Introduction

Today beer is widely available and enjoyed in most countries and cultures around the world. Heineken is one of the largest companies in a global network of distributors and breweries. In addition, Heineken owns and manages one of the world’s leading portfolios of beer brands in terms of sales volume and profitability. Moreover, the company has been able to remain one of the world’s leading consumer and corporate brands for more than 130 years. It became Europe’s favorite beer brand – successfully exported to every corner of the world.

Financial Analysis

Income Statement

Balance Sheets

Geographical Breakdown of Sales

Leading Brewers

Significant Heineken Brands in Various Markets

Global Marketing Campaign

“Heineken refreshes the parts other beers cannot.”

SWOT Analysis:

Strengths:

+The company has undertaken various advertising and promotional initiatives, which has improved its brand equity

+Strong network of breweries helps the company boost customer satisfaction and reduce costs

+strong portfolio of over 250 plus beers

Weaknesses:

+largely dependent on the price of grain and hop

+more expensive than beers in the market

+being a leader susceptible to fake imitation products

Opportunities:

+rapidly growing market in Asia

+Mergers and acquisitions of other beer brands creating more growth for Heineken

+Falling trade and ownership regulations in foreign countries

Threats:

+raising alcohol tax

+Input costs (including transportation and energy) have accelerated to unprecedented levels in the past few years

+Changing buyer taste and preference

Issues facing the firm

-with acquisitions, heineken has to be careful to not acquire a brewery that will not be missed by the craft brewing crowd (they do not tend to take kindly when their favorite craft brewery is taken over by a corporate beer company)

-above goes along with the loyalty point below

-one big issue facing the Heineken Corporation is the declining number of people drinking beer in their global market

-wine is on the rise with the younger generaton (millenials) and when buying beer the younger crowd gravitates toward craft beer

The chief marketing officer for Heineken is focusing all their resources on finding a way to capture the declining beer drinking market

-He has been quoted saying “We don’t live in an era of loyalty,”

One way that Heineken has penetrated the younger market is through their recent ad about Heineken Lite featuring Neil Patrick Harris. This ad is very relevant to the younger age group and according to the CMO reached 35 million people in 3 days.

-Border acquisitions and mergers are becoming more and more common in the beer industry. Heineken, the most active company in this respect, acquired no less than 35 smaller breweries around the world between 1990 and 2008.

-Over the last three decades, the number of breweries operated by the top players in the industry has increased dramatically. Currently, Heineken operates 140 breweries throughout the world.

– A foreign brewery’s market entrance can result in counterattacks from other international players, as has been the case in India, China and Russia. These attacks are not restricted to the host countries but are extended to the main competitors’ home countries. One example is Heineken, which, via its ownership of Alken-Mae, holds around 14 per cent of the Belgium market, home to its archrival AB Interbrew.

Porter’s Five Forces

1. Competition in the industry; Anheuser-Busch InBev is their main competitor (#1 in the world). SABMiller used to be the 2nd largest brewing company in the world, but they were acquired by Anheuser-Busch InBev in 2016 for around $103 billion (Megabrew deal).

ABInBev owns brands such as Budweiser, Bud Light, Corona, Michelob Ultra, Stella Artois, and many more.

Molson Coors is another main competitor. (Coors Light, Miller Lite, Blue Moon)

InBev sold MillerCoors to Molson Coors

Budweiser, Group Modelo, Belgium’s InBev and UK’s SABMiller have grown significantly through mega-acquisitions (from case)

Heineken was the lead selling imported beer in US for 65 years, but lost its leadership to Group Modelo’s Corona in late 1990’s. (from case)

2. Potential of new entrants into the industry; Heineken is a well established/highly recognized brand which makes it difficult for smaller brands to compete with them globally, but many small craft beers companies are attacking niches in the market.

3. Power of suppliers;The suppliers of raw materials to Heineken Company are mainly farmers. Therefore, the threat for power of supplier is high. The bottle supplier for Heineken is provided by Heye Glas Nederland which is fully supplied the green bottle for the worldwide distribution of Heineken beer.

4. Power of customers;The buyers in this industry have many choices as there are many companies serving beer. This will increase the choice of the customer and hence the threat for power of buyers is high. For example, for serving customer at the pub, there are a lot of beer brands for them to fit their taste such as Guiness, Carlsberg, Tiger. Therefore, buyers now have a choice to choose the one they like. As a result, choosing of customer for what kind beer they want to drink will bring threats for Heineken.

5. Threat of substitute products.Heineken is a premium beer which makes it more expensive. Therefore, there is a significant threat of substitutes. The top substitute for beer is other malt beverages which have been growing in popularity. The main group is what is known as “malternatives”. These are malt beverages that have been flavored to taste similar to wine, fruit, and other drinks. Example of such beverages are Smirnoff Ice, Mike’s Hard Lemonade, Bacardi Lemonade. Other substitutes include pre-mixed drinks and wine coolers.

Also, beer is an inferior good and with the growing appreciation of wine, once consumers and the economy are doing well financially, beer is easily substituted with wine.

Board of Directors Recommendation:

-Increase advertising

– Market to young people (21-29) they will be the majority of beer consumers

– Reestablishing brand recognition

– Focus heavily on light beer market

– Marketing strategy

– Vertical integration

– Look into recycled glass/aluminum

– Trying to buy out their glass suppliers

I need this in 4 pages essay includes ( SWOT, Financial, issues facing the firm, Five forces, recommendations). I need it without the graphs