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owns and operates one of the largest and most respected network of breweries in the world, producing the popular Heineken and Amstel brands of beer (which rank number one and number two, respectively, in Europe), as well as Murphy's Irish Stout, all of which the company markets internationally. The company's beer portfolio also includes a large number of national and regional brands, including Tiger, the number one regional brand in Asia. Heineken ranks second in the world beer market (trailing only Anheuser-Busch Companies, Inc.), selling beer in 170 countries and brewing beer at more than 110 company-owned breweries in more than 50 countries. Run by the Heineken family for most of its existence, the business built a solid reputation early in its history for maintaining high standards for its beer, standards the company continues to adhere to more than 135 years later. Moreover, Heineken is also the single largest exporter of beer in the world. The company has operations in many countries outside its base in the Netherlands, though it has no brewing facilities in the United States, by far the company's largest export market; Heineken beer is the number two imported beer in the United States (behind Grupo Modelo, S.A. de C.V.'s Corona). In parts of Europe, Heineken N.V. owns beverage wholesalers, which, in addition to handling beer, also supply soft drinks and spirits to restaurants and taverns; some of these soft drinks are manufactured in Heineken factories. Although no longer involved in day-to-day management, the Heineken family retains influence over the company it founded through its 50 percent ownership of Heineken Holding N.V., which holds a 50 percent stake in Heineken N.V. Birth and Early Development In 1864 Gerard Adriaan Heineken convinced his mother that there would be fewer problems with alcoholism in Holland if the Dutch could be induced to drink beer instead of gin, and, moreover, that beer brewed in Holland was of such poor quality that he felt a personal obligation to produce a highquality beer. Heineken's mother bought him an Amsterdam brewery known as De Hooiberg (The Haystack) which had been established almost 300 years before, in 1582. Heineken was only 22 when he assumed control of De Hooiberg, one of Amsterdam's largest breweries. He was so successful that after four years he built a new, larger brewery and closed the original facility. His business continued to grow rapidly, and after six more years, in 1874, he purchased a Rotterdam brewery to add to his operation. Heineken incorporated his company as Heineken's Bierbrouwerij Maatschappij N.V. (Heineken's Beer Brewery Company) in 1873. During this time, using a new cooling technique developed by Carl von Linde, Heineken gained the ability to brew year round at a consistent quality level. Heineken was thus one of the first breweries in the world to eliminate the brewer's traditional dependence on seasonal natural ice. In 1879 Heineken hired Dr. Elion, a former student of Louis Pasteur, to research yeast. Over the next 13 years Elion systematically bred and selected a specific yeast cell for Heineken, which came to be known as the 'Heineken A-yeast' (yeast being the source of alcohol and carbon dioxide in beer). The Heineken A-yeast would continue in use into the 21st century and would eventually be shipped from Holland to all breweries owned or operated by the company, providing for a uniformity in taste among Heineken products, regardless of the different climates in which they were produced or consumed. Heineken began to export just 12 years after the De Hooiberg purchase, with regular shipments to France. Exporting to the United States began soon after the founder's son, Dr. H.P. Heineken, assumed control of the company in 1914. Traveling on the Dutch liner Nieuw Amsterdam to New York, he met Leo van Munching, the liner's bartender. Impressed by van Munching's knowledge of beer, Heineken offered him a position as the company's importer in New York. The bartender quickly accepted. Van Munching distributed Heineken beer to the finer restaurants, taverns, and hotels in the New York area until Prohibition forced him to stop in 1920. 1930s Through Mid-1960s: Accelerating International Expansion After the repeal of Prohibition in 1933, Heineken was the first beer imported into the United States. World War II once again brought importing to a temporary halt while van Munching served in the U.S. Navy. When he returned in 1945, he formed Van Munching and Company, Inc. and established a nationwide distribution system to expand the beer's market beyond the New York area. Beginning in the 1940s, the U.S. market became extremely important to Heineken, eventually becoming
