Saved ncials Required information Financial Analysis: Heineken The following questions are about key financial numbers that impart useful insights into the financial health of Heineken. The financials offer quantitative measurements of the success or failure of Heineken's strategies. Part 3: Questions Based on the case and previous calculations, please answer the following short answer questions. Note: Your instructor will need to manually grade these questions 1 Based on the breakdown of geographic sales, in what region has Heineken seen the largest percentage increase in sales since 2016? What contributed to this growth? 2. What accounted for the decrease in net income from 2015 to 2016 for Heineken? This question will be sent to your instructor for greding CASES HEINEKEN its leading time, Heineken mainta Dutch brewer Heineken was expanding its presence around At the same the globe in response to the merger of Anheuser-Busch tion across Europ InBev with SAB Miller giving the combined firm a com in 2008 manding 30 percent of global beer sales. Heineken was in brewer of well-known talks to buy the Brazilian unit of Kirin, which the Japanese and Kronenbourg parent was planning to sell. The addition of Kirin beer m would double Heineken's share in Brazil to 20 percent. The g firm was also planning to launch Bintang, its biggest selling crucial European markets beer brand in Indonesia, into the UK and select European Ireland, Portugal, Finland, and markets. An industry spokesman was positive about the These decisions to Scottish & Newcastle, the of Scottish-based 1664. Although the purchase made in partnership with Carlsberg, Heineken was a eain control of Scottish & Newcastle's operations in several such as the United Kingdom acquire brewers that operate in dif brewer has been making to raise acquisitions and ing consolidation within the industry and changes that are world beers. We lerent parts of the world have been a part of a series of believe Bintang is perfectly suited to meet These moves came on the heels of and capacity investments that Heineken had been making in changes that the Dutch its stature in the various markets and to respond to grow- occurring in the global market for beer. Even as sales of ping markets. In 2013, the firm had strength beer have stagnated in the U.S. and Europe, ened its position as the world's third largest brewer by tak e owner of this deal, Heineken added 30 breweries across several coun- tries in the Asia Pacific region. A few years earlier, the firm been growing elsewhere, especially in develop This has led the largest brewers to expand across the globe ers (see E g full ownership of Asian Pacific Breweries, th Tiger, Bintang, and other popular Asian beer brands. With through acquisitions of smaller regional ad xhibits I and 2). need for change was clearly reflected in the appoint- n brewer FEMSA Cervesa, producer ment in October 2005 of Jean-Francois van Boxmeer as of Dos Equis, Sol, and Tecate beers, to become a stronger, Heineken's first non-Dutch CEO. He was brought in to replace Thorny Ruys, who had decided to resign because of his failure to show much improvement in performance. Prior to the appointment of Ruys in 2002, Heineken had been run by three generations of Heineken ancestors, whose portraits still adorn the dark paneled office of the CEO in its Amsterdam headquarters. Like Ruys, van Boxmeer The had acquired Mexica nore competitive player in Latin America. Case prepared by Jamal Shamie, Michigan State University, with the sistance of Professor Alan B. Eisner. Pace University. Material has been wn from published sources to be used for purposes of class discussion pyright O 2017 Jamal Shamsle and Alan B.Eisner HIBIT 1 Income os) IT 2 Balance ei 12 faced the challenge of preserving the firm's family driven 1 uraditions, while trying to deal with threats Heineken had never faced before. 190 breweries in over 70 countries, claiming about 10 per cent of the global market for beer (see Exhibits 3 and 4). firm's flagship Heineken brand ranked second only to Budweiser in a global brand survey jointly undertaken by Business Week and Interbrand. The premier brand has to Kevin Baker beverages at British market researcher n Ltd. When a U.S. wholesaler asked a group of The Confronting a Globalizing Industry Heineken was one of the pioneers of an international strat- achieved worldwide recognition according egy, using cross-border deals to expand its distribution of its director of alcoholic Heineken, Amstel, and about 175 other beer brands in more Canadea than 100 countries around the globe. For years, it had been marketing students to identi picking up small brewers from various brands and to get better access to new roots on the outskirts of into one of the world's