Heineken hopes sports will be more interesting than the Most Interesting Man in the World
The new CEO of Heineken USA makes no bones about it: Heineken went through a brutal dark period. After the 2008 financial crisis, U.S. sales of Heineken fell for four years straight. “We had, without a doubt, a very, very tough period,” says Roland den Elzen, who took over the U.S. business last July. “Now we are back in the green, as we like to call it… But we need to grow even faster, and we are aiming everything to do that.”
The Heineken beer brand saw more growth in 2015 than in each of the past seven years. Heineken (HEINY) the corporation, meanwhile, released its 2015 year-end earnings last month, and they were outstanding. The company grew its beer volume 2.3% and forecasted higher revenue and profits for 2016. The Dutch company remains the No. 3 in global market share by beer volume, with nearly 10% share, behind Anheuser-Busch InBev (BUD) and SABMiller (SAB.L). The latter two are attempting to complete a merger that would result in a company with nearly 30% share of the global market. But Heineken’s stock has outperformed both of theirs in the last year.
The success is in many ways a triumph of marketing. And much of that marketing magic has happened in the sports realm, a bold approach at a time when athlete endorsements are a riskier gambit than ever, and no star (even, say, Peyton Manning or Maria Sharapova) is a sure bet to stay immune from scandal. Heineken has recently aligned some of its best known brands—Heineken, Tecate and Dos Equis—with either full sports leagues or individual players. It appears to be working.
For the Heineken brand, 2015 marked the first year of a new five-year, $50 million deal to be the official beer of Major League Soccer, unseating previous sponsor Budweiser. It represents Heineken’s first-ever national sponsorship of a U.S. sports league, and while MLS is hardly at the popularity level of the NFL, MLB or NBA, it has grown impressively in recent years and enjoys a trickle-down boost in World Cup years (the next will be in 2018).
Tecate struck new ground for its parent company by becoming a sponsor of the boxer Canelo Alvarez last month. The name will adorn the popular Mexican fighter’s shorts, and Tecate also replaces InBev-owned Corona as the exclusive beer partner of Golden Boy, the promotions company of Oscar De La Hoya. It is a bold bet on a foreign boxer’s imminent stardom in the States. “I think there are two big elements where we focus Tecate: millennials and Hispanics,” den Elzen says. “And Canelo resonates with both of those.” Last year, Tecate was a sponsor of the much-hyped bout between Floyd Mayweather and Manny Pacquiao.
Dos Equis, meanwhile, entered into a multiyear deal in December to be the exclusive beer sponsor of the College Football Playoff, just in time for the second year of the new system. It did not release any new advertisement for the CFP in the first year, but says a “legendary fall campaign” tied to the sponsorship is coming.
After scoring the CFP deal, Dos Equis made a surprising decision: it will retire Jonathan Goldsmith, the actor who played its “Most Interesting Man in the World,” and replace him with someone new and not yet revealed. It also sounds like the tone of the campaign will shift. The “Most Interesting Man” campaign has inarguably been Heineken’s most successful campaign, den Elzen acknowledges—not just for Dos Equis, but for the entire Heineken portfolio. “Everybody knows the most interesting man,” he says. “I was lucky enough to meet that man a few times myself, and the guy is really interesting. He really catapulted Dos Equis from a small brand into a very well-known Mexican import brand in the U.S. market. But as always, you want consistency in your campaign… it cannot be dull, it has to be new. So we want to make it even more interesting.”
That’s a tall order. And it’s what Heineken wants to do not just for Dos Equis, but all of its brands in the U.S. market, where big beer has been increasingly beset by the rise of craft. According to the Brewers Association, craft beer now makes up 12% of the global beer market by volume—that’s a larger piece of the pie than Heineken itself has. And craft has an even bigger share by retail spend: 21%. That has long been the narrative of why craft’s rise scares the big brewers: still small by volume, but big by spend, since it commands higher prices.
Unsurprisingly, den Elzen insists the notion of craft breathing down the neck of big beer is overstated. “I think we should not be negative about craft,” he says. “It brought engagement of consumers back to the industry. When people talk about craft they talk about taste, color, flavor. The taste palate of young, legal-drinking-age consumers is broadening up.” He adds that in Amsterdam, where he worked over a decade ago, many young people had an image of Heineken as expensive and bitter; thanks to craft, he reasons, Heineken now looks elegant and affordable by comparison.
To be sure, Heineken is not only looking to sports for brand power. Like any beer maker, it cannot resist the pull of celebrity. This year, it gave the Heineken brand its own “Most Interesting Man” in a new campaign with the actor Benicio Del Toro, who pokes fun at himself for being confused with Antonio Banderas. (Del Toro is a fun, less obvious choice of celerbrity endorser; InBev-owned Shock Top made a similar move at this year’s Super Bowl with an ad that used “Silicon Valley” star T.J. Miller.)
It also rolled out a separate line of Heineken ads that urge men to drink less—a bit of a twist in narrative. “Moderate Drinkers Wanted” is the slogan. It’s a nice message, but investors in the family-owned, 140-year-old company hope, of course, that drinkers will drink more Heineken brands overall in 2016.