can marketan affection aroused by both
economic and emotional factors. Although
all imported beers command only 2.6% of
the U.S. marketup from 0.6% a decade
agoHeineken finds his niche here quite
comfortable. For one thing, he can sell his
beer for a premium price: the average retail
tab on a Heineken six-pack is $4.25, com
pared with $2.65 for Löwenbrau and $2.35
for Budweiser. Moreover, even a small
slice of a huge market is rewarding. With
2.5 billion cases sold in 1980, America's to
tal beer market is the world's biggest. The
U.S. is Heineken's largest outlet after the
Netherlands itself, where Heineken's mar
ket share is 60%. Finally, while beer con
sumption in Europe is stagnant or declin
ing, beer sales in the U.S. are surging, with
the potential for growth far from exhaust
ed. For Freddy, the U.S. also holds a senti
mental place in his heart because it was his
first training ground. In 1946 his father,
then the firm's president, sent him, at the
age of 23, to New York City to learn the
American market under the tutelage of a
remarkably clever Dutchman named Leo
van Munching. In the mid-1930s, the elder
Heineken, crossing the Atlantic on the
Nieuw Amsterdamhad met Van Munch
ing, a bartender on the liner. So impressed
was Freddy's father by the bartender's
knowledge of beer that he hired him to be
his importer in New York. Because World
War II cut off supplies from Holland, Van
Munching was just getting started again as
Freddy arrived.
It proved a particularly difficult time.
The first big postwar shipment of 5,000
cases spoiled en route, and it had to be
dumped in New York Harbor. Freddy
lived in a $3.50-a-night room in the Astor
Hotel on Times Square. By day, young
Heineken canvassed New York on foot
with Van Munching's few salesmen, soon
learning firsthand the difficulty of break
ing into a new market. "The bar owners
would ask us, 'What's a Heineken and why
should I pay so much for it?'he recalls.
At night, Freddy took business courses in
advertising and administration. During a
trip to the South, he met and subsequently
married Lucille Cummins, the daughter of
a Kentucky whiskey-making family.
"I had seen the future"
The American experience gave Freddy a
profoundly new perception of how the
beer market would develop in Europe. "It
was all so easy," he exclaims. "I had seen
the future. I had seen how refrigerators,
television, and supermarkets were chang
ing beer-drinking habits in the U.S. And I
knew they would have much the same im
pact in Holland."
When Freddy and his bride returned to
the Netherlands in 1948, his ideas struck
his fellow Dutchmen as wildly impractical.
"Of course, the son of the boss is always
regarded within the company as an idiot,"
laughs Heineken. In those days, almost
no marketing was done through grocery
stores. There was next to no advertising
because none was needed. Bar owners
were tied to the brewery by "golden
chains," a euphemism for loans that com
pelled the borrowers to handle only a par
ticular beer.
But "Little Freddy," as he refers to him
self in those days, stuck to his American-
bred ideas. One Saturday afternoon, when
the other employees had gone home, he
and a colleague affixed to a door in a base
ment office a small plaque that read "Ad
vertising." "No one ever questioned it,"
remembers Heineken. "Evidently, every
one thought the new department had offi
cial approval."
Heineken began to devise the advertis
ing and marketing techniquesfrom elab
orate store displays to radio jingles—that
soon would make the company famous for
its innovative approaches in Europe. In the
U.S., meanwhile, Leo van Munching, aid
ed by his son, Leo Jr., who took over as
president last year, began to create what
no other importer has managed to build: a
truly nationwide distribution system.
And herein lies Heineken's greatest
strength. Most other importers concen
trate only on the major metropolitan areas,
where 80% of foreign beers are sold; New
York alone accounts for some 38%. Such
importers are unknown outside these ar
eas. Furthermore, brand identification is
hopelessly confusing because more than
200 different foreign beers are marketed in
the U.S. The vast majority are available
only in narrow markets. As Jeffrey Wein-
garten, a beverages analyst at Goldman
Sachs, points out, "Even the more impor
tant Mexican and Canadian beers are con
sumed almost exclusively in contiguous
American states. The Mexican brews such
as Dos Equis and Carta Blanca are con
sumed mainly in Texas and California.
Canada's Labatt's, the third-largest import
after Heineken and Molson, is seldom
available beyond the northern-tier states."
By contrast, Heineken is the only import
ed beer available almost everywhere; ac
cording to the latest Heineken study, the
green bottle can be purchased in 70% of all
retail outlets handling alcoholic beverages
in the U.S.
For Heineken, this wide distribution
leads to fast turnover, which ensures fresh
beer. This is the main reason Heineken
and Van Munching prefer to sell bottled
beer and not kegs of draft. Once tapped, a
keg will go stale within a few weeks, giv
ing the consumer a flat drink. Heineken in
bottles remains fresh and sparkling for at
least six months.
To deliver fresh beer at the right place in
a short time, Heineken and Van Munching
have established impressive logistics. Or
ders from New York arrive at a command
post at Rotterdam port. The order is trans
mitted that same day to the Heineken pro
duction director, along with the exact
minute that a truck bearing an empty con
tainer will arrive at the shipping brewery.
The brewery is usually the one at
's Hertogenbosch, in southern Holland,
which has specialized bottling lines that
can make the dozens of quick adjustments
necessary to deal with all the different
crown caps and labels required by laws in
the 50 states. The trip to the U.S. takes less
than two weeks.
Heineken beer is now, by volume, the
largest single item shipped from Europe to
North America. This year, Heineken will
send at least 20,000 containers to the
U.S.enough to fill 50 big container ships.
Dutchman with his kettle
Freddy is committed to keeping the
Heineken beer sold in America a strictly
Dutch product, and its six-packs will re
main emblazoned with windmills to con
vey a certain Old World mystique: maybe,
the customer is invited to fancy, some lit
tle Dutchman really is stirring the brew in
a big copper kettle. Wall Street analysts ap
plaud the strategy. Citing the Löwenbrau
example, Emanuel Goldman at the broker
age firm of Sanford C. Bernstein explains,
"Your average consumer of imported beer
is a young, status-conscious, upwardly
mobile person who wants his friends to
know he appreciates quality. So when
Löwenbrau goes domestic, he switches to
Heineken."
As Freddy Heineken likes to point out,
the success of his beer in the U.S. provided
the real basis for its success in the rest of
the world. "It was the 'is-the-water-safe-
to-drink?' syndrome," he explains.
"Americans knew the beer as a reliable
product, and as they traveled to other
countries, they would ask for it. They cre
ated the demand."
Making the French drink wine
Inevitably, Heineken's success in the
U.S. has encouraged challengers. The latest
and cheekiest is Kronenbourg, produced
in Strasbourg by the French food con
glomerate BSN-Gervais Danone. Bank
rolled by its rich parent, Kronenbourg is
spending about $3 million a year on ads
proclaiming, "Europeans like Heineken,
but they love Kronenbourg." Kronenbourg
has so far failed to climb into the top ten
imported beers, however, and competitors
put its annual sales at a mere 400,000
casesfar less than one week's sale of
Heineken. Leo van Munching takes an un
compromising view of his new competi
tor: "Kronenbourg is the reason the French
drink wine."
Freddy Heineken refuses to be drawn
into comparisons of his beer with others.
He has some compliments for competi
tors, occasionally mentioning favorably