largest brewers, operating more than change in a furious fy an assortment of beer bot- tles that had been stripped of their labels, the stubby green countries to add more markets. From its Amsterdam, the firm had evolved Heineken bottle was the only one instantly recognized. The beer industry has been undergoing significant wave of consolidation. Most of the EXHIBIT 3 2015 2016 10,112 5,203 3.203 2,894 of Sales Western Europe Americas Africa, Middle East,& Eastern Europe Asia Pacific Breakdown millions of euros) 5,159 2.483 Source: Heineken. EXHIBIT 4 Significant Heineken Brands In Various Markets Markets Brands Heineken, Amstel Light, Paulaner Moretti Heineken, Amstel, Lingen's Blond, Murphy's Irish Red Heineken, Amstel, Buckler.2 Desperados Heineken, Amstel, Birra Moretti Heineken, Amstel, Cruzcampo, Buckler Heineken, Krolewskie, Kujawiak, Zywiec Heineken, Tiger, Reeb Heineken, Tiger, Anchor, Baron's Heineken, Arlem, Kingfisher Heineken, Bintang, Guinness Heineken, Amstel, Tian Shan U.S rance Italy Poland China Singapore India Kazakhsta Egypt Israel Nigeria South Africa Panama Chile Heineken, Birell,Meister, Fayrour Heineken, Maccabee, Gold Star Heineken, Star, Maltina, Gulder Heineken, Amstel, Windhoek. Strongbow Heineken, Soberana, Crystal, Panama Heineken, Cristal, Escudo, Royal Minority interest Wheat beer Nonalcoholic beer Tequila-(lavored beer EXHIBIT 5 Leading Global Brewers (2016 1% 1. Anheuser Busch InBev, Leuven, Beiglum, 2. SAB Miller, London, UK 3 Heineken, Amsterdam share based on annual sales, milions of US dolars) 10 Carlsberg, Copenhagen, Denmark who has insisted on having a however, were behind some of changes ment to support the firm's next phase of growth as a global been acquiring or merging with their heir, Charlene de Carv competitors in foreign markets in order to become global say in all of the maor players. Ownership of local brands has propelled them into Family members. dominant positions in various markets around the world. Beyond this, they hope acquisitions of foreign brewers provide them with the manufacturing and distribution capa- that were a nnounced at the time of van Boxmeer's appoin As part of the plan, dubbed Fit 2 Fight, the Board was cut down from five members to just can organization. As part of the rP Graafland. The change was made to centralize control at the bal strategy. The idea brands is coming." said Alan Clark, Budapest-based manag CEO van Boxmeer and Chie ing director of SABMiller Europe (see Exhibit 5). Over the past decade, South African Breweries Ple has acquired U.S-based Miller Brewing to top of the firm to better enable a become a major ers, the largest across different markets whose tastes are still developing. behind the global strategy is to win over younger customers global brewer. They have acquired Fost Australian brewer. U.S.-based Coors linked with Canadian- based Molson in 2005, with their combined operations Heineken has created management positions respo sible for five different operating regions and several dif- eving them a leading position among the world's biggest ferent functional areas. These positions wen brewers In 2008, Belgium's Interbrew, Brazil's AmBev, and more clearly define different spheres of respons U.S-bas global ed Anheuser Busch merged to become the largest Boxmeer has argued that the new structure provides incen- brewer with operations across most of the conti- tives for people to be accountable for their performance: y, Anheuser-Busch InBev acquired SAB Miller "There is more pressure for results, for achievement.""H to become an even more dominant player in the industry. claims the new structure has already encouraged more risk Since its acquisition of Anheuser Busch, InBev has been tempting to develop not only Budweiser but also Stella taking and boosted the level of energy within the firm. The Executive Committee of Heineken was cut down from Artois, Brahma, and Becks as global flagship brands.Each of 36 to 12 members in order to speed up the decision-making these brands originated in different locations, with Budweiser process Besides the two members of the Executive Board Artois coming from Belgium, this management group consists of the managers who are responsible for the different operating regions and several of Brahma from Brazil, and Becks from Germany. imilarty, doubled shortly after SAB acquired it in 1999, but sales have cumbersome consensus culture that has made it di and the SAB Miller has been attempting to develop the Czech brand the key functional areas. Van Boxmeer hopes that the reduc- Pilsner Urquell into a global brand. Exports of this pilsner tion in t he size of this group will allow the firm to combat the since plateaued. John Brock, the CEO of InBev. commented: Heineken to respon swiftly to various