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Heineken predicts return to black

Heineken, the Dutch brewer, will claim today that it remains on track to return to profit in Britain, despite the decision to scrap television advertising.

In an interview with The Times, Rob Marijnen, its UK managing director, said that the withdrawal of the campaign starring Ray Liotta, the star of Goodfellas, did not mean it was cutting back on expenditure on marketing and promotion. “We’re spending £6.5 million on TV commercials currently. Next year, the total marketing budget will increase, only there won’t be any TV ads,” Mr Marijnen said.

He said, however, that the beer would maintain a presence on British TV after the company’s decision in June to replace its Amstel brand with the flagship Heineken brand as the title sponsor of football’s European Champions League.

The brewer will also continue to receive high-profile exposure from its sponsorship of rugby union’s main European club competition, the Heineken Cup, which kicks off today.

Mr Marijnen said a new poster and print campaign would run next year, and point-of-sale initiatives would be stepped up.

Heineken plans to repeat the consumer taste tests held in the summer as part of its campaign to convert drinkers to the premium-strength lager brought in almost three years ago to replace the standard-strength Heineken Cold Filtered previously sold in Britain. A double-decker Heineken bus with a bar visited supermarkets and events throughout the country to offer taste tests. Mr Marijnen said that the results, showing that 68 per cent of respondents preferred Heineken to Stella Artois, had persuaded him to repeat the exercise next year.

He said that the heavy investment in marketing was important for Heineken as it sought to recoup some of the sales lost after it stopped producing Heineken Cold Filtered and started selling its 5 per cent ABV premium-strength lager.

At a stroke, its £500 million of annual sales shrunk to about £100 million and the investment needed to re-establish the business means it is no longer profitable.

But Mr Marijnen said sales were improving and would hit £130 million to £140 million this year. The business was on track to become “profitable and sustainable”, despite its unwillingness to become involved in the heavy price-discounting prevalent in supermarkets and off-licences. “Our aim is to achieve a 5 per cent to 10 per cent premium to our nearest competitor.”

Heineken is also spending to promote its Amstel brand, which vies with Carling, Foster’s and Carlsberg in the standard lager category, and Moretti, its Italian beer. A fourth brand, Edelweiss, an Austrian beer, is about to be launched on draft in the All Bar One chain.

Dominic Walsh

Times Online - 22 October 2005
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