Heineken S.W.O.T Analysis
Heineken boast of a large international presence. It has a worldwide distribution network and breweries. The company owns and manages leading portfolios of beer brand thus has one of the largest beer sales volume. Moreover, for more than 130 years, Heineken Company has remained one of the global leading consumer and corporate brands and Europe’s favorite beer brand (Hailemeskel 2016).
Heineken’s mission is: “To be a proud, independent, international brewer who is committed to surprising and exciting all consumers around the world (Hailemeskel 2016).”
Through its mission of surmising and exciting its customers, Heineken Company has for a long time been able to define clear characteristics of its beer products with the intention of meeting consumer needs. The mission has guided the company into brewing high-quality beer accompanied with great packaging thus meeting the consumer expectations and impacting on the overall success of the company.
“To win all markets with Heineken with a full brand portfolio in markets we choose (Hailemeskel 2016).”
The vision of the company is guiding it into maintaining standards regarding brand value, style, and the company’s development. The vision is pushing the Heineken Company into establishing varying beer flavors under a single brand. Hence, the vision is consistently guiding the company to utilize its brand impact thus winning global markets thus impacting its overall success (Grusenmeyer 2009).
Heineken’s primary stakeholders are the customers, stakeholders, suppliers, creditors, and employees. Its primary stakeholders are connected throughout the processes which always result in high-quality beer. The company’s processes re-executed by its employees and managers who continuously ensure that the company’s production rates and principles are met daily. Most importantly, the company is driven by consumer needs and expectations which it has to meet through a consistent supply of quality products from suppliers. Hence, the company’s stakeholders ensure that the company maintains normal business processes thus impacting positively on its overall success (Hailemeskel 2016).
|Parent company||Heineken International|
|Product portfolio|| Heineken
1. Heineken’s has a leading brand portfolio, It has more than 170 international premium beer, regional, local together with specialty beers.
3. Strong brand portfolio in the international market thus ensuring a stable inflow of revenues.
4. Heineken has a wide network of breweries. Currently, it owns over 125 breweries in over 70 countries.
5. All Heineken breweries are located near their end markets, thus Heineken Company is often in a position to serve its customers with fresh beer.
7. There is a strong network of breweries which enables Heineken Company to continuously supply its customers with beer at lower costs thus keeping its customers satisfied.
8. Excellent branding through advertising and sponsorship initiatives.
9. Many consumers in the US still prefer imported beer to local beer.
|Weakness||· Shrinking market share.
· The unprecedented increase in excise duties to curb drinking thus increasing the beer prices and eventually making customers to opt for alternative affordable beer brands.
· The ban of selling beer on public places thus limiting the beer selling platforms.
· Maintaining corporate image in distinct cultures.
· Counterfeit packaging from competitors.
|Opportunities||· Heineken can acquire small breweries.
· Heineken can expand product line in new areas to accommodate the changing taste and preferences of its customers.
· The technological changes can be exploited to strengthen Heineken brand.
· Falling trade and ownership regulations in the US market.
· There is a positive beer drinking trends where more females are now drinking beer.
· Customers are demanding low calories beer.
· There is a growing home deliveries.
|Threats||· Tax regulations on the beer industry.
An increasingly societal negative perception towards alcohol could instigate more restrictive legal measures.· Slowing beer industry growth rate.
· The changing customers’ tastes and preferences.
· Consumers today want to know more about the history and production methods behind what they drink. And they enjoy experimenting across categories and styles. As a result, they are less brand-loyal than ever before
· Legal issues related to underage drinking and retailer license may continue to limit the selling platforms for beer products.
· The production costs are rising to unprecedented level.
|· AB InBev
Beer Industry Market Analysis
Breweries are often categorized into micro-breweries and micro-breweries on the basis of production volume. The tag war between these two producers is that craft brew companies are consistently growing their production. Though micro-breweries do offer quality and quantity through greater distances, micro-breweries are also doing the same. This has been influenced by the current changing drinking trends like preferences that are significantly increasing the consumer demand for micro-breweries (Ft.com 2017). A greater number of consumers are shifting towards craft beer due to its distinct quality and taste. Therefore, micro-breweries are persistently expanding due to the growing consumer demand for craft beer.
Global Beer Market
The figures of global sales are on upward trend. Apparently, most brands are experiencing significant success because of the rising disposal income and the changing lifestyles of the US consumers. For instance, there are now a growing number of female customers. Besides, exploiting the niche consumer segment, the traditional markets are also experiencing a great shift from high-calorie beer market to that of low-calorie beer consumers. Moreover, there is a growing popularity of the craft beer which is creating a way for new producers. Other than glass-like PET, beer manufacturers are opting for packaging solutions that are durable but ductile, sustainable and affordable like cans (Zion Market Research 2017).
