‘Buying a craft beer holding? That’ll never work!’ Heineken CEO talks up Affligem

Addressing this month’s Barclays Back to School Conference in Boston, Van Boxmeer was candid about where, in his eyes, Heineken could and couldn’t compete.

“In the US you see the craft beer boom. In some European countries it’s also coming. Of course, we are not a craft brewer insofar as, I’m not going to buy a series of craft breweries and make a craft holding,”​ Van Boxmeer told delegates.

“That’s never going to work because what’s at the heart of craft beer…are people who set up a shop, go and dig into the immense rich repertoire of beer brewing and of ingredients and reinvent beer…But by definition this is not a business we can go into,”​ he added.

Belgian abbey beer Affligem: ‘In essence a craft brew’​

On the other hand, he said, Heineken owned brands like Belgium abbey beer Affligem, which due to its 1,000 year history and ancient recipe is “in essence a craft brew”​ that can tap global growth in premium speciality beer – with 6% CAGR between 2010 and 2014, versus only 4% for premium beer.

“And I think that on the back of the force of our commercial strength and the market positions we have in the world we can use a brand like Affligem and launch that as a specialty or craft beer proposition.”​

“And this is where we devote our attention now, and we’re already putting it in 30 countries in our portfolio and we’ll continue to roll that opportunity out,”​ he said, noting that Affligem was only sold in a three or four countries several years ago.

Heineken targets innovation as 6% of sales​

Turning to innovation in relation to beer, cider, packaging or line extensions, Van Boxmeer said innovations contributed 7.4% (€1.1bn) of the brewer’s total revenues in H1 2014, while company guidance targets 6%.

“I maintain the 6% as a good measure to have all our operating companies having innovation at the forefront of their agenda,”​ he said.

What counted was not the precise innovation rate, Van Boxmeer added, but the “dynamic of looking out for new things” ​then “getting them to stick and continue to grow”​ to bring more margin and market share in the countries where line extensions are launched.

“Innovation will continue to be at the forefront of our agenda because…it’s perhaps the most efficient tool to grow your top lines and certainly and even more so in mature markets where demand overall is declining,”​ he said.

“Innovation is a way to increase your revenue and your margins and also increase your market share,”​ Van Boxmeer said, adding that outlet execution was also key for every FMCG company.