AMBA 660 Dream Team Paper Week 10 Final 
AMBA 660
Heineken in South Africa
Presentation Script
The Dream Team
Jason Pratt
Megan Allen
LaShaunda Person
This document was prepared for Professor Egan University of Maryland University College
Executive Summary
Executive Summary
Upon entering into the alcoholic beverage industry in South Africa, Heineken encountered several key issues including legal concerns regarding a contract with SAB Miller, a struggling subsidiary, outdated infrastructure, fragmented retail landscape, ever-changing government laws and regulations, and limited access to a skilled work pool. Since Brandhouse, Heineken’s subsidiary, has been able to establish a local production facility, it has been able to grasp 12.8% of the South African beer market. Strategies and business practices attributing to their success are strategic joint ventures (most notably the DHN JV) with industry giants, re-evaluation and realignment of business practices and organizational goals, innovation, rapid response, and strong CSR practices. Heineken’s entry into South African through the Brandhouse joint venture provides a successful entrance example for adult beverage companies to consider when planning to access to the market. It is highly advised that entry is not done alone. The market is established and highly competitive, leaving little chance of new companies succeeding. Pooling resources is the best strategy in this situation.
Slide 3
Specific operational, managerial, and organizational problems incurred by Heineken in
South Africa? Heineken established their footprint in South Africa in 1977, when it contracted SABMiller to produce, distribute, and sell its Amstel product within that country. SABMiller used Amstel to help it establish a 98% monopoly of the beer industry of the country in 2003 (Appendix 1) (Pluckett, 2004). South Africa’s beer market has been the largest in the continent with 30.9m hectoliters currently being consumed each year (Baker, 2015). This amounts to 3.4B
Heineken in South Africa
Presentation Script
The Dream Team
Jason Pratt
Megan Allen
LaShaunda Person
This document was prepared for Professor Egan University of Maryland University College
Executive Summary
Executive Summary
Upon entering into the alcoholic beverage industry in South Africa, Heineken encountered several key issues including legal concerns regarding a contract with SAB Miller, a struggling subsidiary, outdated infrastructure, fragmented retail landscape, ever-changing government laws and regulations, and limited access to a skilled work pool. Since Brandhouse, Heineken’s subsidiary, has been able to establish a local production facility, it has been able to grasp 12.8% of the South African beer market. Strategies and business practices attributing to their success are strategic joint ventures (most notably the DHN JV) with industry giants, re-evaluation and realignment of business practices and organizational goals, innovation, rapid response, and strong CSR practices. Heineken’s entry into South African through the Brandhouse joint venture provides a successful entrance example for adult beverage companies to consider when planning to access to the market. It is highly advised that entry is not done alone. The market is established and highly competitive, leaving little chance of new companies succeeding. Pooling resources is the best strategy in this situation.
Slide 3
Specific operational, managerial, and organizational problems incurred by Heineken in
South Africa? Heineken established their footprint in South Africa in 1977, when it contracted SABMiller to produce, distribute, and sell its Amstel product within that country. SABMiller used Amstel to help it establish a 98% monopoly of the beer industry of the country in 2003 (Appendix 1) (Pluckett, 2004). South Africa’s beer market has been the largest in the continent with 30.9m hectoliters currently being consumed each year (Baker, 2015). This amounts to 3.4B
References: Baker, N. (March 3, 2015). Africa the next great beer frontier. The Drinks Business. Retrieved from http://www.thedrinksbusiness.com/2015/03/africa-the-next-great-beer-frontier/. Brandhouse. (2015). Exec Team. Retrieved from www.brandhouse.co.za/OurPeople Brandhouse Daniels, J. D., Radebaugh, L. H. & Sullivan, D. P. (2015). International business. Environments and operations (15th ed., custom package textbook). Upper Saddle River, NJ: Pearson/Prentice Hall Diageo Diageo. 2008. South African Joint Venture. Retrieved from http://www.moneyweb.co.za/archive/no- more-amstel-for-sab/ Fletcher, C Heineken (2012). Advertising. Retrieved on June 7, 2015, from http://www.Heineken.co.za/ Advertising.aspx?Page=1 Heineken Company - Management. (2015). Retrieved June 6, 2015, from http://www.theheinekencompany.com/about-us/management/management-structure Heineken International Marketing Schools. (2012). Traditional marketing. Retrieved on June 7, 2015, from Plunkett, J. (2004) Plunkett 's Food Industry Almanac. Plunkett Research Ltd. Houston, TX. ISBN: 1-59392-394-5 SAB Miller 2014 Annual Report. (2015). Retrieved June 15, 2015, from http://www.sabmiller.com/docs/default-source/investor-documents/reports/2014/financial- reports/annual-report-2014-(interactive).pdf?sfvrsn=6 Steutel, W Chart courtesy of Heineken Company - Management (Heineken, 2015)