challenges even as its Global brands sell at significantly higher prices, industry has been experiencing considerable change. margins are much better than with local beers. Finally, all of the activities of Heineken are overseer by a Supervisory Board, which currently consists of 1 members. Individuals that make up this board are drawn Wrestling with Change Although the management of Heineken has moved away from the family for the first time, they have been well aware of the longstanding and well-established family traditions decisions in the firm's overall operations that are difficult to change. Even with the appointment of Supervisory Board are rotated nonfamily members to manage the firm, a little over half of from different countries and own a wide ran ge of expertise king major and experience. The Board sets policies for ma on a regular basis. he hae ofn can Developing a Global Presence pany which is controlled by the family. With the death of Van Boxmeer is well aware of the need for Freddy Heineken in 2002, the last family member to head the Dutch brewer, control has passed to his only child and its brands to build upon its markets. Yet in spite of its formidable Hei stature across existin mar 104 CASE 16 HEINEKEN d the world with its flagship Heineken brand, the firm John has been reluctant to match the recent moves of formidable who has studied the beer competitors such as Belgium's InBev and UK's SABMiller, danger of becoming a tired, relice a professor at Harvard Business School industry, said of Heineken: "It's in which have grown significantly through mega-a For many years, Heineken limited itself to small national brewers such as Italy's Moretti and Spains also introduced a light beer. Heinekem Cruzcampo that have provided it with small, but profitable target the growing market for such beers avenues for growth. In 1996, Heineken acquired Fischer, firm has managed to reduc a small French brewer, whose Desperados brand has been drinker from abo quite saccessful in niche markets. Similarly. Paulaner, a the same time, Heineken has pushea n wheat beer that the firm picked up in Germany a few years to reduce its reliance on its ago, has been making inroads into the U.S. market The firm has therefore worked hard to increase awareness snapping up of their flagship brand among younger drinkers. Heinek in the U.S. The e the average age of the Heineken ut 40 years old to about 30 years old coee Heincken brand. It has achieved considerable success with Amstel Light, has become the leading imported light been But as other brewers reached out to make all over the globe, Heineken risked falling behind its more has been selling well in may aggressive rivals. To deal with this growing challenge, the acquisitions of smaller firm broke out of its play-it-safe a few big deals. In 2003, Heineken spent $2.1 billion to acquire BBAG, a family-owned Austria. Because of BBAG's extensive presence in Central Europe, Heineken has become the biggest beer maker in seven countries across Eastern Europe. The acquisition and of Scottish & Newcastle in 2008 similarly For years firm's dominance in Western Europe. acquisitions US. a other countries. Owing to its breweries around the globe, it has acquisitions e corporate culture to make managed to develop a relatively small but loyal base of com sumers for its strong local brands-specialty brands such as company based in Linz. Murphy's Irish Red and Moretti For Hispanics, who account for one quarter of us sales, Heineken developed specific marketing campaigns, added popular Mexican beers Tecate, Dos Equis, and reinsorced the others. For years, these had been marketed and distributed Heineken in the U.S. under a license from FEMSA Cervesa. In 2010, they acquired the firm. giving them full ontrol over all of their brands. Benj Steinman, publisher an aggressive push into and editor of newsletter Beer Marketer's Insight believed their relationship with FEMSA had been quite beneficial: Russia "This gives Heineken a commanding share of the US Heineken's acquisitions in Ethiopia, Singapore, and Mexico have allowed it to build its position in these grow- ing markets. The firm has made Russia with the acquisition of mid-sized brewing con- several c one of Heineken's largest markets by volume. import business and... gives them a bigger presence in t Fcineken now ranks as the third-Hargest brewer in Russia, Southwest. .. and better access to Hispanic consumers behind Sweden's Baltic Beverages Holding and InBev. The he stated. firm has also pounced on brewers in far-fTung places like Above all. Heineken wants to maintain its leadership in Belarus, Panama, Egypt, and Kazakhstan. In Egpt. Ruys the premiam beer industry, which represents the most prof- bought a majority stake in Al Ahram