The flagship Heineken brand saw double digit growth in 14 markets in the first six months of 2020. Overall, the brand saw volumes decline only 2.5%, despite the huge impact of coronavirus on the beverage industry as a whole.
And now brand extensions for Heineken are widening consumption occasions while benefiting from the strong brand equity behind the beer. Heineken 0.0 showed double digit growth over the last six months; while Heineken’s latest innovation - Heineken Silver - has performed above expectations in its launch market of Vietnam and is currently rolling out in China.
‘Consumers are turning towards brands they trust’
Reporting its 2020 half year results last week, Heineken said its markets and businesses had been materially impacted by the coronavirus pandemic. The decline of the on-trade in Europe; and government restrictions on activities in Mexico and South Africa; were among the factors affecting the Dutch brewer’s business. Net revenue decreased 16.4% while beer volumes were down 11.5%.
But while brand Heineken volumes were hit by a 9% decline in the second quarter (April-June), they closed the first half of 2020 with a 2.5% decline.
And over the six months, the Heineken brand grew double digits in 14 markets including Brazil, China, the UK, Poland, Germany, Ivory Coast and South Korea. It is also performing well in the off-trade in Europe.
Given the challenge presented by coronavirus to the beverage industry over the last few months, Dolf van den Brink, CEO and chairman, says the Heineken brand is one of the parts of the business he is most proud of.
“The Heineken brand performed strongly given the circumstances,” he said.
“Excluding South Africa, the brand would have been in positive territory. Consumers are turning towards brands they trust so it is a good thing that as measured by Kantar, the Heineken brand stands as the most trusted international beer brand in the world. Brand Heineken is clearly outperforming in the category and in fact we observed stable or growing share in over 80% of our key markets.”
In China, Heineken entered a long-term strategic partnership with China Resources in 2018 - one of the aims being to grow the Heineken brand in Mainland China. Heineken says the performance of the Heineken brand has accelerated as a result, with double-digit growth quarter-over-quarter.
Moving forward, some of Heineken’s global sponsorship platforms are now resuming activities for the second half of the year.
Heineken 0.0: strong US performance
Heineken 0.0 is Heineken’s alcohol-free sibling, which was launched in Europe in 2017 and has since been rolling out to other global markets, including with a US launch last year.
Over the last six months, Heineken 0.0 grew double digits with growth across all its regions, and with particular strength in the US, Mexico and South Africa.
And van den Brink says Heineken 0.0 is an example of consumer-centric innovation: focusing in on the growing trend for lower-alcohol beverages.
“On consumer and customer-centricity, that is something that is and should be a priority at any moment in time, but I do believe it goes a little bit in waves up and down. At times I find we can become a bit too centric on our own brands and our own products and it is important to really have that outward-in perspective, really understanding where our consumers are going.
“That is a muscle we can strengthen further but we are also doing it quite spectacularly on, for example, Heineken 0.0. A couple of years ago we made a very big bet on Heineken 0.0. On the biggest brand, 25% of the brand budget is going there and we have seen the fruits with almost 60 operating companies who have rolled out the brand with continued double-digit growth even in the middle of this crisis.”
New kid on the block: Heineken Silver
In the latest line extension for the Heineken brand, Heineken launched Heineken Silver in Vietnam in March last year. At 4% ABV it is designed to be a more sessionable beer, while retaining the signature Heineken taste.
It hopes to open up the Heineken brand to more consumers and meet more occasions. In launching the beverage, Heineken stated the drink is “designed to suit a wide range of occasions - including over food, which is one of the most popular occasions in Vietnam”.
Heineken Silver is ‘performing ahead of expectations’, according to van den Brink, and has already started expanding into new markets with a launch in China in April this year.