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Heineken in Russia

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  1. Heineken's strategy for growth.
  2. The challenges facing Heineken in meeting its objectives.
    1. The overall economic situation in the different countries.
    2. The Americas - the most profitable regions for Heineken.
    3. The fast growing market of Asia
  3. Heineken's strategies for Russia.
    1. Not being historically present on the Russian market as an advantage.
    2. Acquisition of Bravo International Inc.
    3. Producing and selling local brands.
  4. Challenges/Opportunities facing Heineken in Russia.
    1. The huge size of this market.
    2. The company will have to fight the competition.
    3. The Russian market might not be growing as fast as expected in the coming years.
  5. The Environmental factors that face Heineken.
    1. Political factors.
    2. Economic factors.
    3. Socio-cultural factors.
    4. Technological factors.
    5. Environmental factors.
    6. Legal factors.
  6. Suggestions for Heineken to move forward.
  7. Bibliography.

Heineken is the first European Brewer and one of the first brewers in the world. Also, to give a better idea of the situation of the company, let's state some figures. In 2005, net profit was 761 million €, with sales above 10 billion € and a total beer volume of almost 120 million hectoliters. All this represents an annual growth of nearly 20% in net profit, more than 7% in revenue, and more than 5% in sales volume (hectoliters). So, we may wonder where this growth comes from, what is Heineken's strategy to achieve such a growth and sustain it. In their 2005 annual report, they state: ?We are committed to growth and have embraced innovation as a key component of our strategy. We work to continually anticipate and meet the changing needs of consumers. Our innovations are in the areas of production, marketing, communication, packaging, and, in particular, draught beer systems, where we are an acknowledged leader.? So, it could seem that there strategy is focused on innovation, but as we will see, not only. Another part of the strategy seems to focus on an active participation to the consolidation in the beer market, so as to be able to grow and strengthen a good position in mature and profitable markets.

[...] Also, in this part of the world, Heineken also has to cope with increasing excise duties, which causes damages to the volumes. This is namely the case in Malaysia. (Heineken advertising in Asia) To finish with the challenges facing Heineken, we should state the increase in oil price, which will directly affect Heineken because it increases the costs of energy, transportation and packaging material. In a competitive market in which it could be difficult to pass on these costs to the customer, this will automatically have a negative impact to the financial result of the group. [...]


[...] A good element that shows this is the fact that in Russia there are actually more than 30 license marks canned and bottled, which is a world record. Thus, I would recommend to Heineken, to try gaining market shares very rapidly by continuing its policy of acquiring local beer brewers. Heineken is one of the world leaders and has a sane financial situation (In 2005, the company hit profits of nearly 800 million Euros and a free operating cash flow of more than 1 billion Euros). [...]


[...] This namely results in the fact that Heineken acquired 7 breweries in Russia in the last 3 years, and also developed two partnerships. Nevertheless, acquisitions were also made in mature countries such as Germany, Brazil and the USA. In Russia, Heineken namely acquired in 2005 the Brewer ?Ivan Taranov?, which was the 7th biggest brewer in Russia and allowed Heineken to strengthen its position of 3rd Brewer in Russia, and also makes from the group the number one in the city of St Petersburg. [...]

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