Beverages Co, and has itable segment of the beer business. In this category, the been using the Cairo-based brewer's fruit-flavored, nonalco- firm's brands face competition in the U.S. from domestic holic malts as an avenue into other Muslim countries. Rene beers such as Anheuser's Budweiser Select and imported Hooft Graafland, th has stated that Heineken will continue to participate in the consolidation of the $460 billion global retail beer industry beers such as InBev's Stella Artois. Premium brews often have slightly higher alcohol content than standard beers and they are developed through a more exclusive position e company's Chief Financial Officer, targeting many different markets around the world. ing of the brand. This allows a firm to charge a higher price for their premium brands. The flagship Heineken brand remains positioned as a premium beer. A six-pack Maintaining a Premium Position For decades, Heineken was able to rely on the success of of Heineken, for example, costs $9, versus around $6 for its flagship Heineken brand, which enjoyed a leading posi- a six-pack of Budweiser. Just-drinks.com, a London-based emium beers in many markets around the online research service, estimates that the market world. It was the best-selling imported beer in the U.S. for mium beer will continue to expand over the next decade. several decades, giving it a steady source of revenues and profits from the world's biggest market. But by the late 1990s, Heineken had lost its 65-year-old leadership among The acquisitions in different parts of the world-Asia. imported beers in the U.S. to Grupo Modelo's Corona. Africa, Latin America and Europe-re Building on Its Past The Mexican beer appeals to a certain segment of younger tant step in Heineken's quest to build on its global stature. American beer drinkers, and more importantly, to the grow Most analysts expect that van Boxmeer and his team will ing number of Hispanic Americans who represent one of continue to build Heineken into a powerful global competi- providing any specific details, Graafland, the the fastest growing segments of beer drinkers in the U.S. tor. Without The firm was concerned that Heineken was perceived as firm's CFO, makes it clear that the firm's management a stodgy or even an obsolete brand by many young drinkers. take initiatives to drive long-term m growth. In his words: We CASE 16 HEINEKEN C105 Saved ncials Required information Financial Analysis: Heineken The following questions are about key financial numbers that impart useful insights into the financial health of Heineken. The financials offer quantitative measurements of the success or failure of Heineken's strategies. Part 3: Questions Based on the case and previous calculations, please answer the following short answer questions. Note: Your instructor will need to manually grade these questions 1 Based on the breakdown of geographic sales, in what region has Heineken seen the largest percentage increase in sales since 2016? What contributed to this growth? 2. What accounted for the decrease in net income from 2015 to 2016 for Heineken? This question will be sent to your instructor for greding CASES HEINEKEN its leading time, Heineken mainta Dutch brewer Heineken was expanding its presence around At the same the globe in response to the merger of Anheuser-Busch tion across Europ InBev with SAB Miller giving the combined firm a com in 2008 manding 30 percent of global beer sales. Heineken was in brewer of well-known talks to buy the Brazilian unit of Kirin, which the Japanese and Kronenbourg parent was planning to sell. The addition of Kirin beer m would double Heineken's share in Brazil to 20 percent. The g firm was also planning to launch Bintang, its biggest selling crucial European markets beer brand in Indonesia, into the UK and select European Ireland, Portugal, Finland, and markets. An industry spokesman was positive about the These decisions to Scottish & Newcastle, the of Scottish-based 1664. Although the purchase made in partnership with Carlsberg, Heineken was a eain control of Scottish & Newcastle's operations in several such as the United Kingdom acquire brewers that operate in dif brewer has been making to raise acquisitions and ing consolidation within the industry and changes that are world beers. We lerent parts of the world have been a part of a series of believe Bintang is perfectly suited to meet These moves came on the heels of and capacity investments that Heineken had been making in changes that the Dutch its stature in the various markets and to respond to grow- occurring in the global market for beer. Even as sales of ping markets. In 2013, the firm had strength beer have stagnated in the U.S. and Europe, ened its position as the world's third largest brewer by tak e