Heineken External Analysis

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Macro Environmental Factors
1. Demographics
In the beer industry, 40% of the US population consumes beer regularly (at least once a week). Amongst that, 30% of drinkers are frequent beer shoppers. However, the beer drinker profile is skewed towards younger males between the ages of 21-30 years old with only a moderate education and modest household incomes. It has also been determined, that consumers drink less beer as they age because of health and wellness concerns. For Heineken, in the mid 1990’s, the average drinker was 40 years old. In the past couple years, the average Heineken drinker’s age has dropped to 30 years old. 2. Political

The beer industry is subject to many government regulations regarding distribution, labeling, advertising, prices, taxes, and alcohol content.  Alcohol legislations differ from state to state, therefore being enforced at the state level.  Yet, they are all subject to federal regulations by the Bureau of Alcohol Tobacco and Firearms (ATF).  To limit alcohol abuse the government made a disproportionate tax rate on beer, doubling the tax rate per barrel of beer.  Post prohibition introduced the 21st amendment and its “three tier” distribution system which means beer is only allowed to be passed from producers through distributors to retail outlets. Heineken has always been run by family members. They always used strong, family-driven traditions for running their company. Thorny Ruys was the first non-family member to be appointed as CEO. Prior to Ruys, the company was run by three generations of Heineken ancestors. However, he resigned 18 months ahead of schedule because his lack of improvement in performance. In 2005, Jean-Francois van Boxmeer was appointed as CEO and was Heineken’s first non-Dutch CEO. 3. Economic

In the US, the beer market is usually segmented into beer types; Premium, Popular, Light, Imports, and Domestic specialties. Heineken falls into the Premium and Import segment which allows them to charge more for their beers than domestic. For example a six-pack of Heineken would cost you $10, whereas a pack of Budweiser would cost $7. Studies are showing that the market for premium beer is continuing to expand. This is important because Heineken wants to maintain its leadership in the premium beer industry, because is it the most profitable segment in the beer business. Right now consumer’s disposable income is lesser because of the economy, therefore beer sales aren’t as high. Lastly, a London-based online research service estimates that the market for premium beer will expand by 84 percent, to $230 billion, by 2012, from $125 billion in 2004. (C109) 4. Socio-Cultural

Social trends associated with the beer industry usually deal with health and dieting issues and deaths from over consumption. Beer consumers have increased their sensitivity to diet and health issues. As a result it makes them less likely to drink beer because of some of the “unhealthy” nutrients such as carbohydrates. Drinkers who desire to lose weight by cutting “carbs” often switch to wine or FAB’s (Flavored alcoholic beverages). Also, with alcohol consumption there is the complementary need to “go out” to bars, clubs and restaurants. If beer consumption decreases so does the need to go out, resulting in a sales drop in these complementary channels. Alcohol related deaths with drinking and driving is also a major concern to society. To minimize these deaths, law enforcement agencies across the United States are creating drinking and driving laws and enforcing them to their full capacity. 5. Technological

Technologically, beer companies are always trying to improve in the areas of production efficiency, packaging, delivery systems, and market intelligence. Most recently in the past decade or so, beer consumers have shown a high sensitivity to the freshness of their beer, not wanting to have the “skunked” taste. In light of these consumer behaviors, Anheuser-Busch...
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