Heineken Lager Beer, India

Heineken Lager Beer

- Kumar Rajgeet

Alcohol Industry in India

The Alcohol market in India can be segmented into four

categories: IMFL, CL, Beer, and Imported Liquor.

Revenue generated from the IMFL and CL segments is

considerably higher than that generated from the Beer segment.

However, the Beer segment is the fastest growing Alcoholic

Beverage segment in India by consumption and revenue share.

Alcohol Industry in India

Beer

IMFL

Imported Liquor

CL

The Hindu Business Line, 2013

Market Overview

In terms of alcohol content, the market is divided into two segments: Strong Beer and Mild Beer. In terms of type, the market includes standard lager, premium lager, and other beer.

Growth Rate by Revenue

The Beer market in India was valued at US$4.13 billion in 2013 and is expected to reach US$9.03 billion by 2018, growing at a CAGR of 16.94 percent.

Growth Rate by Volume

Total beer sales in India were 2,248.53 million liters in 2013 and are expected to increase to 4,438.47 million liters by 2018, growing at a CAGR of 14.57 percent.

Market Research, 2014

Key Vendors

Carlsberg India Pvt. Ltd.

Mohan Meakin Ltd.

SABMiller India Ltd.

United Breweries Ltd.

Drivers

Increase in Disposable Income

Increasing Young Population

Changing Lifestyles


Challenges

Restrictions on Advertising Alcoholic Beverages

Heavy Taxation on Beer

Increasing Vendor Competition

Trends

Growing Demand for Barley

Increasing Preference for Strong Beer

Increasing Availability of Imported Beer


Heineken Overview

Heineken, is a pale lager beer with 5% alcohol by volume

produced by the Dutch brewing company Heineken

International.

One of the world’s leading brands >130 years.

Global network of distributors and 115 breweries in more

than 65 countries

Heineken Lager Beer was first brewed by Gerard Adriaan

Heineken in 1873.

Heineken International, 2014

The beer is made of purified water, malted barley,hops, and yeast.

In 1886 H. Elion finished the development of the Heineken A-yeast, which is still used in the brewing process today.

Since 1975, most Heineken brand beer has been brewed at the Heineken brewery in Zoeterwoude, Netherlands.

In 2014, 2.74 billion litres of Heineken brand beer was produced worldwide.

The total beer production of all breweries fully owned by the Heineken Group over all brands was 16.46 billion litres globally.


Vision

Our aim is to be a leading brewer in each of the markets in which

we operate and to have the world’s most valuable brand portfolio.

Mission

HEINEKEN is one of the world’s great brewers and is committed

to growth and remaining independent. The brand that bears the

founder’s family name – HEINEKEN – is available in almost

every country on the globe and is the world’s most valuable

international premium beer brand.


Organization goals and objectives

Aims for sustainable growth as a broad market leader

and segment leadership.

Expand and optimize product portfolio.

Embraced innovation as a key component of their strategy

in the areas of production, marketing, communication and

packaging.

Goal is to grow the business in a sustainable and

consistent manner, while constantly improving

profitability


Business Priorities

The Heineken® brand is a key strategic asset and the undisputed leader in the international premium segment (IPS).

HEINEKEN is committed to being part of the conversation with consumers and being recognised as the preferred partner for its customers.

HEINEKEN has transformed its emerging market presence in recent years through a clear acquisition strategy, strong organic growth and our excellent joint venture partnerships.

As the world’s most international brewer, HEINEKEN is investing in new business initiatives aimed at better leveraging the scale of our global operations across commerce, supply chain, purchasing, information services (IS), human resources and finance.

HEINEKEN employs more than 85,000 people in over 70

countries.

Brewing a Better Future is integral to our business and to

our success in becoming a consumer-inspired, customer

oriented and brand-led organisation.

That’s why we have recognised sustainability as an

integral part of our strategy alongside our other

commercial and business imperatives.


Price Product

Heineken is a premium product and

hence its price is more than its

competitors in the market.

The strategy of pricing is skimming,

hence Heineken has made deals with

premium pubs and discotheques to

promote and sell its products.

Name Price (Rs.)

Calsberg 150

Heineken 180

Fosters 110

Kingfisher 100

Heineken sells its beer in 650 ml green

bottles. Heineken contains water,

barley malt and hops.

The alcohol volume of Heineken pilsner

is 5%.

Beer contains gluten, which comes

from the grain used to brew it.

Heineken has a policy of not using any

GMO raw materials. Heineken is brewed

using a natural brewing process with no

additives. It contains water, barley

malt, hops, and the unique Heineken A-

yeast for fermentation in the brewing

process.

Place Promotion

Heineken is in alliance with United

Breweries and hence enjoys the

distribution network of the same.

Government market (65%)

State government is the sole distributor

Auction market (16%)

State government auctions

geographical territories which has led

to monopolies / cartels

Free market (19%)

Through trade licenses

Through various advertisements,

Heineken always portray itself as ‘the

adventurer’s drink’ and a ‘drink of

voyage’.

The alliance with UB has led to the

increase in Heineken’s promotion not

only in the IPLs but also in various

events UB organizes.

The Economic Times, 2014

STRENGTHS

Premium brand > 130 years old

Heineken’s leading brand portfolio includes more than 170

international premium, regional, local and specialty beers.