owner of this deal, Heineken added 30 breweries across several coun- tries in the Asia Pacific region. A few years earlier, the firm been growing elsewhere, especially in develop This has led the largest brewers to expand across the globe ers (see E g full ownership of Asian Pacific Breweries, th Tiger, Bintang, and other popular Asian beer brands. With through acquisitions of smaller regional ad xhibits I and 2). need for change was clearly reflected in the appoint- n brewer FEMSA Cervesa, producer ment in October 2005 of Jean-Francois van Boxmeer as of Dos Equis, Sol, and Tecate beers, to become a stronger, Heineken's first non-Dutch CEO. He was brought in to replace Thorny Ruys, who had decided to resign because of his failure to show much improvement in performance. Prior to the appointment of Ruys in 2002, Heineken had been run by three generations of Heineken ancestors, whose portraits still adorn the dark paneled office of the CEO in its Amsterdam headquarters. Like Ruys, van Boxmeer The had acquired Mexica nore competitive player in Latin America. Case prepared by Jamal Shamie, Michigan State University, with the sistance of Professor Alan B. Eisner. Pace University. Material has been wn from published sources to be used for purposes of class discussion pyright O 2017 Jamal Shamsle and Alan B.Eisner HIBIT 1 Income os) IT 2 Balance ei 12 faced the challenge of preserving the firm's family driven 1 uraditions, while trying to deal with threats Heineken had never faced before. 190 breweries in over 70 countries, claiming about 10 per cent of the global market for beer (see Exhibits 3 and 4). firm's flagship Heineken brand ranked second only to Budweiser in a global brand survey jointly undertaken by Business Week and Interbrand. The premier brand has to Kevin Baker beverages at British market researcher n Ltd. When a U.S. wholesaler asked a group of The Confronting a Globalizing Industry Heineken was one of the pioneers of an international strat- achieved worldwide recognition according egy, using cross-border deals to expand its distribution of its director of alcoholic Heineken, Amstel, and about 175 other beer brands in more Canadea than 100 countries around the globe. For years, it had been marketing students to identi picking up small brewers from various brands and to get better access to new roots on the outskirts of into one of the world's largest brewers, operating more than change in a furious fy an assortment of beer bot- tles that had been stripped of their labels, the stubby green countries to add more markets. From its Amsterdam, the firm had evolved Heineken bottle was the only one instantly recognized. The beer industry has been undergoing significant wave of consolidation. Most of the EXHIBIT 3 2015 2016 10,112 5,203 3.203 2,894 of Sales Western Europe Americas Africa, Middle East,& Eastern Europe Asia Pacific Breakdown millions of euros) 5,159 2.483 Source: Heineken. EXHIBIT 4 Significant Heineken Brands In Various Markets Markets Brands Heineken, Amstel Light, Paulaner Moretti Heineken, Amstel, Lingen's Blond, Murphy's Irish Red Heineken, Amstel, Buckler.2 Desperados Heineken, Amstel, Birra Moretti Heineken, Amstel, Cruzcampo, Buckler Heineken, Krolewskie, Kujawiak, Zywiec Heineken, Tiger, Reeb Heineken, Tiger, Anchor, Baron's Heineken, Arlem, Kingfisher Heineken, Bintang, Guinness Heineken, Amstel, Tian Shan U.S rance Italy Poland China Singapore India Kazakhsta Egypt Israel Nigeria South Africa Panama Chile Heineken, Birell,Meister, Fayrour Heineken, Maccabee, Gold Star Heineken, Star, Maltina, Gulder Heineken, Amstel, Windhoek. Strongbow Heineken, Soberana, Crystal, Panama Heineken, Cristal, Escudo, Royal Minority interest Wheat beer Nonalcoholic beer Tequila-(lavored beer EXHIBIT 5 Leading Global Brewers (2016 1% 1. Anheuser Busch InBev, Leuven, Beiglum, 2. SAB Miller, London, UK 3 Heineken, Amsterdam share based on annual sales, milions of US dolars) 10 Carlsberg, Copenhagen, Denmark who has insisted on having a however, were behind some of changes ment to support the firm's next phase of growth as a global been acquiring or merging with their heir, Charlene de Carv competitors in foreign markets in order to become global say in all of the maor players. Ownership of local brands has propelled them into Family members. dominant positions in various markets around the world. Beyond this, they hope acquisitions of foreign brewers provide them with the manufacturing and distribution capa- that were a nnounced at the time of van Boxmeer's appoin As part of the plan, dubbed Fit 2 Fight, the Board was cut down from five members to just can organization. As part of the rP Graafland. The change was made to centralize control at the bal strategy. The idea brands is coming." said Alan Clark, Budapest-based manag CEO van Boxmeer and Chie ing director of SABMiller Europe (see Exhibit 5). Over the past decade, South African Breweries Ple has acquired U.S-based Miller Brewing to top of the firm to better enable a become a major ers, the largest across different markets whose tastes are still developing. behind the global strategy is to win over younger customers global brewer. They have acquired Fost Australian brewer. U.S.