This page last updated 2008 March 19 (added Heinken re: Brazil + old Molson "I am Canadian" rant)
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Readers of this page should understand that in discussing beer - specifically Heineken, in our international business class we are not implying that to be a successful international business student one must drink international beer it is simply a good example of a large company that is developing international markets using strategies and modes of export which we are learning about in MGTC44.

If I happened to pick a beverage which is of consumer interest to the demographic in the class, that is mere coincidence  ;-)  and not meant to offend anyone who's religion or culture forbids such indulgences.

- pictured to the left is our friendly, esteemed Chair of the Dept. of Management, and well loved Economics Professor, Dr. Michael Krashinsky - "raising a glass" at the MESA Gala in March 2007


INTRODUCTION In this part of the course we have been looking at the ways of exporting, the strategies involved and some of the actual modes of entry employed. In discussing the "case" of Heineken, it is possible to put all of this together and look at.

Proactive vs. Reactive Reasons for going international
Heineken exporting because of stiff domestic competition

Collaborative Relationships
Heineken using a Joint Venture with a strong local business, to expand into a new region

Export Modes
Heineken using Licensing to expand exports

Employing FDI - Foreign Direct Investment
Heineken using acquisitions FDI to expand exports
Heineken setting up brewery operations in Africa to avoid import tariffs
Heineken's "greenfield" investments

"The key methods Heineken uses for its international expansion are export, licensing, acquisitions and Greenfield investments."

How Big is Heineken?

from Heineken's website - "Heineken beer is available in more than 170 countries. The company's product portfolio consists of over 80 brands. With more than 110 breweries in  over 50 countries and export activities all over the world, Heineken is the most international brewery group in the world."

"At the end of 2003, Heineken owned over 115 breweries in more than 65 countries and employed 61,271 people."

sc Heineken exporting because of stiff domestic competition
(from www.Heineken.com FAQ)

"In the 1950's and 1960's Heineken concentrated in particular on  the export markets in which maximum financial  reward could be gained with relatively little effort.  These included the markets in Africa, the United  States, the Caribbean, the Persian Gulf region and  the duty-free markets. The developed, complex beer  markets in Europe, which were characterized by  heavy competition, were provisionally left alone by  Heineken. Only after the 'easy' markets had been  captured the group switched its attention to the 'more difficult' markets in the 1970's and 1980's.".

. Heineken using a Joint Venture with another "player" to expand into a new region
(from www.heinekeninternational.com/canadabrazil23.aspx )

"Heineken has reached an agreement with Canadian brewer Molson who announced today its acquisition of Kaiser in Brazil. Heineken will enter into a partnership with Molson by taking a 20% participation in the new brewery group that Molson will form by merging Kaiser and Bavaria. This merger creates a strong second player in the Brazilian beer market with a combined market share of approximately 18%.".

http://people.senecac.on.ca/tim.richardson/audio/audioHeinekenMolson.wav  Analysis / History

. Heineken using a Joint Venture with a strong local business, to expand into a new region
(from www.Heineken.com FAQ)

"In 1931 the very first foreign Heineken brewery was opened near the Indonesian city of Surabaya. Two years later Heineken set up a brewery in Singapore together with soft drinks producer Fraser & Neave: Malayan  Breweries, now known as Asia Pacific Breweries (APB).The many decades of Heineken's presence in Asia have yielded additional benefits in recent years. Almost all-Asian countries have shown increased beer consumption. By utilizing its knowledge of doing business in Asia, Heineken has strongly expanded its interests in Asia via APB Heineken using Licensing agreements to expand".

. Heineken using Licensing to expand exports
(from www.Heineken.com FAQ)

From the 1970's when it began to "go international" Heineken expanded its interests by licensing agreements "Firstly, by concluding licensing agreements with various breweries in France, Ireland, Spain and Italy and subsequently by taking participation in those breweries. The licensing policy pursued in the 1970's has  contributed substantially to the further  internationalization of the group. Outside Europe it  was mainly in the Caribbean where licenses were granted. The presence of many American tourists there and the proximity of the important American market in fact meant that the Caribbean was a market that had a ripple effect."

. EmployingFDI - Foreign Direct Investment

Heineken setting up brewery operations in Africa to avoid import tariffs.

"After world war two, export became a top priority for Heineken and other Dutch companies. The aim was to get hold of foreign currency after the destruction of the war. Shortly after the war, African countries, especially in Western Africa, were top export destinations for Heineken beer. However, more and more African governments decided to increase import duties. This convinced Heineken that it was time to opt for domestic production in Africa."
from "Heineken University"

. EmployingFDI - Foreign Direct Investment

Heineken's Greenfield Investments

Heineken says
"Greenfield investments mean constructing and running completely new breweries. Greenfield investments are not common occurrences in the industry as they involve high investment costs, a high degree of uncertainty and much learning. But sometimes, Greenfield operations are the only way to get a foothold in a market."

from "Heineken University"

"Ploughing free cash flow into greenfield investments, thereby shifting the balance of a portfolio currently 70 per cent reliant on mature markets, is an investment in the future"
 Ian Bickerton, Financial Times

COMMENT In addition to the information from Heineken's own PR dept., there is a recent story in the Financial Times of London, as carried in the National Post of Canada, about Heineken's entry into "emerging markets".
, ad
. "Heineken Taps Into Emerging Markets"
by Ian Bickerton, Financial Times 
- carried in the National Post, 2002 Sept 24
Heineken using acquisitions (FDI - Foreign Direct Investment) to expand exports

Bickerton explains in the Financial Times article that "" A rapid-fire flurry of acquisitions has put Heineken, the Dutch brewer, back on the map in a global consolidation battle that is increasingly focused on emerging markets."

