RESEARCH: Heineken will ride out market turbulence

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Although sales of Heineken's flagship lager are expected to continue growing in line with the expansion of the worldwide market for premium beer, the company will nonetheless come to rely more heavily on sales of supporting brands, according to a new report from beverage analyst Canadean.

Amstel, the company's number two brand, has seen global sales remain stable, with growth in some markets offset by contraction in others. However, the two products have lost market share within the group's overall portfolio - falling from a combined 37% in 1995 to 31% in 2001. The acquisition of BBAG will further dilute the flagship brands position.

One method of dealing with this situation the company might consider, says Canadean, is to look at the shortage of premium brands in its portfolio. "Should it concentrate more on brands that are locally acceptable rather than focusing on pushing its key brands onto the market?" it asks.

Despite achieving worldwide status, the group has retained a family-owned style and prides itself on inducting employees from organisations it has taken over into the Heineken way of life. The culture they join is said to be both autocratic and brand orientated with a business strategy built around three core areas: efficient cost structures, high effective advertising spend, and focus on the premium Heineken brand supported by strong local brands.

When it comes to new markets, the group's strategy is clear. The brand muscles its way in as an import. When significant volumes have been achieved, local production begins - although the company has shown sufficient flexibility to not pursue this path in the American market where consumers see import value as a key benefit.

Heineken has several operating partners in regions where it is trying to increase its presence. Although it is keen to promote established ventures, it has demonstrated in a number of markets that it is not content with only holding a 51%. The outright acquisition last year of Bravo in Russia signalled Heineken's firm intention to move decisively into this strong growth market, which is expected to provide a significant source of future revenue.

Companies: Heineken

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