HEINEKEN CASE STUDY 1. What strategy does Heineken follow in the global beer market? The strategy that Heineken uses is that of differentiation. This strategy gains market share and competitive advantage by distinguishing their products from their competitors through excellent design. A U. S. wholesaler recently asked a group of marketing students to identify a group of beer bottles that had been stripped of their labels. The stubby green Heineken bottle was the only one among the group that showed an instant recognition.
This strategy also focuses on high awareness, easy accessibility, and new products. Heineken spent a lot of money on the launch of Premium Light; the first time that brewer had created an extension of its flagship launch to attract younger customers. This new product was able to attract customers without taking away sales from the original brew. The decision to launch a new product came in part as a series of changes to raise its stature in the U. S. market and to respond to changes that are occurring in the growing global market.
Awareness of the brand was needed since there has been an overall decline in the market due to tougher drunk-driving laws and a growing appreciation for wine. 2. What is the structure of the global beer industry? Currently, the structure in the global beer industry is consolidation. This has caused the industry to undergo significant changes during the past several years. Most of the bigger brewers have begun to acquire or merge with their competitors in foreign markets in order to become global players.
Over the past decade, South African Breweries acquired U. S. based Miller Brewing to become one of the world’s largest global brewers. In 2004 Belgium’s Interbrew combined with Brazil’s AmBev to eventually become the largest global brewer with operations across most continents. During this time Coors also linked with Canadian based Molson to also become a power in the global brewing scene. Many brewers also expanded their operations without the use of such acquisitions. Anheuser Bush bought equity stakes and struck partnership deals with Mexico’s Grupo Modelo.
Such cross border deals have provided significant benefits to the brewing giants. This has given them ownership of local brands propelling them into dominant market positions around the world as global brands sell at significantly higher prices and the margins are much better as compared to the local beers. 3. What changes has Heineken made that will help it deal with its challenges? Some of the changes that Heineken has implemented during the past few years include the following: For the first time in the history of the company, the CEO is not a family member.
Van Boxmeer was appointed CEO although the family still maintains the controlling share of the company’s stock. They developed a plan called Fit 2 Fight which made several changes. Most of them aimed at streamlining management. They cut the executive board from 5 members down to three. The new board is made up of the CEO, COO, and CFO. The change is expected to assist the company in thinking about the steps that it needs to take to win over younger customers across different markets whose tastes are still developing.
Heineken also created management positions that would be responsible for 5 different operating regions and nine different functional areas. These positions were created to more clearly define different spheres of responsibility. The management group was cut from 36 to 13 members in order to speed up the decision making process. Also, the firm’s activities will be overseen by a supervisory board which consists of 10 members from different countries who have a wide range of expertise and experience.