Recently Heineken has acquired major breweries in Egypt, Costa Rice and Lebanon. More deals are expected in Africa - Heineken bought a majority stake in Nigerian Breweries.

FT logo used according to the "Terms of Use" posted on their website http://news.ft.com/home/us (2004)

The effects of the "ENVIRONMENTS" can be seen here, - particularly the Social/Cultural Environment and the Competitive Environment; Europe has a rapidly aging population - there are not so many young people out in bars drinking beer in great volumes, - so, if you want to continue to sell high volumes, you have to go to new places.
. Heineken exporting because of stiff domestic competition

"With some home markets suffering low levels of growth, emerging markets are the future for all the brewers," said one person who knows the company well. "It is in these far-flung regions that the consolidation struggle is really being fought." Many analysts have suggested Heineken's tightly controlled ownership structure would limit its ability to fund significant acquisitions. However, with the global consolidation battle at its keenest in markets such as Latin America and Africa, the issue of Heineken's rigid shareholder structure has proved to be a red herring." 
Ian Bickerton, Financial Times

. Global Diversification 

Bickerton says
"It could double, triple or even quadruple sales of its higher-price premium brands in new markets within four or five years." And any concern about political or economic uncertainty is offset by spreading investments across a range of territories.

. Management changes - leadership style effecting global business

Bickerton says
"While no-one expected a sea-change following the death in January of brewing magnate Freddy Heineken and the appointment in May of Anthony Ruys to succeed the extrovert Karel Vuursteen as executive chairman, there are nonetheless indications of a shift in leadership style. Mr Vuursteen, who moved to the family controlled holding company that in turn controls Heineken, was "involved everywhere, right up until five minutes before he left", according to one company watcher. "Mr Ruys is very different in style, much more a consensus-seeker."

He leads a five-man executive board that is, on average, ten years younger than 18 months ago. Rene Hooft Graafland, Mark Bolland and Belgian-born Jean-Francois van Boxmeer are all in their early 40s. "These are young, forward-thinking, dynamic guys," said the person close to the company. That emphasis on youth is carried through in Project Beacon, Heineken's attempt to tap into a younger consumer. The idea struck Mr Ruys as a "wake-up in the middle of the night" kind of moment.

"I realised that what is really important is to keep the company and its brands
young," he said. "If we are young and attractive as a company, we will attract young talented people." But he added: "Consistency has been the success factor of this company and I am not about to change that. At the end of the day it is all about selling more beer.".

May 2007

Molson and Heineken issued press releases discussing their JV saying
"Molson and Heineken Strengthen Existing Relationship in Canada"

Heineken is distributed in Canada through Molson Breweries.
Heineken update re: Canada 2007
Heineken Named Official Beer for Caribana 2007
- as a consequence of distributor Molson partnering w Caribana organizers
- Justine Rae, Heineken Brand Manager, Molson Canada

Molson - most famous for their "I am Canadian" rant

http://www.youtube.com/watch?v=BRI-A3vakVg Text of the Molson 2000 "I am canadian" rant

Hey, I'm not a lumberjack, or a fur trader....
I don't live in an igloo or eat blubber, or own a dogsled....
and I don't know Jimmy, Sally or Suzy from Canada,
although I'm certain they're really really nice.

I have a Prime Minister, not a president.
I speak English and French, not American.
And I pronounce it 'about', not 'a boot'.

I can proudly sew my country's flag on my backpack.
I believe in peace keeping, not policing, diversity, not assimilation,
and that the beaver is a truly proud and noble animal.
A toque is a hat, a chesterfield is a couch,
and it is pronounced 'zed' not 'zee', 'zed' !!!!

Canada is the second largest landmass!
The first nation of hockey!
and the best part of North America

My name is Joe!!
And I am Canadian!!!


"Heineken established the Heineken University in 1998 to help the organisation develop its employees and meet ever-changing business requirements."
"About 60,000 employees globally have access to the University’s resources, which range from books to e- Learning to instructor-led training sessions. Employees from all over the world regularly fly into the University’s Learning Centre in Amsterdam to attend classroom-based courses...the courses are developed in close collaboration with Stanford University, Columbia Business School and the London School of Economics."

if you have a lot of time to waste you can see Heineken's "online course" about beer making

ft.com on their website http://news.ft.com/home/us has a "Terms of use" section in which they state "...may display an FT logo" , "You can use any of the graphics below as a hyperlink to FT.com. Image sizes are also provided...."
Contact was made with Jolie Hunt, Public Relations, North America, The Financial Times for quoting extensively from the article by Bickerton.
Copies of emails are kept in the permissions binder.

For permission to use the Heineken logo and quotes and links,
Contact was made with Heineken through Molson's Canada. Contact was Veronique Schyns, Heineken International Communications Department in Heineken head office in Amsterdam.
Copies of emails are kept in the permissions binder.

Prof. W. Tim G. Richardson © www.witiger.com