BRAND IN DEMAND: Heineken sips success

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Once as out of favor as pink-and-green madras and conspicuous consumption, Heineken is back-thanks to a low-brow tie-in, a younger target and old-fashioned elbow grease.

From the end of Prohibition through the 1980s, the Dutch lager's sales growth in the U.S. was fairly consistent. Volume, however, started to slow late in the decade and bottomed out in 1991. That was the year Heineken NV of Amsterdam bought out family-run Van Munching & Co., which had imported the beer since the 1930s, and renamed it Heineken USA. Six Super Bowls later, in 1997, Heineken had fallen to the No. 2 import behind less expensive Mexico's Corona Extra.

But 1991, when the recession and a federal excise tax had clocked everything but light beers and malt liquors, was the brew's last down year. By the economic recovery of the mid '90s, the microbrew craze was pushing thousands of beers, and Heineken had new competition for people willing to drop almost as much on a premium six-pack as on a 24-pack of Schlitz. "We no longer were the only choice in town," said Steve Davis, Heineken USA's senior VP-marketing.

Heineken's game plan-to broaden the brand's appeal-allowed the lager to break records, shatter stereotypes and register 10 consecutive years of healthy growth. The strategy was encapsulated in Heineken's "It's all about the beer" tagline, introduced in 1999 by Interpublic Group of Cos.' Lowe Lintas & Partners Worldwide, New York, when the brand's renaissance was well under way. (The creative force behind the campaign, Lee Garfinkel, this year left Lowe for the president-chief creative officer worldwide post at Bcom3 Group's D'Arcy Masius Benton & Bowles, now pitching for Molson USA.) The creative pegged Heineken less as an upscale import and more as an approachable brew-not just for the boss but for the buds.

"Heineken was truly a badge, a symbol. You bought it, you put it down on the bar, and it was status-a very shorthand symbol, inner and outer, `I-have-it-you-don't. Greed is good,"' Mr. Davis said. "Then we moved into the '90s, and consumers no longer wanted to be seen as stuffy and stodgy and status-oriented. ... There was no need to have a fourth Mercedes in the driveway. One was fine."

He added, "We're not trying to become ordinary. We want to maintain and to grow our specialness, but we want to do it in more of an inclusive way."

As Heineken began to court regular, though sophisticated, Joes, its success drew the attention of beer behemoth Anheuser-Busch Cos. The U.S.-based No. 1 beer purveyor first tried to strike a distribution deal with Heineken in the late '90s, but it didn't come off. Since then, the king of brewers has kept Heineken in its rearview mirror, and the two companies covertly snipe at each other in advertising. One of Anheuser-Busch's more recent efforts is a Whassup!?! spoof from Omnicom Group's Goodby, Silverstein & Partners, San Francisco, showing uptight and unhip white guys yelling over the phone: "What are YOU doing?"

"I don't know what they're thinking," Mr. Davis said, "but I'm flattered."

It wasn't just inclusiveness that helped Heineken grow-it also started aiming younger, beginning in the early 1990s. "If you want to have a fresh, vital franchise-especially in the beer industry-you've got to capture the 21- to 35-year-old beer drinker," Mr. Davis said.

The Dutch import set out to do just that with cheeky ads and tie-ins with movies such as "Austin Powers," which featured Mike Myers. Mr. Myers even appeared in one spot where his character gets a massage from a woman more interested in his beer than his bod. Heineken is considering another link with the International Man of Mystery's third flick. "The tie-in with Austin Powers was a pretty big step for us to take at the time. Ten years ago, that probably would not have happened," said Ken Kunze, Heineken USA marketing director.

Increased TV allocations also helped, with Heineken dedicating $47 million to measured media spending last year, compared with $34 million in 1999, according to Taylor Nelson Sofres' CMR. Heineken spending for the first six months of 2001 was $26.4 million as measured by CMR.

Its closest competitor-Corona Extra-received $34.5 million in total spending last year, compared with $33.8 million in 1999.

Making the brand more approachable also meant making it more available. Distribution was shifted more to supermarkets, convenience stores and drug stores, where other brews were thriving, in addition to Heineken's power alley of bars and restaurants.

Heineken journeyed from about 35 million cases in the mid-1990s to a goal of 100 million cases by 2005. It's ahead of schedule. Last year, Heineken sold a record 54 million cases-up 10% from 47 million in 1999, according to industry publication Impact. During that time, category leader Corona Extra sold 73 million cases, up 13%.

One distributor said his Heineken sales, though below the national average, have doubled in the past two years and should do so again within 36 months. "Heineken has been fabulous. I don't know what other word to use," he said. "They're hitting on a lot of cylinders."

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