Dive Brief:
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Brands with a defined personality and a story that are made locally are the ones that will help Heineken succeed in today's challenging beer marketplace, according to an interview in The Wall Street Journal with Laurence Debroux, chief financial officer for the Dutch brewing giant.
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Craft beer has growth potential in the U.S. and Western Europe, where younger people are increasingly drawn to the phenomenon, Debroux said. "When I walk in France, my country, and I look in Paris at the terraces of the cafes, I see many young people, young adults, with a glass of beer. I wouldn’t have seen this 10 years ago, I think," she told the newspaper.
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The core brands of Heineken, the second-largest beer brewer in the world after AB InBev, continue to make up 15% of the company's volume, but Debroux noted the company has about 300 global brands and a local portfolio in every country.
Dive Insight:
The buy local movement in fresh produce and regional CPGs has extended to beer. Heineken and other big beer makers have been investing in the the trend by acquiring craft beer startups and putting their marketing heft behind these local products. In 2016, MillerCoors bought three craft breweries. AB InBev bought eight of them between 2011 and 2016.
Breweries, some with taprooms and brewpubs, are also continuing to crop up across the country.
"We're seeing local breweries open anywhere there's a density of population, and that's true in basically every state in the country now," Bart Watson, chief economist at the Brewers Association, told BevNet this past March. "There are 5,600 craft brewers in the U.S. and two more open up every day. The vast majority of them are very, very small."
Regionalizing beer is a winning strategy since many consumers are interested in trying unique products made locally — or at least in the country they're in — because they're viewed as fresher and better. As a result, there's evidence that smaller, local brewers have done better than larger ones. According to Beer Marketer's Insights statistics reported by The Wall Street Journal, 5,000 small breweries shipping fewer than 100,000 barrels a year saw an average volume growth of 14% in 2016. It may have been these small-batch craft beers only available locally that initially helped to develop the craft beer trend.
To switch things up and attract new audiences, Heineken has been diversifying into new categories such as no-alcohol beer and cannabis-infused selzer water marketed by California's Lagunitas Brewing, which the Dutch company acquired last year. And Heineken recently bought a 20.67% interest in China Resources Beer Holding Co., which will give it access to a huge distribution network in that country, The Wall Street Journal reported.
Changes are also afoot in the company's C-suite. Heineken USA will have a new CEO as of Sept. 1. Maggie Timoney, who is taking the post, has a solid understanding of the markets here and in Canada. She will need that background in order to tackle the company's slumping sales. During the first quarter of this year, U.S. sales fell by high single digits, although the brand saw 8.1% growth year-over-year globally.