More than beer is brewing at Heineken, though there's plenty of it being produced by the world's second-largest brewer.
In fact, the numbers are heady: 79.1 million hectoliters—about 8 billion, 361 million quarts—of beer brewed in 1998 in more than 110 facilities in 50 countries and distributed to bars, hotels, restaurants and stores around the globe. It all added up to a heady 29-percent growth in profit.
But besides suds, Heineken has brewed up a world-class supply chain and marketing tools with the help of technology.
Solutions such as Heineken's HOPS system in the United States link the company's supply chain to suppliers and intermediaries to increase reaction time, decrease costs and improve decision-making by sharing information throughout the chain.
"For a company as large as Heineken, with so many suppliers, partners and employees around the world, using e-business technology to manage the business is a must," Jose Evers, head of Heineken's interactive marketing division, says. "We are very aware that e-business will not change our business model overnight. But as technology becomes more...pervasive, it will have deep impact on the way we interact and build relationships within our company and with our business partners. The ultimate challenge for us, as a brewer, is to use this new media to reach the consumer in order to gain a competitive advantage."
The Missing Link
Evers understands that e-business has arrived.
"When one considers that, in the United States, young adults spend almost as much time on-line as they do watching TV, it is evident that our marketing strategy must focus on strengthening this relationship through the use of the Internet," he says.
But how could that be done? Heineken worked with IBM and advertising agencies to create this link to consumers, through the Web.
"This was the missing link," Evers explains. "In the past, we had focused our e-business strategy on intranets and extranets. Since the product we sell can not be converted into bits and bytes, we now focus on how we can use the Web as a way to drive people towards places where they can enjoy our products while building a relationship between the consumer and our brand."
An important part of Heineken's presence on the Internet is based on the two main characteristics of any good bar—fun and communication. The Heineken site allows users to open their own virtual bar in which other users can chat about a subject selected by the "bartender" or moderator. The result is that a device that looks on the outside like a marketing gimmick has serious business implications, according to Evers.
"For users to join in the conversation at the virtual bars, they must register with us by giving some basic information about them and their tastes," he says. "This information can be used by us to create one to one marketing opportunities. For example, if a user in France has stated that he likes jazz music, we can easily send him a personalized e-mail informing him about a Heineken bar that's hosting a jazz concert or a Heineken jazz event [that Heineken is sponsoring]. Thus the link between the virtual world and the physical world."
Using IBM's Net.Commerce solution on IBM hardware, Heineken is also selling official Heineken and cobranded merchandise on the Web.
"We built the e-commerce site for two main reasons," Evers says. "The first was consumer demand for Heineken-branded merchandise. The second was to give us experience in business-to-consumer electronic sales."
IBM has been Heineken's technology partner for various e-business projects, such as the company's extranet and intranet. The latest partnership has been building an end-to-end solution for the Heineken Web site.
"We chose to work with IBM on this because they were the only vendor who could supply the whole package: the software, hardware and services that was needed to build the different applications on the site," Evers says. "The IBM solution is completely scalable, so we can build on it to respond quickly to new consumer demands, as is the case with the Heineken Shop. Finally, IBM has had experience working with other vendors and suppliers, so they were able to work seamlessly with our various internet agencies to ensure that the on-line image was in line with our brand strategy. This was a very important factor, since the Internet is now a very important marketing tool for us."
Meeting Consumer Demand
Heineken learned very quickly the advantages of using e-business to manage relationships with business partners, suppliers, merchants and employees. These benefits include increased reaction time throughout the supply chain, decreased costs from reengineering processes and improving decision-making by sharing information.
Now, Heineken's focusing its attention on the consumer through three corporate Web sites (www.heineken.com, www.amstel.com, www.murphys.com). The consumer response to these sites has been very rewarding for Heineken.
"In order to measure the response to the site, we created an on-line questionnaire that visitors could fill out," Evers says. "The questionnaire was only up on the site during one week and we estimated that it would take respondents approximately 20 minutes to fill it out. Even so, we received a little under 3,000 responses. The feedback was very positive, with a majority asking that we sell Heineken-branded merchandise on-line. To meet this demand, we opened the Heineken Shop."
Of course, the online shop isn't Heineken's primary business, but Evers says it's providing the brewer with valuable business-to-consumer electronic-commerce experience, and helping to build the Heineken brand.
We firmly believe that the Internet and e-business will very quickly change the business landscape." Evers says. "We need to focus on it now because, if we don't, it will be too late."
Case study produced and provided by IBM Corp.