The company has undertaken various advertising and promotional

initiatives, which has improved its brand equity.

A geographically widespread plant network reduces transportation costs

as well.

Strong network of breweries helps the company boost customer

satisfaction and reduce costs

Excellent branding and top of the mind recall owing to advertising and

sponsorship initiatives

Alliance with India’s leading United Breweries

Reuters, 2014

WEAKNESSES

Conservative/”Play it safe” culture

Struggle to obtain large breweries

Not drank by regular beer drinkers

Expensive when compared to other Indian beers.

Maintaining corporate values, image and quality standards in the entire

country is a challenge.

Reuters, 2014

OPPORTUNITIES

Falling trade and ownership regulations in India.

Innovations contribute to the top-line growth and to the strength of the

Heineken brand in particular.

Increasing beer market share in global market

Growing Indian population.

Majority of young population in India

Increasing pub culture in India

Reuters, 2014

THREATS

Tax regulations in the beer industry.

An increasingly negative perception in society towards alcohol could

prompt legislators to restrictive measures.

Heineken has many operations in mature beer markets where the

attractiveness of the beer category is being challenged by other

beverage categories.

Changing buyer taste and preference.

Input costs (including transportation and energy) have accelerated to

unprecedented levels in the past few years.

Being a leader susceptible to fake imitation products

Beer markets in India faced a challenging year due to the combined

impact of the financial crisis, mixed weather, smoking bans and

unprecedented increases in excise duties

Reuters, 2014

Business Strategy of Heineken

Grow externally to strengthen the position of the

company in developed markets as well as maximizing

potential for profit in high-growth markets.

Basically do whatever is necessary to get your company

represented around the world.Heineken was the pioneer

of this strategy, becoming the first brewer to cut deals to

distribute worldwide.

Pull strategy.

Alliances with leading breweries of the country.

Tie ups with leading pubs and discotheques

Catering in high end airlines and hotels


Political

Different states have different rules for liquor.

Some states like Gujrat are Dry states where the sales of

liquor are completely banned.

Some states have time limits i.e., after 9 the sales of liquor

are prohibited.

Even the age limit for drinking in India is under discussion.

The advertisement of liquor is banned in India.

Heineken has targeted the public houses and discotheques

for their promotion which is very apt


Economic

The disposable income of people specially living in urban

cities is also increasing rapidly.

Thus Heineken has targeted only the urban cities of India

to penetrate the market.

Heineken has aimed to grab a market share of approx. 10

% by next 2 years, once that target is achieved, they will

expand their base to other cities and rest of the country.


Social

Due to its diverse culture we can’t categorize India under

one segment.

Per capita income is rising, but at the same time the gap

between the haves and have-nots is also widening.

There is a school of thought against the so called pub

culture.

Heineken is relying on the change and has targeted

the new Indian who is open to change.

Heineken India, 2014

Technological

With the joint venture with United Breweries, Heineken

has set up breweries in India.

Due to the technical advancement of its plants, Heineken

never compromises with its quality.

There are now endeavours to bring the overall cost of

manufacturing lower, but the company has no intention of

lowering its market price, so as to retain its premium

image.


Legal

Heineken is very careful about the steps it takes because of the political environment which could land it in trouble.

As the laws are different for different states, Heineken India has played smart in making social media as the primary channel of its advertising.

Heineken abides with every law dictating the alcohol industry.

Due to its huge financial resources, the company easily adapts to the new laws that are passed by the government in the minimum time possible.

Heineken India, 2014

Environmental

Due to the harmful effects of plastic in the environment,

Heineken hasn’t launched its plastic keg bottles.

Due to its relatively new entrance in the Indian market,

Heineken is still trying to figure out ways to deal with the

surrounding environment.


Referencing Heineken to sell Mexican can, bottle maker to Crown | Reuters . 2014.Heineken to sell Mexican

can, bottle maker to Crown | Reuters . [ONLINE] Available at: http://www.reuters.com/article/2014/09/01/uk-heineken-nl-crown-holdings-divestitur-idUSKBN0GW1IZ20140901. [Accessed 16 November 2014].

Latest Reports. 2014. Latest Reports. [ONLINE] Available at:https://secure.theheinekencompany.com/latest-reports. [Accessed 16 November 2014].

ALCOHOLIC BEVERAGES INDUSTRY IN INDIA (2013-15). 2014.ALCOHOLIC BEVERAGES INDUSTRY IN INDIA (2013-15). [ONLINE] Available at: http://www.marketresearch.com/IS-Advisors-v3900/ALCOHOLIC-BEVERAGES-INDIA-7429124/. [Accessed 16 November 2014].

The alcohol economy | Business Line . 2014. The alcohol economy | Business Line . [ONLINE] Available at:http://www.thehindubusinessline.com/industry-and-economy/the-alcohol-economy/article5436924.ece. [Accessed 16 November 2014].

Indian liquor industry growing at 8%: Tilaknagar Industries - Moneycontrol.com. 2014. Indian liquor industry growing at 8%: Tilaknagar Industries - Moneycontrol.com. [ONLINE] Available at:http://www.moneycontrol.com/news/business/indian-liquor-industry-growing-at-8-tilaknagar-ind_1070150.html. [Accessed 16 November 2014].

Heineken Lager Beer, India

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