Heineken McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Heineken What strategy does Heineken follow in the beer market?

Heineken What is the structure of the global beer industry? What recent changes have impacted the structure?

Heineken What moves did Anthony Ruys make upon taking over the helm of the firm in 2002?

Heineken What challenges does Ruys face?

Q1. Globalization challenges Global strategy with its core brands – standardized products with strong central coordination; Heineken and Amstel are global brands Moving toward a multidomestic strategy through acquisition of small breweries Gives Heineken brands that are known within their domestic or regional markets Most of these brands primarily geared toward local taste preferences and have not achieved much of a global presence

Q2. Industry Structure POTENTIAL ENTRANTS INDUSTRY COMPETITORS High – Top four brewers (in 2004) accounted for only a third of the global market; number of local brewers operate POTENTIAL ENTRANTS INDUSTRY COMPETITORS SUPPLIERS BUYERS High – abundant choices; brand appeal difficult to maintain; brand image important High – large brewers expanding globally through acquisitions; U.S. beer consumption down since 2000 SUBSTITUTES High – growing appreciation of wine High – many alternatives for desserts/snacks (cake, pie, fruit, candy)

Q3. Ruy’s Moves Marketing Acquisitions U.S. marketing expenses increased to $51 million vs. $35 million for Corona To appeal to younger customers, tie-in with movies such as Austin Powers and The Matrix Possibility of launching Heineken Premium Light to tap into the growing light beer market Acquisitions Acquisition of small brewers – Italy’s Moretti, Spain’s Cruzcampo, etc. Major acquisition ($2.1 billion) of BBAG in Austria

Q4. Ruy’s Challenges Global Competition Both Interbrew and SAB Miller became larger through major acquisitions Lost 65 year old leadership in U.S. market Ownership Issues Still a family owned firm with daughter Charlene de Carvalho in charge Need to respect age old tradition and not attempt major changes