SHIFT
The South African beer market can be subdivided into five
segments: the premium segment, which includes brands
like Heineken and Amstel, the standard segment with
brands like Hansa and Castle, a modestly sized light seg
ment with Castle Light, the stout segment (with an annual
a continued shift from sorghum beers to clear beers, i.e. to
standard beers, a process that has already been under way
for five years. The reason for this ongoing shift is the anti
cipated higher level of prosperity. Incomes are expected to
grow further and for the inhabitants of the townships that
means they can afford to buy a better quality beer.
The forecast upturn in the economy will have even
more consequences for the beer market, as expectations are
that a substantial number of consumers who now drink a
standard beer will have the purchasing power to change
over to a brand like Heineken or Amstel.
volume of 1 million hectolitres) and the sorghum beer seg
ment.
Sorghum beer is on the bottom rung of the beer ladder.
It is a home brew, which means that it does not appeal to
the lager enthusiast. Those who know the South African
beer market expect that the next five to ten years will bring
PRICE REDUCTION
Heineken Beer is, on average, some fifty to sixty per cent
dearer than the standard beers. Until recently that was not
the case. The price premium of Heineken was one hundred
per cent above that of standard beers. And that price diffe
rence was a little bit too high for South African consumers.
"We commissioned research into this and the one thing
that always emerged from consumer reactions was that
they see Heineken as an international, premium quality
beer but with a price that is too high for them", explains Mr
Van Geldern.
In the run-up to local production of Heineken Beer in
South Africa the price for the consumer has already fallen
to a level which, as far as the cost base is concerned, is in
line with locally produced brews. As a result, margins have
come under heavy pressure. "That's right", agrees Mr Van
Geldern, "but it was essential if we wanted to create vol
ume. You need that volume to justify local production." In
its first four months the price reduction has in any event
had an enormous impact on sales of Heineken. All the
graphs show a tremendous increase in sales, on average as
much as eighty per cent.
Hilary Jamieson is the marketing manager for Heineken.
She enjoys working for a small brand. "The challenge of
working with small brands is definitely bigger than work
ing on the big brands. You can really build up the brand".
Since the price reduction in the middle of last year that
brand-building is chiefly being achieved via a strong in
crease in brand visibility. No big-time advertising on tele
vision, just the basic rules: availability, visibility and afford-
ability. Many activities are scheduled for 1999 to draw
consumer attention to Heineken. But Hilary adds a note of
caution. "We are busy developing merchandise for each
market segment, in other words, for the off premise, for the
informal market and for the on premise. But that doesn't
mean that we'll be applying a coat of green paint to every
new outlet. It has to remain sophisticated. I'd rather see a
nice neon sign and a drip mat than a Heineken image that
sticks out like a sore thumb."
For the elite shebeens in the townships Hilary is consid
ering the idea of making one of the rooms into a Heineken
House. "A room with a genuine Heineken image, i.e. a neon
sign, glasses and other POS materials. But here again the
maxim is: too much is a bad thing, we're aiming for quality
rather than quantity."
MILLION DOLLAR
Sponsorships such as polo and yachting are also used on a
modest scale by Heineken South Africa to communicate the
brand to consumers. Last year Heineken was official spon
sor of the Nedbank Million Dollar Golf Challenge, which is
held in Sun City each December.
21
Heineken!
