubs are up by 13%.
Heineken Smart Dispense, which reduces energy bills in a pub by up to 90% by eliminating the need for cellar cooling, is also a UK innovation that van der Linden is confident will travel.
June 2015 will also see the launch of “The Sub”, an in-home draft system designed by Marc Newson, creative director of Apple, just in time for Father’s Day. The launch will make use of an e-commerce platform similar to the one used in France and Italy where it was launched earlier this year.
Reinvesting in creativity
Marketing investment for Heineken UK has increased by 35% over the last two years as the brand has focused more on creativity.
The company is also committed to reinvesting money saved by cost cutting in commercial and above and below the line activity, as it believes in maintaining investment in marketing to drive cut through.
“The world and the profession have changed dramatically,” van der Linden says. “Creativity is the key to creating impact.”
The brewer has certainly been rewarded for its marketing efforts. Heineken will receive the Marketer of the Year award at the Cannes Lions festival in 2015 and was also given the IPA Effectiveness Award for the Foster’s Brad and Dan campaign this year.
It took home 23 awards at the Cannes Lions festival in 2014 and 17 the previous year.
Next year, van der Linden says the company will make a significant shift from traditional to digital and social media and will focus its activation around the UEFA Champions League, the Rugby World Cup and the new James Bond film, which will be released next fall.
Sales struggle amid marketing success
Despite its marketing success, Heineken’s sales have been struggling in the declining beer category.
The company’s latest quarterly results showed total consolidated sales had dropped by 4.1% in the UK and Western Europe, with total consolidated beer volume dropping by 4.7% and global sales falling by 1.5% to £4bn.
“In the last three years we’ve changed our organisation, processes, people and location,” van der Linden says. “Our new portfolio is fit for the future and ready to fight.”