Overview

Smaller brewers might be green with envy. Heineken, a global brewing giant, sells its namesake beer in the easily recognized green bottles in just about every country on the planet. The company's other global brands include Amstel and Murphy's -- national and regional brands include Buckler (Europe), Quilmes (Argentina), Moretti (Italy), Tiger (Asia's leading regional brew), Zagorka (Bulgaria), and Bochkaryov (Russia). Heineken also distributes soft drinks and other nonalcoholic beverages. Heineken has interests in more than 115 breweries and continues to acquire more worldwide. The founding Heineken family owns 50% of Heineken Holding, which owns 50% of Heineken.

Heineken is the #2 imported beer in the US (behind Grupo Modelo's Corona, which tapped the #1 spot after nearly 65 years of Heineken dominance). The company is choosing to invest in expanding its role in the US market and introduced a new beer for the US market in 2006: Heineken Premium Light.
The company introduced a new portable draught beer system called DraughtKeg. Some 20 glasses can be dispensed from the mini keg. Heineken's BeerTender system, which keeps kegs fresh for several weeks once it has been tapped, also continued to grow in sales.
About 75% of Heineken's sales are in Europe, where it has solidified its base by buying breweries in Central Europe, Italy, Spain, and Russia. However, the company has had to shut down more than 30 breweries in recent years, mostly in Europe, as part of a cost-reduction program.
Political unrest has impeded Heineken's growth in Africa. However, it joined with Diageo to purchase 30% of InBev's Namibia Breweries in southern Africa and formed a joint venture with Kenya-based East Africa Breweries to introduce Heineken's products in Kenya and Uganda. It also has plans to increase its presence in South Africa.

History

Every Sunday morning Gerard Heineken's mother was appalled by crowds of drunken Dutchmen who had consumed too much gin the night before. Heineken, who wanted his mother's financial backing, insisted that drunkenness would decrease if people drank beer instead of gin and pointed out that there were no good beers in Holland. His strategy worked. In 1863 Heineken's mother put up the money to buy De Hooiberg (The Haystack), a 271-year-old brewery in Amsterdam.
Gerard proved his aptitude for brewing and within 10 years had established a brewery in Rotterdam. He named the business Heineken in 1873 and launched the company's lucrative foreign trade by exporting beer in 1876 to France. (By the 1950s half the beer brewed by the company was for export.) The company perfected a yeast strain (Heineken A-yeast) in 1886 that is still in use today.
In 1917 Gerard's son Dr. Henri Pierre Heineken inherited the firm and expanded operations to the US. Making a voyage to that country, Henri Pierre met Leo van Munching, a ship's bartender who displayed a remarkable knowledge of beer. Recognizing van Munching's talent, Henri Pierre hired him as Heineken's US importer. Prohibition killed the US operations, although the company entered new markets elsewhere; after repeal, Heineken was the first foreign beer to re-enter the US market.
After WWII, Henri Pierre sent his son, Alfred, to learn the business under van Munching, who had created a national distribution system in the US. Alfred succeeded his father in 1953 and stepped down in 1989.
Heineken bought the Amstel Brewery in Holland (founded 1870) in 1968. Two years later it became a producer of stout through the acquisition of James J. Murphy in Cork, Ireland. Facing a consolidation of the European market, Heineken launched a campaign in the 1980s to expand its European beer operations, purchasing breweries in France, Greece, Ireland, Italy, and Spain.
In 1991 Heineken bought the van Munching US import business and a majority interest in Hungarian brewer Komaromi Sorgyar, its first Eastern European investment. Two years later Karel Vuursteen was appointed chairman.
The firm cut more than 1,300 jobs in 1993 and sold its spirits and wine operations the next year. In 1995 Heineken began a major spending spree, acquiring Interbrew Italia and 66% of Zlaty Bazant, the largest Slovakian brewery and maltworks (it acquired the rest in 1999). The company bought Birra Moretti, Italy's third-largest brewery, in 1996. It also purchased interests in two African breweries. All the acquisitions led to high integration costs and lower profits.
To boost its sales in Poland, in 1998 Heineken raised its stake in brewer Zaklady Piwowarskie W. Zywcu (Zywiec) to 75%, bought a minority stake in Brewpole, and merged the companies to create the largest Polish brewer. That year Heineken bought about 25% of Pivara Skopje, the largest brewery in the former Yugoslav republic of Macedonia, through its Brewinvest joint venture. In 1999 the company bought about 18% of Israel's leading brewer, Tempo (Goldstar and Maccabee beers).
In 2000 Heineken bought 99% of Spanish brewer Cruzcampo, most of it from Diageo. Cruzcampo later merged with Heineken's Spanish brewer El Águila to create Heineken España. In February 2001 Heineken created a joint venture, BrauHolding International, with Bayerische BrauHolding to sell Paulaner Weiss beer and to give Heineken access to two German beer makers.
In 2002 vice president Anthony Ruys replaced Vuursteen as CEO. Heineken also announced it would launch its premium Heineken beer in the UK in 2003 and eventually withdraw its Heineken Cold Filtered and Heineken Export beers from that market. It also signed a deal allowing Belgium's Interbrew (now InBev) to brew and sell Murphy's Irish Stout in Britain. Heineken also gained EU approval that year to buy a stake in German brewer Karlsberg.
Also in 2002 Heineken agreed to buy stakes in two Central American breweries: Costa Rica's Florida Ice and Farm Company (FIFCO) and Nicaragua's Consorcio Cervecero Centroamericano S.A. (COCECA). With FIFCO and Coca-Cola bottler Panamerican Beverages, Heineken purchased Cervecerías Baru-Panamá, the country's second-largest brewer, for $138 million. The company later purchased Russian brewer Bravo International (which changed its name to Heineken Brewery in 2003). Heineken also bought a controlling stake in Egyptian brewer Al Ahram Beverages Co. in 2002. Ak Agram produces Fayrouz, a nonalcoholic beer favored by Muslims. The brewer also agreed to increase its stake in Lebanese brewer Almaza S.A.L. from 10% to 79%.
In 2003 Heineken purchased Austrian brewer BBAG Österreichische Brau-Beteiligungs-AG for $1.7 billion. It combined its regional operations with BBAG, creating Brau Union AG. That year Heineken sold all of its shares (15% of outstanding shares) in Quilmes to Beverage Associates Corp. (BAC); AmBev (now InBev) acquired 8.6% of the Quilmes shares from BAC.
Making a strong play for the growing US Hispanic market, Heineken inked a three-year deal with FEMSA Cerveza in 2004, making it the sole importer of FEMSA's Mexican beers Tecate, Sol, Dos Equis, Carta Blanca, and Bohemia. Heineken recognized the growing number of people using online music stores. That year it entered a joint venture with Lion Nathan Limited to sell its flagship brand in Australia. Heineken also began an aggressive push into Russia that year, when it purchased Sobol Beer LLC in West Siberia and the Volga and Shikhan breweries. Heineken also grew steadily in new markets such as Asia and South America. In 2004 it joined its Chinese operations with those of Asia Pacific Breweries to form Heineken Asia Pacific Breweries China (HAPBC); and that year HAPBC bought an approximate 21% stake in China's Kingway Brewery Holding.
In order to compete with competitors' low-calorie, low-carb beers, in 2005 the company introduced Heinken Premium Light in select markets in the US market. Also in 2005 the company formed a partnership with Diageo to produce and distribute Guinness in Russia. It also acquired approximately 91% of German brewer Würzburger Hofbräu AG.