I have never been a big spirits drinker, although I rather drink a G&T than a poor lager. Last summer holiday in a Turkish all-inclusive turned out to be soaked in G&T. I never thought Heineken would get pissed off by G&T though – but it did. Read how they try to screw a hard-working bar owner over it!
Palladium, not my kind of bar on Amsterdam’s infamous Leidseplein, is the kind of hotspot where you can drool over famous TV or football personalities, hanging out. They used to hang with a Heineken in one hand and something blond in the other. Bar owner Ed Pool saw this changing and he now offers seven different gins – and sells his brains out on them. Heineken happens to own the building (as they do with most high-volume outlets) and were never really charging Ed a market-conforming rent, let alone more than that: never mind, the beer sales easily compensated that! With those sales dropping (and not just in Ed’s place, and not just because of Gin & Tonic) Heineken saw its earnings decline and decided to up the rent a bit. Ridiculous? A mere doubling seemed reasonable to them.
Yup, you’ve read that right: they want to up the rent 100%. Bear in mind that a bar owner in a brewery-owned building gets none, or perhaps a minute, bonus on his beer volume. So, almost the full vertical margin on every glass of beer is for Heineken – which is a lot, taking into account that beer production and packaging is a relative cheap affair and Heineken’s cost for a packaged liter is around 7 euro cent. A bar pays around € 120 for a 50 liter keg, equaling € 2,40 per liter. Heineken makes around € 2,43 on a liter – not bad – which it then spends on marketing, bonuses (but not for Ed), dividend and dresses for Charlene. Again: production cost, fully packaged an all, is € 3,50 for a 50 liter keg that sells at € 120 and lands a 3,300% profit. Ridiculous?
Ed is trying to make a living and the square he’s at is being remodeled by the city – the next five years. Of course he refused the proposed rent increase – so, Heineken is now suing him. Picture it: you, as a brewery, own a building which you let out at a reasonable price to an entrepreneur. He sells a lot of (your) product, until his customers start choosing something else – something different, like craft beer, and Gin & Tonic. Sounds like a production alarm bell to me – ‘Hey guys, there’s something wrong with our product!’ – but not to Heineken. They need to make money and will evict Ed from his means of earning his daily bread if he doesn’t cough up the dough. Sounds like a Goodfellas thing: whether through product, rent or pizzo, we’ll get our money from you anyway. I understand: Charlene can’t be walking around in the nude. That would be ridiculous!