-based Coors linked with Canadian- based Molson in 2005, with their combined operations Heineken has created management positions respo sible for five different operating regions and several dif- eving them a leading position among the world's biggest ferent functional areas. These positions wen brewers In 2008, Belgium's Interbrew, Brazil's AmBev, and more clearly define different spheres of respons U.S-bas global ed Anheuser Busch merged to become the largest Boxmeer has argued that the new structure provides incen- brewer with operations across most of the conti- tives for people to be accountable for their performance: y, Anheuser-Busch InBev acquired SAB Miller "There is more pressure for results, for achievement.""H to become an even more dominant player in the industry. claims the new structure has already encouraged more risk Since its acquisition of Anheuser Busch, InBev has been tempting to develop not only Budweiser but also Stella taking and boosted the level of energy within the firm. The Executive Committee of Heineken was cut down from Artois, Brahma, and Becks as global flagship brands.Each of 36 to 12 members in order to speed up the decision-making these brands originated in different locations, with Budweiser process Besides the two members of the Executive Board Artois coming from Belgium, this management group consists of the managers who are responsible for the different operating regions and several of Brahma from Brazil, and Becks from Germany. imilarty, doubled shortly after SAB acquired it in 1999, but sales have cumbersome consensus culture that has made it di and the SAB Miller has been attempting to develop the Czech brand the key functional areas. Van Boxmeer hopes that the reduc- Pilsner Urquell into a global brand. Exports of this pilsner tion in t he size of this group will allow the firm to combat the since plateaued. John Brock, the CEO of InBev. commented: Heineken to respon swiftly to various challenges even as its Global brands sell at significantly higher prices, industry has been experiencing considerable change. margins are much better than with local beers. Finally, all of the activities of Heineken are overseer by a Supervisory Board, which currently consists of 1 members. Individuals that make up this board are drawn Wrestling with Change Although the management of Heineken has moved away from the family for the first time, they have been well aware of the longstanding and well-established family traditions decisions in the firm's overall operations that are difficult to change. Even with the appointment of Supervisory Board are rotated nonfamily members to manage the firm, a little over half of from different countries and own a wide ran ge of expertise king major and experience. The Board sets policies for ma on a regular basis. he hae ofn can Developing a Global Presence pany which is controlled by the family. With the death of Van Boxmeer is well aware of the need for Freddy Heineken in 2002, the last family member to head the Dutch brewer, control has passed to his only child and its brands to build upon its markets. Yet in spite of its formidable Hei stature across existin mar 104 CASE 16 HEINEKEN d the world with its flagship Heineken brand, the firm John has been reluctant to match the recent moves of formidable who has studied the beer competitors such as Belgium's InBev and UK's SABMiller, danger of becoming a tired, relice a professor at Harvard Business School industry, said of Heineken: "It's in which have grown significantly through mega-a For many years, Heineken limited itself to small national brewers such as Italy's Moretti and Spains also introduced a light beer. Heinekem Cruzcampo that have provided it with small, but profitable target the growing market for such beers avenues for growth. In 1996, Heineken acquired Fischer, firm has managed to reduc a small French brewer, whose Desperados brand has been drinker from abo quite saccessful in niche markets. Similarly. Paulaner, a the same time, Heineken has pushea n wheat beer that the firm picked up in Germany a few years to reduce its reliance on its ago, has been making inroads into the U.S. market The firm has therefore worked hard to increase awareness snapping up of their flagship brand among younger drinkers. Heinek in the U.S. The e the average age of the Heineken