Heineken taps fountain of youth to stay ahead

Chief executive Anthony Ruys tells Dominic Coyle how the company's growth plan is panning out in Ireland and globally

It was supposed to be Anthony Ruys's big day. The board meeting just concluding had confirmed him as chief executive-designate of Heineken, the beer giant. But all that was overshadowed as a secretary came in to tell the gathered executives that planes had just flown into the Twin Towers of the World Trade Centre.

"A moment like that gives you pause for thought about the future," says Mr Ruys. "Nothing seems the same."

Mr Ruys has recovered from that turbulent start to put his stamp on the company that has made a hugely successful business, straddling the two major strategies in the beer industry - concentration on breweries and on brands.

His first priority has been to ensure that both the company and its image remain young and active, without undermining the strategic focus that has served the company so well. That is reflected in the composition of the five-man executive board of the Dutch group. "We have lowered the average age of our executive board by 10 years, giving us one of the younger age profiles of companies on the Amsterdam exchange," he says. "It is important and an example to the consumer."

However, despite their relative youth, most of the executive board are long-serving employees of the company. Among those stepping up was 43-year-old chief financial officer Mr Rene Graaft Hoofland.

"We feel we have to speed up some things; we feel we have to make sure the brand stays young and vital and active. That means shaking up the organisation and reminding people that the world around us is changing and we cannot just do what we have done in the past," says Mr Hoofland.

While adapting to change is a key part of Heineken's future, the company is not turning its back on the past. Heineken may have advanced a long way from the humble brewery taken over by Gerard Adriaan Heineken in 1864 but it retains close ties with its founding family. Three generations of Heinekens have worked in the company and a fourth currently sits on the board of the holding company.

Mr Ruys's office occupies what was the sitting-room of the family home in Amsterdam's city centre, from which the patriarchs could look on the brewery across the Weteringplantsoen square. On the walls, images of Mr Ruys's predecessors look down on him.

One of Mr Ruys's first initiatives was to set up what he calls the "Beacon project". "We decided to get an idea of what consumers in the 20-26 age category think of the world and their place in it. They are a difficult group to get to know but if you take the effort to reach out, you are better placed to address the requirements of what is our core age group."

The exercise, which took place across all the 171 countries in which Heineken sells, yielded some surprising results. Those running the project had expected to find the current cadre of 20- to 26-year-olds were the first truly global generation; instead they found a group of people for whom local and national identities were still very important.

The Beacon project has bred several initiatives. High among these has been the decision to reverse the trend among multinationals to centralise advertising - in Ireland's case this involved advertising generated generally in Britain or the United States. Acting on the Beacon feedback, which the firm acknowledges reflected comments coming from its own staff on the ground, advertising is being moved back to the countries of operation. In Ireland's case, this meant a €10 million account for McCann Erickson.

In Ireland, Heineken remains committed to an operation that has grown from receivership in 1983 to become the fifth largest operating company in the group.

The Cork operation has given Heineken reason to be pleased with its acquisition. Executives from the former Murphy Brewery now hold key positions around the globe, with one running the fast-growing Polish operation and another handling the tricky post of Middle East export director, which spans Lebanon and Israel. Others hold posts in the US, Brazil and the Amsterdam headquarters.

"Part of the added value for us in the acquisition of Murphy's was the calibre of the managers,"said Mr Hooft Graafland. "On the one hand, the education is very good and on the other, the Irish, like the people of many small countries, including the Netherlands, travel well and are successful in bringing their skills to other parts of the business."

Apart from the people, the brewery and brand have performed very well. Murphy's stout is now a central element of Heineken's international brand portfolio - along with Murphy's Red Beer brewed in Cork for the export market - and is sold in 65 countries worldwide, largely through the company's Murphy's Irish Pub concept.

Heineken has also seen its share of the increasingly stagnant Irish market grow strongly since its acquisition of Murphy's. "If you look at Heineken's position in Ireland, it is a good example of how we would see the brand progressing in new markets," says Mr Hooft Graafland.

"The total market growth is limited in Ireland but there is a switch from stout to lager within that so our operation benefits - because lager is so much more important to us - and within that category, there is a continuous upgrading of the offering in terms of products. So the outlook for Ireland is very positive even if overall consumption is flattening out. As long as Ireland continues to deliver, it can be sure of continued investment."

The company is strongly targeting the European union accession states. The other concentration for Mr Ruys and his team is the positioning of Heineken as a premium product in the key US and Asian markets, where status is important and the resultant margins more profitable for the group.