How Heineken raise its stature in its various worldwide markets and respond to the changes that were occurring in the global beer industry? Were the current strategies effective? What else could it do?

 
 
 
 
 
 
 
 

CASE 10 HEINEKEN* At the start of 2013, Dutch brewer Heineken had strengthened its position as the world's third largest brewer by securing a stronger foothold in the lucrative Asian beer market. It had recently paid over $6 billion to secure control of Asian Pacific Breweries, the owner of Tiger beer, Bintang lager, and other popular Asian brands. Listed in Singapore, Asia Pacific Breweries operates 30 breweries across the region, with operations in Cambodia, China, Indonesia, Malaysia, New Zealand, Singapore, Thailand, and Vietnam. CEO Francois van Boxmeer stated that the firm had wanted to make "a bold move in the region, which will be a growth market for decades to come."1 The move came on the heels of acquisitions and capacity investments that Heineken has been making in other developing markets. In 2011, it purchased five breweries in Nigeria to increase its presence in Africa, which is becoming one of the world's fastest-growing beer markets. The previous year, it had acquired Mexican brewer FEMSA Cervesa, producer of Dos Equis, Sol, and Tecate beers, to become a stronger, more competitive player in Latin America. With its purchase of Asia Pacific Breweries, Heineken expects that around 55 percent of its operating profits will come from such high-growth markets. At the same time, Heineken has maintained its leading position across Europe. It made a high-profile acquisition of Scottish-based brewer Scottish & Newcastle, the brewer of well-known brands such Newcastle Brown Ale and Kronenbourg 1664. Although the purchase had been made in partnership with Carlsberg, Heineken was able to gain control of Scottish & Newcastle's operations in several crucial European markets, such as the United Kingdom, Ireland, Portugal, Finland, and Belgium. These decisions to acquire brewers that operate in different parts of the world have been a part of a series of changes that the Dutch brewer has been making to raise its stature in the various markets and to respond to changes that are occurring in the global market for beer. Beer consumption has been declining in the U.S. and Europe as a result of tougher drunk-driving laws and a growing appreciation for wine. At the same time, the beer industry has become ever more competitive, as the largest brewers have been expanding across the globe through acquisitions of smaller regional and national players (see Exhibits 1 and 2). Go to library tab in Connect to access Case Financials. EXHIBIT 1 Income Statements*