In 1971 Alfred Heineken was appointed chairman. Heineken beer also became the leading import in Japan. Heineken Technisch Beheer.the beer's largest market outside the Netherlands. Heineken gained interests in breweries in Surinam. Heineken sent his son Alfred to New York to learn about Van Munching's marketing operation. This was followed closely by participation in a brewery in Indonesia. Canada. however.T. to Heineken N. Jordan. project engineering.A. There was also a tasting center at the Zoeterwoude laboratory. Through Van Munching's distribution system.S. Chad. Heineken. which paid the brewer in guilders and thereby assumed all currency risks. Its various breweries contracted with Heineken World to supply worldwide beer shipments. the company changed its name from Heineken's Bierbrouwerij Maatschappij N. Heineken became the dominant beer import in most of the United States. The young Heineken took advertising and business courses in the evening and spent his days canvassing New York on foot with Van Munching's sales staff. Heineken began advertising its beer on the radio. largely because Heineken sold its beer to Van Munching. Alfred Heineken had been impressed with the changes in the U. research on raw materials. Late 1960s Through 1980s: Product Diversification and Continued Growth Product diversification began relatively late in Heineken's history. and Australia. the fourth opened in 1982.V. and Sierra Leone as well. however. and Greece. the company purchased the Amstel Brewer y. Samples of all beers brewed under Heineken supervision were shipped there each month to be tested by panels of taste experts.V. The H. The following year.T. High quality was always the company's hallmark. The brewing process of medium-quality beers usually took three days and aging lasted a week at most. Madagascar. advertising had been considered unnecessary because tavern owners were tied to specific breweries. Previously. In 1949 the company built the first of four breweries in Nigeria. That year Malayan Breweries was formed in Singapore in association with a local partner. In 1931 the company entered the first of many joint brewing ventures in countries to which it had previously exported.B. founded by Jonkheer C. Moreover. He prompted the company to implement marketing techniques that capitalized on these habits. brewed its beer for eight days and aged it for six weeks. the Netherlands Antilles. by the 1980s Heineken was available in 70 percent of the nation's retail outlets handling alcoholic beverages. lifestyle brought about by electrical refrigerators and modern supermarkets. The tests at Zoeterwoude augmented the taste testing that was carried out at each individual brewery. Between 1958 and 1972 the company also built four breweries and two soft drink plants in Zaire. van Marwijk Kooy in 1870 and the first in Holland to brew lager beers. Heineken World headquarters remained in Amsterdam and were housed in an addition to the Heineken . the company began selling beer in grocery stores (with store displays designed by Alfred Heineken).H. During the late 1940s H. Through its acquisition of Amstel. Lebanon. de Pesters and J. and other services for all breweries associated with the company. which was formed in 1963. Heineken had breweries in Rwanda. In addition. where special production lines accommodated the varied labeling requirements of the different states. Recognizing the importance of the take-home market. the company looked upon all of Europe as its domestic market. by the 1980s Amstel beers were sold in more than 60 countries. Amstel's export market was firmly established by the time Heineken purchased the operation. His return to Holland in 1948 marked the beginning of a new era in the company's marketing strategy. While many imports were available only in metropolitan areas or other limited geographical regions.P. Ghana. the People's Republic of Congo. The company's remarkable success outside the Netherlands led management to emphasize Heineken's international presence rather than casting it as a Dutch company with significant international operations. or H. because the company's emphasis had been on expanding its markets. Holland's second largest. for instance. In 1968. In fact. Angola. unit operated out of the company's laboratory at Zoeterwoude in the Netherlands and provided laboratory services. and he foresaw the eventual impact of modern conveniences on the Dutch way of life. currency fluctuations had little effect on the company itself.B. Heineken Holland had headquarters at the Zoeterwoude brewery. The majority of Heineken beer destined for the United States was brewed at the company's Hertogenbosch brewery. In the 1960s the company institutionalized its meticulous quality control efforts under its technical services group. In 1980 Heineken eventually entered the low calorie beer market with Amstel Light..
