5 Building a portfolio of beer brands
You will now look at a case study on beer brands.
Activity 4 Building a portfolio of beer brands
Read, from Dibb and Simkin.
Then answer the following questions:
- Why was the UK’s version of Heineken lager weaker than its counterpart in the rest of Europe? What problems has this product variation caused Heineken?
- Why does Heineken opt for a mix of internationally known brands marketed alongside local beers?
- In what ways is Heineken continually updating its product portfolio and its marketing mix?
The UK’s version of Heineken lager is weaker than its counterpart in the rest of Europe because it was introduced in the 1960s when UK drinkers were unused to the lager taste. The weaker variant proved more acceptable to the palates of drinkers at this time. Once this product version had gained popularity, it became risky for Heineken to contemplate a change. The firm did not want to run the risk of alienating its existing customers. However, when British drinkers subsequently developed a taste for stronger lager, perhaps as a result of encountering these drinks while travelling abroad, the firm was able to respond by launching its export strength product. This enables Heineken to bridge the gap between its offerings in the UK and elsewhere in a low-risk way.
The company follows this strategy in order to achieve a ‘successful level of distribution’ and adequate ‘economies of scale’. The former refers to the firm being able to distribute a mix of products that will meet the needs of different segments in each country and reduce the space available to competitors. The reference to economies of scale means that the company must also ensure that its distribution supports the sale of sufficiently large volumes of products to make economic sense. Clearly, achieving both goals is a difficult challenge.
Heineken is continually updating its product portfolio and its marketing mix by taking a share in over 60 brewing companies around the world. The company is also developing new products such as iced beers and non-alcoholic brews.