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A distributor's view
Heineken's striving to get closer to the market has deeply
affected the day-to-day business operations of its over 430
distributors in the US. In the US the distribution system is not
integrated. In other words, beer suppliers, with few exceptions,
do not own distributorships. They enter into agreements with
independent distributors to distribute their brands for them.
One of them is the Maryland branch of National Distribution
Company in Washington. Executive Vice President Tom White
has been with the company for two decades and he has
witnessed the changes with his own eyes. "We started in 1903
as Kronheim Company and we have had Heineken products in
our portfolio since the fifties. I have been told that we are one
of the first distributors in the USA to sell Heineken, so we have
come a long way. I think the first significant change in our
relationship was when Heineken bought import company Van
Munching Co. From that moment on we really grasped the
scope of what Heineken was. We saw that the change was very
good for us, because Heineken believed in being involved in the
beer business and focused on partnership with us distributors.
It absolutely enhanced the relationship."
That relationship was enhanced even further by the new
initiatives taken in recent years: the demand centers, the
HOPS system, Star Design, improved packaging, Heineken's full
dedication to the icon brands, Heineken's own sales managers
who are out there in the market where they cooperate closely
with the sales managers of the distributors. All these initiatives
are proof of the long term strategy of Heineken in the USA,
as in the rest of the world. "I think it is Heineken's European
culture that influences our business. In the USA we tend to have
a more short-term vision and look ahead for the next twelve
months. Heineken looks ahead for the next twelve years and
they did a great job in getting that message across," says
Tom White, a member of the Distributor Council, which was set
up by Heineken five years ago.
A number of leading Heineken wholesalers are represented on
this Distributors Council which convenes twice a year. At these
meetings the Heineken management communicates its vision
and its plans for the future and asks the members of the council
for feedback on these initiatives. "It is definitely not a marketing
meeting where we simply hear what the plans are for next year.
They listen to us and take our advice into consideration before
they decide to introduce a product nation-wide. I consider this
council to be another proof of how Heineken is getting closer
to the market."
In recent years NDC Maryland, a major name in the wines
business, has removed most of its other beer brands from its
portfolio, including a major local brand. Only a few local micro-
brews remained and Tom White is happy with this focused
approach. "Heineken is now 30% of our total business and in
the last five years both sales and profits with Heineken have
increased dramatically. We invest in the Heineken business,
both in additional people and in local marketing and image
enhancement." NDC was able to make this investment thanks
to the demand centers and the HOPS system. These two
initiatives have very much helped the distributors and
ultimately the consumers, says Tom White. "Heineken saw the
need to have fresher beer in the market. At the same time
HOPS made it possible for us to lower our inventories, which
meant that we had more capital to invest in the brands."
The eagerness of distributors to invest in the Heineken portfolio
is based on their faith that Heineken always focuses on the long
term and is aware that the only way to do that is by knowing
the market inside out.
filling station to pick up some purchases on their way home is
almost a daily routine. Charles Kovach has been focusing on the
convenience petroleum channel for the past two years. He
advises the regional chain managers on how to develop new sales
tactics and is himself responsible for the key national chains,
such as 7-Eleven, BP, Exxon and Shell. Competition in this channel
is intense and the imported beers in particular are fighting a major
battle against market leader Anheuser Busch (A-B) to secure shelf
space. The amount of shelf space is limited and the retailers want
to use that space to maximum advantage. A-B offers customers a
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