Heineken to fight on-trade pressures with two new products

Claire Dodd

Claire Dodd

02 March 2016

Heineken has announced the launch of two new products, as the company says it is focused on overcoming the current challenges of the on-trade.

A new Bulmers, Wild Blueberry and Lime, and the launch of Desperados on draught are the latest in a long line of NPD from the brewer and pub operator, which also owns the Strongbow brand. Speaking as the company revealed its plans for the year ahead, Andrew Turner, category and trade marketing director said Heineken UK was fighting against the combined pressures of a squeezed on-trade, and a decline in beer volumes.

The company currently runs 1,050 pubs under the Star Pubs & Bars name. 'Pubs are a really integral part of our business,' he said. 'The fact that we own and run pubs gives us fantastic insight into the on-trade. It's a key part of our business and something that we want to keep on growing. We have invested £30m in our pubs in 2015, and increased revenues by 3.4% year-on-year.'

Turner said Heineken was committed to helping customers grow their businesses, including a pledge to be easier to do business with. He said it was developing a live chat function on its website for on-trade customers to use. But he recognised conditions are increasingly tough.

'For the on-trade, the next five years are going to be a challenge to stand out. Over 2.4hl of beer and cider has left the marketplace in the last three years, which is the equivalent of a brand like Foster’s. And 21,000 drinks venues have closed in ten years.'

However, he added that the 'craft' beer category was a good news story for the on-trade, helping push beer prices up. Craft beer is now being stocked in 32,164 UK venues. Heineken also said that casual dining was going to be an increasingly important sector for its brands, with 8,600 food-focused venues having opened in the past ten years.

On the brand side, Turner admitted that the company had not got all of its previous product launches quite right. Speaking on last year's launch of Desperados Red, which saw the tequila beer flavoured with Guarana and Cachaça, he said: 'The brand is doing okay, but we've realised that whereas cider growth is being driven by new flavours, Desperados is all about tequila and beer. We lost our way a bit there.'

The new Desperados draft launch follows a trial that saw 50 pubs stock it alongside the bottled product. Overall volumes grew by 35%. The new font will roll-out to the on-trade throughout March, and will be served in schooner glasses only. Desperados has added £18m value to the on-trade since its launch in 2011, including £5m in the last 12 months.

For Bulmers, however, flavour experimentation is king. Last year's launch, Bulmers Zesty Blood Orange was the biggest packaged cider NPD of 2015. Heineken says it brought one million people into the Bulmers brand, 50% of which were new to the cider category.

The launch of Wild Blueberry and Lime has been informed by 'a flavour trend yet to be leveraged within the cider category'. It will be offered in 568ml bottles at 4% abv, and is being backed by a £1.2m above-and-below-the-line campaign.

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