Premium beer producer Heineken’s R2.3-billion investment in its Sedibeng plant, south of Johannesburg, will see the company for the first time tapping into the lucrative mass market.
Researcher and chief executive Jame Maposa said this during an interview with Sunday World after Heineken built a new beer production line to produce alcohol beverage sold in a 650ml bottle.
“The reason behind this [producing 650ml bottles] is because beer is a volumes business. To sustain you need to sell large quantities to remain viable. So targeting the mass market is often the core strategy for beer manufacturers because margins are thin and the more volumes of beer you sell the better from a sustainability standpoint,” stated Maposa.
He predicted that the beer producer’s new strategy would result in an increased market share.
“If market share is measured by volume of beer sold, yes (it would increase market share). Heineken is following the trend of ‘shared drinking’ where two or three friends buy a larger sized beer, pour it among themselves and when it’s done buy the next and the next and the next.
“From an economics standpoint across the drinkers, the unit price is lower so they can drink more and for the beer brewer the unit packaging price is lower (for volume produced) so they reduce their packaging costs and increase margins.
“Other benefits include lower distribution costs (this needs to be further explored) and again it contributes to Heineken’s margins.
“Essentially they’re trying to establish a win-win for themselves and their customers by lowering unit consumption prices and reducing packaging and distribution costs,” Maposa pointed out.
The renowned global premium beer maker said the investment will increase its returnable bottling programme in South Africa, more than doubling its share of returnable beer bottles.
The company hired a wide range of companies including construction and engineering firms to help to build the production line as well as increase the warehouse capacity.
Some worked for the entire duration of the construction and reconfiguration of the line, others were employed at various stages of this project.
“The move, which will see the Heineken beer brand move into returnable glass, aligns to the company’s global ambition of net zero carbon by 2040 as per the Dutch Brewers’ ‘Brew a Better World’ strategy,” said managing director, Jordi Borrut.
Borrut revealed that the company, which has the same bottle design in 190 countries world-wide, will break with tradition unveiling the new design for its returnable bottle in South Africa, a change not made anywhere else in the world.
With the launch of its returnable bottle, Heineken will be opening several Heineken Green Zones – a collection of open parks and meadows complemented by food and flower gardens, as well as creative arts spaces in communities across the country, including Phillipi, Cape Town, Eldorado Park and Lawley in Johannesburg.