Jamaica (1973). offering displaced employees retraining and outplacement. Japan (1983). The most serious incident was the November 1983 kidnapping of the company chief. and soft drinks were also becoming increasingly important Heineken products. Management policies at Heineken changed little over the years. Sisi. grandson of the founder and owner of 50 percent of the shares in the company.A.A. Heineken spent tens of millions of guilders each year to bolster its image as a prestigious import. Löwenbräu's experience was not lost on Heineken. Heineken and its affiliates also sold Royal Club. Limited.V. and B3 soft drinks. Alfred Heineken. when Miller Brewing Company began brewing Löwenbräu under license in the United States the German brand lost a major portion of its market share. The distillery at Zoetermeer was the headquarters of Heineken's Netherlands Wine and Spirits Group B. he kept close ties with the company well into the 1990s. St. In addition to Murphy's Irish Stout.. In revenues it ranked fifth in the world behind Anheuser-Busch. From 1983 to 1986 Heineken invested significantly in Sogebra S. The company also purchased stakes in numerous foreign brewers. Its share of the world beer market increased from 2. which held a 50 percent stake in Heineken N. however. Bokma Genever was Holland's most popular gin. In 1982 two unsuccessful blackmail attempts were made against the brewery. finance. a leader in Spain. It appeared that Americans enjoyed the exclusivity of an import. even though its beer is brewed under license in many other countries.82 percent between 1977 and 1981. Glenmark. the brewery produced Heineken light lager brew under license. The group was kept small in order to prevent factions from developing. spirits. and a minority stake in Quilmes International (Bermuda) Ltd.. The two were held for 21 days and released after the company paid out an estimated 30 million guilders for their return (though the actual amount was never made public).. Ireland. and the company bottled PepsiCola and 7Up under license. Heineken beer began to be produced in Sierra Leone and Trinidad (1972). and Japan's Kirin Brewery Company. The premium price they paid for Heineken beer lent credence to the image. which had interests in Argentina. Greece and South Korea (1981). the family head of the company was involved in Heineken's day-to-day functions. Spirits and wines included Bologna.. Though Alfred Heineken officially retired in 1989. was in part attributable to a need to maintain the image. a minority stake in El Aguila S. (Société Générale de Brasserie). Britain's Allied Domecq PLC. and nonalcoholic beers such as Amstel Brew. Soft drinks were made at Bunnik by Vrumona B. and Paraguay and later expanded into Chile. Hoppe.. Sourcy. in 1983.V. in 1984 (increased to 51. The situation was considered so bleak that in 1986 the company and its French partner cut 500 jobs and closed down three breweries and a bottling plant in France. which dated back to 1856. and since entering France in 1972 through the purchase of a majority stake in the third largest brewing group. As in the past. The company's refusal to brew in the United States. Wines. Uruguay. Morocco (1980). In 1971 Heineken purchased the Bokma distillery. Haiti (1977). including: a minority stake in Cervejarias Kaiser S. In 1970 Heineken entered the stout market by buying the failing James J. Heineken was unquestionably a powerful force in the brewing industry in the 1980s. Alfred Heineken. trying to sustain the company's French activities. In the 1980s the company was a victim of a series of criminal incidents. Grand Monarque. Coebergh.61 to 2. and public relations in the mid-1980s. and Jagermeister brands.V. The family retained control over virtually all aspects of the company.family home. Italy (1979). Through li ense c agreements. and his chauffeur. followed the next year by an extortion attempt. Royal Club and Green Sands shandies. Murphy brewery in Cork. and Spain (1988). Lucia and Tahiti (1976). directly supervised research and development. 1990s: Expanding Aggressively into Emerging Markets .A. Norway and Sweden (1975). a leading Brazilian brewing group. Heineken continued its international expansion throughout the 1970s and 1980s.2 percent in 1986). Ireland (1978). Heineken had only one profitable year there by the mid-1980s.V. which was managed by a small team selected by the head of the family. The French market proved the most challenging to Heineken. serving as chairman and delegate member of the supervisory council (until 1995) and as chairman of the board of Heineken Holding N. Miller Brewing.
the U. which then. targeting in particular young Germans who. Also in 1996. Heineken paid US$40 million for a 25 percent stake in Poland's Zywiec Brewing in 1994 (the stake was increased to 31. Early that year the company acquired the fourth largest brewer in France.. Heineken had three export offices and three breweries in China.afzant A. he was responsible for export sales to the United States. imported beer appealing.D. a 24-bottle case of Heineken sold on average for about 50 percent more than a case of the domestic favorite Budweiser. a Hungarian brewer.S. worldwide annual beer consumption had increased to about 30 billion gallons. whose brands included Stella Artois and Classica von Wunster. This business then became officially known as Heineken USA. Heineken was able to take advantage of this trend. Interbrew Italia was merged into Heineken Italia S.A. Scandinavia. after the United States. Gerard Van Schaik took over as chairman. In October 1995 Heineken acquired a 66 percent stake in Zlatý Ba.p.A. Heineken announced in 1992 that it had signed a joint agreement to become the first foreign beer