Heineken shakes up the beer market

Almaza

When Heineken bought Almaza at the end of 2002, the acquisition, “represented a further strengthening of Heineken’s position in growing beer markets thus creating a better balance between the activities of Heineken in mature and in developing markets. It also offers a strong base from which to export to surrounding countries.” Two year’s later the Dutch multi-national has not taken its eye off the ball and at the end of March of this year, another, crucial piece of the jigsaw fell into place when Brasserie Almaza bought local rival Laziza, giving Almaza and Heineken the brand portfolio to realize their regional ambitions.
“Two years on, we are on track with our vision of making Lebanon a credible sourcing hub for the Middle East,” explained Almaza managing director, Jean-Marc Landriau, sitting in his office at the company’s famous Dora brewery. Laziza had struggled to establish itself on the local market since being revived by Joe Khawam, grandson of the founder, in 2000.

 

The brand, which was brewed in Holland but marketed as a Lebanese beer, suffered from what Landriau describes as an “ambiguity of positioning.” It came in three “flavors”: Lite, Regular and Strong. However, few understood the Lite concept; the Strong version was a shade too expensive and the Regular was in no position to dislodge the mighty Almaza. “Laziza lacked the finances to market itself efficiently,” shrugged Landriau.

Before the Laziza buyout, Heineken’s Lebanese stable included Almaza, Amstel and Desperado, a beer and tequila RTD (ready to drink) beverage. Later this year, it will launch a new beer, Rex, to compete in the growing “strong beer” segment. It was a portfolio designed to compete in all niches of the local market but it had limited export punch. Although Almaza was exporting to Syria and certain on-trade outlets in Europe, the US and Canada, where it is styled as an ethnic specialty, the brewery’s sights were firmly set on the lucrative GGC markets.

Almaza was aware that 75% of Laziza’s sales were from its non-alcoholic beers, which had, given its limited resources, performed credibly in a local market, where sales were buoyed by Lebanon’s modest tourism boom and the increasing number of teetotal Arabs who wanted something fun to drink.
Buying Laziza meant not only a acquiring a high-profile brand but also an export platform to the Gulf. Now, Almaza wants to export Laziza to Jordan, Qatar, Bahrain, Kuwait and the mouthwatering Saudi Arabia market, where 60 million liters of non-alcoholic beer are drunk every year and where it will pitch for a 10% share of the local market, so far dominated by European non-alcoholic beers.

“Laziza is indeed our key brand for export in the Middle East region,” said Landriau. “We want to develop volume in the region. In 2002, Almaza was exporting 2% to the region. Today, we are exporting 25% of volume and by 2008, I hope to be exporting 40%.”

Landriau’s dream is to export more beer than Lebanon imports. Such ambitions will not come cheap. More exports means greater production. “We will have to invest, if we are to increase capacity by 10% every year,” said Landriau, who was painfully reluctant to be pinned down on the specifics of Heineken’s spending or its market share in Lebanon: “We need to protect ourselves from our competitors.”

He did however reveal that the Dutch company had spent euro 35 million “so far.” The tab includes the acquisition of both Almaza (rumored to have been bought for $24 million) and Laziza and new equipment. Landriau said there are plans to build a new brewery.

Until the Laziza purchase, Almaza and its stablemate Amstel controlled 60% of Lebanon’s $40 million beer market. The Laziza acquisition should increase that figure to 70%, while it is hoped that the new Rex will make a dent in the strong beer segment, which currents claim a 10% overall market share.

There have been casualties. Devotees of Laziza Strong will be sad to learn that their tipple is being discontinued to make way for Rex, at 8% the same strength as Laziza Strong but sold in a bigger, brasher can. The idea is to position Rex to compete with the popular and affordable EFS, Atlas and the daunting Everest. Many of these beers are the strength of white wine but cost as little as LL 1,000 a tin. EFS from Turkey, is the best-selling strong beer in Lebanon with a 9% share of the overall local beer market.

According to Landriau, strong beers have made a surprisingly successful impact in the local market. “The Lebanese consumer generally looks at price rather than strength. With these [strong] beers they get value for their money. This is in direct contradiction with global trends where stronger beer is usually more expensive.”

Also struck off the team sheet was Laziza Lite. Almaza felt the Lite option was too subtle a choice for Lebanon’s beer drinker. “It was difficult for the customer to define,” said Landriau. “Markets are either dominated by Lites (like the US) or non-alcoholic beer (like Spain). In Lebanon, this segment is definitely non-alcoholic and the Lite was squeezed out.”

The decision to axe Laziza Lite highlights the importance of clear brand segmentation. Almaza (and no doubt its illustrious parent company) is confident that each beverage has a distinct enough identity to hold its own in the local market. Heineken needs no introduction. It is the most visible beer on the planet. Almaza is secure as the local favorite (positioned, for those who care about such things, at a respectable 4.1% alcohol). Amstel, with its slightly more international profile is what Landriau calls “an upper-mainstream brand” and sells for around 10% to 15% more. Laziza (the regular beer) is priced slightly below Almaza with marginally higher alcohol content (4.7%) and a “sharper taste.” Rex represents the strong beer class. It is, said Landriau euphemistically, “an attractive price proposal.”

Almaza retained J. Walter Thompson to create a marketing campaign that will send one very clear message. “In terms of overall communication, Almaza is alcoholic and Laziza is non alcoholic,” explained Landriau, re-emphasizing the importance placed on Laziza’s non-alcoholic, multi-flavored beer portfolio.

Landriau has not failed to notice the rise of the Alco pop or RTD (ready-to-drink) alcoholic beverages such as Bacardi Breezer and Smirnoff Ice. The two have become a global craze and spawned in their wake an army of similar, often more-affordable, concoctions (including Kassatly Chtaura’s Buzz, which is also set to launch a non-alcoholic product this summer). RTDs pose a formidable threat to the beer market, especially during the heady summer months. In Lebanon, the RTD market is worth $3 million and growing by 15% annually.

“Yes, of course they have taken volume from the beer market but we have reacted with Desperado,” said Landriau, pointing to a golden brown bottle of beer and tequila. Heineken also owns Murphy’s Irish stout, which is gaining global popularity on the back of the Irish pub phenomenon. Landriau is confident that both brands will buttress any assault on Almaza’s share of the market.

For the record, Lebanon consumes five liters of beer per capita. This is greater than Egypt (one liter) but less than Tunisia (nine liters). To put things in perspective, the French consume 40 liters per capita per annum while the Czechs virtually bath in the stuff, consuming an impressive 160.7 liters per person. “Lebanon is an underdeveloped market that we are looking to exploit,” remarked a no-doubt upbeat Landriau.

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