just The Answer: Heineken's Africa & Middle East president, Siep Hiemstra
Siep Hiemstra, head of Heineken's Africa and Middle East unit
Heineken will open its newest African brewery in Ethiopia next month as the brewer continues to expand across the continent. Last week, just-drinks sat down with Siep Hiemstra, Heineken's president for Africa and the Middle East, to talk football, Nigeria and if there's an African Tiger waiting to take on the world.
just-drinks: We are in the middle of the FIFA World Cup at the moment, but of course Heineken is a main sponsor of the UEFA Champions League (UCL). Is this football tie-up especially important for Africa?
Siep Hiemstra: When you're in a soccer crazy country like Nigeria, it goes to another level. I was in Kenya two years ago when we had the (Champions League) trophy over there. I saw it once in Indonesia where we had to have crowd control, but in Kenya, you saw grown men crying over the trophy, and the President, the Prime Minister, all taking pictures with the cup.
j-d: Does Heineken get more out of the UCL than they would out of the World Cup?
SH: It's different. You can't sponsor everything in the world. The UCL has gone from strength to strength - this year, we had 150 guests from Africa at the final game. Conferences are created around it, and people renew friendships. It has become more than just a soccer game, it has become a premium event. It shows the internationalism of Heineken.
j-d: How do you see the Nigerian market? It appears to have rebounded recently from a bit of a slowdown.
SH: Growth in emerging markets is erratic. If you compare Vietnam to a place like Nigeria, then you see that the growth rates, the longer you look, are both high single-digits. But, you can have years with big differences, and sometimes that's because of external circumstances. In Nigeria recently, we had extensive flooding in the area where vegetables are grown. Vegetables became horribly expensive. What we need to accept - and what we do accept at Heineken - is that you can have a somewhat less good year but that the long-term prospectives for that market are fantastic.
j-d: Is there a move towards the lower value end of the beer market in Nigeria?
SH: No, in total the market grows. And, in that growth, you see two developments. You see the development in the premium part of the business, which is growing. I'm not talking about brand Heineken only. We recently launched a brand extension called Starlight, a light beer, and that's moving towards the premium segment.
And, there is a growth in what is popularly called value. I have to put a caveat on that because the "value" segment is not cheap beer, it's a proposition where you can make good money.
What's interesting in the value segment is the segmentation of the market, from very big brands to brands that cater to a region or a province. And, it works well because these provinces are huge, with a lot of people there.
j-d: You've recently launched smaller bottles for some of your local brands (In October last year, Heineken rolled out a 50cl Primus bottle in the Democratic Republic of Congo (DRC), half the size of a regular bottle). What's the idea behind that?
SH: What we have been observing is that more people are coming to the cities and they have a little bit more money to spend, but it's not dramatic. So, they aspire to buy a bottle of (DRC-based beer) Primus, but the entrance price for a big bottle is just too much.
In some markets - not in ours, but in others - there is the sharing principle. You buy one bottle and share with two people. We observed that people would like to have a bottle of their own; something which belongs to them.
So, we thought, let's be imaginative. Let's give exactly the same product - a beautiful bottle, beautiful label, good marketing campaign - and give people the same brand experience at a price they can afford. That's the 50cl bottle. We introduced it and have never looked back. It has been a phenomenal success in markets like the DRC but also in Rwanda.
j-d: What details can you give for the new brewery in Ethiopia?
SH: In July, we will hopefully have the first beers out of our new Ethiopian brewery. It should be operational from 15 July, which is what my people promise me. But, we need the volume, it's really time.
It's a huge achievement, and it's built in a way that we can modular expand it. It's all so we can offer brands at a price that is affordable.
j-d: Nigeria is by far Heineken's most important African market. Do you see any other countries rivalling that dominance?
SH: Well, Nigeria has a lot of people, and a lot of people living in cities. But, it's not the only market. Look at somewhere like the DRC, which has 65m people. And, it's not for nothing that we have moved into Ethiopia with 80m people.
Now, are they the only ones where our business does well? In Sierra Leone we have very healthy returns, as well as in Rwanda and Burundi. So, it's not only going after the big chunks. It's the total picture.
And, if you want to create African premium brands, you have to make sure you can sell them in various countries, because African's travel.
j-d: Heineken has big plans for making Tiger an Asia-wide beer brand. Are there any regional beers that could do the same in Africa?
SH: We do have that - Primus. It was our first brand in Africa, in the DRC in 1923 and that brand has expanded from a national brand to Congo, Rwanda, and Burundi.
In the same way that Tiger expanded out from Singapore, you see that with Primus. You also have to be careful with brands, that you don't over-expand.
But, there are also brands that are heroes in their countries and they should stay heroes.
j-d: Do you think these beers could expand outside of Africa?
SH: We haven't looked into it big time yet, but they could. Tiger in the 1990s came to London and worked well, so we are looking at whether these brands could travel outside their countries, first to follow the diaspora. But, again, we have to careful.
Brands are living organisms, they have to fit the people in the country. And sometimes it works magically well, and sometimes, for whatever reason, it doesn't.
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