producer in Vietnam..As the company entered the 1990s.6 percent of the company's total. by far the world's top consumer of beer.3 percent interest (increased to 100 percent in 1994) in Komáromi Sörgyár RT.A. In fact. the largest brewery in Slovakia. of Belgium.p. but contributed 23 percent of the company's US$435 million in pretax profits in 1991. more than one out of every five imports in the United States was a Heineken. Heineken became the leading imported beer in the United States and brought the entire Heineken USA portfolio double-digit growth in 1994. increasing Heineken's Italian market share from 25 to 30 percent. with 35 percent market share. and the third largest Italian brewery. operation that had handled the Heineken import business in the United States for six decades. Heineken entered into ventures to build new breweries in China (to brew Tiger beer) and in Cambodia (to brew Tiger and ABC Stout). the Fischer Group. the company withdrew from its Myanmar venture. In the 1990s specialty beers remained very strong among the U.5 million brewery located near Ho Chi Minh City began producing beer under the Heineken and Tiger labels.. which in 1994 represented the world's second largest beer market. offering a more full-bodied. When Van Schaik joined the company in 1959. acquisition in 1991. was the most important source of profits for Heineken. the Far East. and the top spot in Italy. Heineken also ventured into Myanmar through a joint venture that began constructing a new brewery to produce Tiger beer.p. arm of subsidiary Heineken Worldwide. Birra Moretti S. Also in 1994. equivalent to more than ten six-packs of beer per person per year. the company moved into Bulgaria through the purchase of 40 percent of the state -owned Zagorka Brewery A. In accordance with this trend. Van Schaik also oversaw an important U.A. and Middle Europe. Expansion into former communist markets began in 1991 with the acquisition of a 50.S. The company also sold the bulk of its spirits and wine business that year. with 38 percent of the market--although at the price of a short-term reduction in profits due to high integration costs. Heineken thereby gained the number two position in France. which was based in Stara Zagorka and held 20 percent of the country's beer market. it was hoped. Emphasizing Heineken as a premium beer. That year. Van Schaik focused on expanding the company's presence in Germany. In early 1995 Heineken acquired Interbrew Italia S.8 percent later in 1994). which produced the Moretti and Sans Souci brands. Heineken's aggressive acquisition drive continued in 1996. To facilitate the introduction of Heineken in Poland. with especially strong volume in Latin American and Asia. as in the 1990s. the U. might find a foreign. concerned about the human rights situation there and the impact its presence there might have on the company's reputation.S. That same year. By 1994. sales represented just 2.S. During this time. European beer that many consumers desired. when Heineken purchased Van Munching & Company. from Interbrew S. Karel Vuursteen became Heineken's chairman in 1993 and continued to expand the company's international presence focusing on Latin America. In 1993 Heineken also moved into China. U. A US$42. .S. the company invested in costly advertising.. Heineken's Indonesian subsidiary broke ground in 1995 at the site of a new brewery near Surabaja. beer-drinking public as many consumers began drinking less and drinking better beers. According to a 1992 Forbes magazine article.S.
and Murphy's--and acquiring or building from scratch foreign breweries with strong local or regional brands.A. as it did in early 1999 when it decided not to bid for a controlling stake in SAB. enhancing its position as the most international brewing group in the world through additional dealmaking. Heineken's position of international preeminence at the dawn of the 21st century was attributable to its two-pronged strategy of exporting its key global brands--Heineken. . and Denmark's Carlsberg A/S. Also in 1998 Heineken gained a 25 percent stake in Pivara Skopje A. It faced a potential battle. however.D. the leading beer maker in Macedonia with a market share of 70 percent. Growth was slowing not only from the maturation of developed markets but also from the financial crises that rocked such emerging areas as Asia and Latin America. Heineken immediately began integrating Cruzcampo into El Aguila. Amstel. from several rivals. from Diageo plc. concerned about the purchase because of Heineken's majority stake in El Aguila. That year Heineken increased its stake in Zywiec to 75 percent. Poland was the focus during 1998. including SAB itself. then merged Zywiec with Brewpole. In June 1999 Heineken reached an agreement to acquire Grupo Cruzcampo S. the largest brewing group in the country and maker of the popular EB brand. behind South African Breweries plc (SAB). forced the company to cut about one-sixth of its Spanish production and storage facilities before the deal was consummated in January 2000. Spain's largest brewer. Spanish regulators. which commanded 38 percent of the Polish market. Heineken held a controlling 50 percent stake in the enlarged Zywiec. Heineken thereby had attained leading positions in several markets in Europe and elsewhere and the number two position in Africa.. But another cropped up a year later when Bass PLC of the United Kingdom began exploring the sale of its brewing operations and Heineken showed keen interest. Heineken remained at the forefront of the consolidation trend. The company did occasionally bypass expansion opportunities. Anheuser-Busch..The late 1990s continued to provide conditions ripe for consolidation in the global beer industry.