Heineken to increase marketing spend

24 February 2010

AMSTERDAM: Heineken, the brewing giant, plans to increase its marketing expenditure this year, as it seeks to offset the impact of slowing consumption and "downtrading" in many countries.

Jean-François van Boxmeer, the company's chairman and ceo, described 2009 as "one of the most challenging trading environments ever witnessed in our industry."

Heineken's beer volume shipments fell by 1.5% on an annual basis in this period, but revenues climbed by 2.7%, to €14.3 billion ($19.4bn; £12.6bn), as it passed on rising commodity costs to customers.

Over the same timeframe, the owner of Amstel and Moretti reduced its outlay on marketing and sales by 3.7%, to €1.67bn, equating to a drop from 11.7% to 11.3% of revenue year-on-year.

In a statement, the Dutch firm argued that "lower advertising rates and increased efficiency" were among the main contributors to this trend.

Media deflation was particularly observable in the US, where the beer category also "declined slightly" as drinkers opted for cheaper or own-label brands.

According to van Boxmeer, cutting costs, "strong pricing" and "the strength of our brands" were the primary drivers of the brewer's comparative resilience.

"Once again, the Heineken brand outperformed the total portfolio, proving its strategic value to our business," he said.

"Looking ahead, we will continue to invest in the growth of our brands, particularly Heineken. We will leverage our leadership in Europe and increase our marketing investments in order to grow value share."

Some of the offerings that benefitted from greater communications support last year were Foster's in the UK, Heineken in South Africa and the relaunched Maes in Belgium.

The company's predictions for this year included rising advertising rates, the continuing contraction of overall beer consumption, and that "downtrading" would remain prominent in areas like the US.

Data sourced from Heineken; additional content by Warc staff