“Under CEO Geert Minnart Heineken put on the hair shirt’: it is the catchy opening sentence of an article in Het Parool on Tuesday, June 7, 2016. Under the equally catchy title” Just delivering beer is not enough” the Belgium-born Holland on-trade director gets to tell how well Heineken thinks along with its on-trade entrepreneurs today.
But Heineken first and foremost still thinks of its own wallet, so much is easily read between the lines. The inevitable subheading ‘price increases’ is not lacking in the article. Minnart drags the – by now milked dry – old cow from the barn by stating that “price increases are inevitable because of rising costs”. And yes, he is aware of the fact that Heineken (because of its huge market share) is kept from concluding long-term contracts. “We have so much more to do to keep our customers. I want the landlord to choose us’ Heineken keeps its customers by, for example, giving them the priceless advise ‘to adjust the prices gradually as the purchase price changes’ – brilliant in its simplicity. Because yes, “sometimes the publican chooses to sharply increase pricing for the guest after years and then it gets noticed”. This is so true: it doesn’t go unnoticed. The hospitality industry is paying 57% more for beer than a decade ago.
In late November I blogged about the imbalance of purchasing prices for Heineken between the supermarket and the on-trade. I made it clear that a publican standard pays one euro per liter more than shoppers and when in promotion the difference is more than double. Both the regular and the promotional price for a crate Heineken at Albert Heijn are exactly the same in November 2015 and in November 2012: € 14.19 and € 9.99 respectively. It’s actually much worse for the hospitality industry which saw the purchase price increased by 57% in ten years, but what was the selling price of a crate of Heineken in 2006? Thanks to Biernet.nl we know: the normal price for a crate of Heineken in April 2006 was € 9.99 at Albert Heijn, and the promotional price € 7.99.
What is striking is that the normal price then is the promotional price now – at least at Albert Heijn. The “normal” retail price increased by 42%; the promotional price only by 25% – less, significantly less than the 57% of the hospitality industry where lager NEVER goes in promotion. And this week Hoogvliet had an offer: Heineken of € 14.49 for € 8.99. The ‘normal’ price increased by 2% this year – shocking! – and the promotional price in 10 years a mere 11% … It is clear who is compensating the “rising costs” of Heineken: the publican, and above all his customers.
The soon to be relaunched “Brouwers Bier” by Albert Heijn, albeit in bottles of 25cl, will hit the shelves at a “normal” price of € 8.99. In 1978, when they launched the ‘original’, the cost of a crate with 33 cl bottles was 8.95 in guilders. Adjusted for bottle size and in Euro that’s € 3.61. In almost 40 years, an increase of 150% – pretty fair, especially since we now have a disposable container. And you will be surprised by the taste: it is a premium taste sensation, especially for a pilsner.
A purchase price increase for on-trade of 57% in ten years for Heineken. A retail price increase of 150% in almost forty years for a private label pilsner. Could it be rising prices do not always represent increased costs? Mr Minnart has to hope Albert Heijn will never make its Brouwers Beer available for on-trade: with its priceless way of thinking along with the customer, his future would be dim. Heineken’s hair shirt is stained and torn!