ut 40 years old to about 30 years old coee Heincken brand. It has achieved considerable success with Amstel Light, has become the leading imported light been But as other brewers reached out to make all over the globe, Heineken risked falling behind its more has been selling well in may aggressive rivals. To deal with this growing challenge, the acquisitions of smaller firm broke out of its play-it-safe a few big deals. In 2003, Heineken spent $2.1 billion to acquire BBAG, a family-owned Austria. Because of BBAG's extensive presence in Central Europe, Heineken has become the biggest beer maker in seven countries across Eastern Europe. The acquisition and of Scottish & Newcastle in 2008 similarly For years firm's dominance in Western Europe. acquisitions US. a other countries. Owing to its breweries around the globe, it has acquisitions e corporate culture to make managed to develop a relatively small but loyal base of com sumers for its strong local brands-specialty brands such as company based in Linz. Murphy's Irish Red and Moretti For Hispanics, who account for one quarter of us sales, Heineken developed specific marketing campaigns, added popular Mexican beers Tecate, Dos Equis, and reinsorced the others. For years, these had been marketed and distributed Heineken in the U.S. under a license from FEMSA Cervesa. In 2010, they acquired the firm. giving them full ontrol over all of their brands. Benj Steinman, publisher an aggressive push into and editor of newsletter Beer Marketer's Insight believed their relationship with FEMSA had been quite beneficial: Russia "This gives Heineken a commanding share of the US Heineken's acquisitions in Ethiopia, Singapore, and Mexico have allowed it to build its position in these grow- ing markets. The firm has made Russia with the acquisition of mid-sized brewing con- several c one of Heineken's largest markets by volume. import business and... gives them a bigger presence in t Fcineken now ranks as the third-Hargest brewer in Russia, Southwest. .. and better access to Hispanic consumers behind Sweden's Baltic Beverages Holding and InBev. The he stated. firm has also pounced on brewers in far-fTung places like Above all. Heineken wants to maintain its leadership in Belarus, Panama, Egypt, and Kazakhstan. In Egpt. Ruys the premiam beer industry, which represents the most prof- bought a majority stake in Al Ahram Beverages Co, and has itable segment of the beer business. In this category, the been using the Cairo-based brewer's fruit-flavored, nonalco- firm's brands face competition in the U.S. from domestic holic malts as an avenue into other Muslim countries. Rene beers such as Anheuser's Budweiser Select and imported Hooft Graafland, th has stated that Heineken will continue to participate in the consolidation of the $460 billion global retail beer industry beers such as InBev's Stella Artois. Premium brews often have slightly higher alcohol content than standard beers and they are developed through a more exclusive position e company's Chief Financial Officer, targeting many different markets around the world. ing of the brand. This allows a firm to charge a higher price for their premium brands. The flagship Heineken brand remains positioned as a premium beer. A six-pack Maintaining a Premium Position For decades, Heineken was able to rely on the success of of Heineken, for example, costs $9, versus around $6 for its flagship Heineken brand, which enjoyed a leading posi- a six-pack of Budweiser. Just-drinks.com, a London-based emium beers in many markets around the online research service, estimates that the market world. It was the best-selling imported beer in the U.S. for mium beer will continue to expand over the next decade. several decades, giving it a steady source of revenues and profits from the world's biggest market. But by the late 1990s, Heineken had lost its 65-year-old leadership among The acquisitions in different parts of the world-Asia. imported beers in the U.S. to Grupo Modelo's Corona. Africa, Latin America and Europe-re Building on Its Past The Mexican beer appeals to a certain segment of younger tant step in Heineken's quest to build on its global stature. American beer drinkers, and more importantly, to the grow Most analysts expect that van Boxmeer and his team will ing number of Hispanic Americans who represent one of continue to build Heineken into a powerful global competi- providing any specific details, Graafland, the the fastest growing segments of beer drinkers in the U.S. tor. Without The firm was concerned that Heineken was perceived as firm's CFO, makes it clear that the firm's management a stodgy or even an obsolete brand by many young drinkers. take initiatives to drive long-term m growth. In his words: We CASE 16 HEINEKEN C105