Heineken in Russia

Résumé du document

Heineken is the first European Brewer and one of the first brewers in the world. Also, to give a better idea of the situation of the company, let's state some figures. In 2005, net profit was 761 million €, with sales above 10 billion € and a total beer volume of almost 120 million hectoliters. All this represents an annual growth of nearly 20% in net profit, more than 7% in revenue, and more than 5% in sales volume (hectoliters). So, we may wonder where this growth comes from, what is Heineken's strategy to achieve such a growth and sustain it. In their 2005 annual report, they state: “We are committed to growth and have embraced innovation as a key component of our strategy. We work to continually anticipate and meet the changing needs of consumers. Our innovations are in the areas of production, marketing, communication, packaging, and, in particular, draught beer systems, where we are an acknowledged leader.” So, it could seem that there strategy is focused on innovation, but as we will see, not only. Another part of the strategy seems to focus on an active participation to the consolidation in the beer market, so as to be able to grow and strengthen a good position in mature and profitable markets.

Extraits

[...] It's important to be present everywhere because as we already said, most of the Russian consumption is made of impulsive purchases and on the spot consumption. So, even if it seems complicated and expensive to organise, I think that here they have a real challenge here, and a challenge which can make them win if it's tackled properly. In my opinion, it's the one with the best distribution network which will win in Russia. [...]

[...] At the same time, that's to say in 2003, Heineken started being able to produce its own beer locally. Thanks to this, the company could distribute its premium beer with a competitive advantage over other foreign competitors and also benefit from the increased interest from the Russian market in premium beers. Also, what we can say is that Heineken wants to win in Russia thanks to a large Portfolio of local beers and premium international brands, which should allow them to target and appeal to all the segment groups of consumers on the Russian Beer market. [...]

[...] Otherwise, they will switch to whatever is available. Also, as it's mainly an impulsive purchase, most of these purchases are done in the street, in small kiosks. These kiosks can sometimes account for up to two thirds of the sales volume of some brewers (article “Drinking ban threatens Russian beer growth”). This also increases the difficulty of logistics, because a multitude of very small shops will have to be provided very frequently as their stock is very small. The situation isn't like in Europe where most of the purchases are made in supermarkets, and thus brewers only have to deliver to big warehouses, sometimes one or two by city, depending on the different brands of supermarkets present in this city. [...]

[...] Nevertheless, we should not forget to put the emphasis on the challenges that Heineken will have to face to take the most out of these opportunities. One of the first challenges in the Russian market is also the huge size of this market. This is what attracts foreign investors generally, but it can also be difficult to deal with. Providing the whole market with Heineken products will require a very good logistic system, so as to be able to deliver all over the country without gaps. [...]

[...] Heineken in Russia 1 What is Heineken's strategy for growth? Heineken is the first European Brewer and one of the first brewers in the world. Also, to give a better idea of the situation of the company, let's state some figures. In 2005, net profit was 761 million with sales above 10 billion and a total beer volume of almost 120 million hectolitres. All this represents an annual growth of nearly 20% in net profit, more than in revenue, and more than in sales volume (hectolitres). [...]