Subsequently, the global beer market is expected to accumulate about $688.4 billion by the year 2020. This growth is believed to be fueled by the growing markets. Moreover, imported beers and premium beers like Heineken are consistently increasing in popularity among their consumers because of the growing disposal income of these consumers. On the other hand, to acquire more market share, beer producers are expanding their distribution channels in new developing markets through mergers and acquisitions (Zion Market Research 2017). That is, most international and domestic breweries are considering merging or collaborations while some multinational producers are consistently making huge investments to broaden their market. Apparently, more international breweries collaborating with domestic breweries to allow the consumers in host countries to explore both local and international beers. Despite all these efforts, the growing health concerns or consciousness among beer drinkers is raising the demand for non-alcoholic beers.
There is an increasing consumer income disposal by the US young beer consumers thus creating an increase in premium beer sales. There are more young beer consumers who are more impulsive thus looking for something exciting. That is, they are very experimental hence they are attracted to social events. They can be reached through long range form of communication. Therefore, their form of communication is mostly via digital media (Kaze 2010). They also tend to pay in cash. Despite the increase of craft beers, most consumers still prefer drinking import beers like Heineken. It is because many US middle-class consumers love to be associated with premium beer brands. These young consumers are always satisfied with their decision after purchasing premium beer due to the high level of involvement and social visibility involved. Moreover, the numbers of such young consumers tend to rise through experimental marketing because they always woo their counterparts by telling them but their experiences with the brand (Kaže & Škapars, 2011).Therefore, the beer consumers do engage in the consumption of beer as participants. Also, the market trends are that millennial consumers are increasing preferring craft beers. However, these consumers want a variety of beer tastes together with quality. They also want authenticity. However, the current customers prefer healthy beer with low alcohol content and such trend in increasing the demand for low-alcohol beer among young consumers (Zion Market Research 2017).The target consumers also interact mostly through social media. They watch television and love sporting and entertainment events.
Five (5) Forces of Competition
- The Bargaining Power of Suppliers
Heineken’s main suppliers are majorly farmers. They supply barley, yeast, hops, and water. Hence, the farmers have high power regarding supply which is a threat to the company. The battle supplier is Heye Glas Netherlands. Heineken has more than 33% stake in Heyes Glas thus reducing the supplier’s power. Finally, Heineken faces high competition for agricultural products from the biofuel and beer industry thus increasing the costs of raw materials (Suarez Carmona 2012).
- The Bargaining Power of Buyers
Currently, customers have a variety of beer choices from many beer companies to buy. The beer companies are increasing customer choices thus the threat of the buyer is significantly high.
- The Threat of Potential New Entrants
There is an explosion of small craft brewers in the market. Their entry of the small brewers has been instigated by low barriers of the beer market. They are a threat to Heineken’s market share. Hence, Heineken must consistently device innovative ways to sustain its competitive advantage (Suarez Carmona 2012).
- The Threat of Substitutes
Beer is an alcoholic product just like wine. Hence, Heineken faces a threat of such substitute since consumers can choose to take wine instead of beer. Wine industry threatens the market share of the beer industry.
- The Extent of Competitive Rivalry
Apparently, Heineken holds approximately 30% of global beer market share. However, its growth is consistently triggering competitors’ efforts of attaining their growth targets. The efforts of its competitors are will consistently drive Heineken into maintaining its economies of scale, produce quality beer and achieving targets (Suarez Carmona 2012).
Heineken is applying the internal governance mechanism through the utilization of the hierarchal system to control the flow of decision making. The company is managed by an executive board that subsequently set directions and form company goals. On the other hand, the corporates shareholders give the board of directors the responsibility of carrying out daily governance. Consequently, the board then establishes transparency by setting quality and frequent financial reports, analyst meetings, investor presentations among many others. Hence, the internal mechanism ensures that the business functions of Heineken are effectively performed towards the achievement of the company’s goals (Hauswald & Marquez 2009).
Secondly is the external corporate governance mechanism which entails the capital market, Heineken’s market share, labor market, federal statutes, and shareholder proposals. Heineken combines both external and internal governance mechanism to protect stakeholders from management misconduct. While the internal corporate governance mechanism is applied to monitor and control the management actions together with aligning the management of shareholder interests in the Heineken company, external governance mechanism employed to control management behaviors. Hence, both mechanism as employed by Heineken induces management actions, which maximize shareholder value and corporate’s profits (Rezaee 2009).
Leadership within Heineken Corporation
The good leadership of Heineken is propelled by its First-Line Manager Development Program that trains first line managers who are responsible for daily operational and marketing work. For such reason, Heineken has proven its management capacity to be one of the most effective in the beer industry. Through a hierarchal management system, Heineken is not only able to realize the continuous changes in the world, but it is also able to respond effectively to constant product innovation. Hence, the leadership of Heineken is embedded in the value of products and stakeholders. Moreover, through the first-Line Manager Development, the corporation has been able to establish a leadership which can meet the challenges of cultural differences, and operational disparities and consistency across international boundaries (Heineken Company Web Access).