Heineken seeks single-minded brand approach after merging marketing and sales
Heineken is building a commercial function following its decision to combine its global chief marketing and sales officer roles into a newly-created position, a shift emblematic of how alcohol makers are increasingly aware they need to mend the disconnect between how their brands are advertised and sold to customers amid tougher competition.
The brewer has tasked its president for central and Eastern Europe and global chief sales officer Jan Derck van Karnebeek to bridge the gap as its first chief commercial officer.
His promotion sends shockwaves through the company with the departure of chief marketing officer Alexis Nasard and the removal of regional marketing and regional sales roles. However, the changes are taking place at an executive level only and Heineken’s brands and brewery teams will remain separate unless there is a clear benefit otherwise.
A spokeswoman for Heineken told The Drum that the “single commercial function” would interact directly with the markets. In the last five years, “our marketing capability has increased significantly,” she continued and the “quality of our marketers and their work is truly world class”.
A marketing overhaul may seem a drastic move for a company that was awarded the Cannes Lions marketer of 2015 but Heineken’s sales last year grew at their slowest rate since 2007, a meager 0.1 per cent.
With Heineken’s more aggressive marketing and expensive financial commitments to the Champions League and James Bond films, the brewer has to cut costs in order to maintain decent margins. The need is compounded by the fact that the brewer predicts sales growth will be slower in 2015 after a year buoyed by emerging market expansion and the World Cup.
The structural shake-up is designed to curb duplication, streamline processes, simplify decision-making and lower costs. Heineken hopes the moves are successful enough to hit its medium-term target of improving consolidated operating margin by an average of 40 basis points per year.
“We have embedded this greater capability in our way of working and processes and have exceptional talent throughout the company,” said the spokeswoman.
“Our consumer and marketing intelligence, capability building and innovation agendas support our brand growth aspirations. We therefore feel confident that in the spirit of ‘keep it simple’ and reducing complexity we should combine the leadership of the sales and marketing agendas.”
In a world increasingly fascinated by provenance, big beer has a real fight on its hands to retain its premium credentials. In the UK there are now more than 800 brewers, with about 80 new ones opening each year. Heineken joins Pernod Ricard and Diageo in uniting aspects of marketing and sales to bolster the desirability of its brands, closing the gap between their marketing strategies and how they show up in the off and on-trade.
Chasing volume instead of image is what hurt Stella Artois in the 90s when it wielded its “Refreshingly expensive” strapline and Heineken’s strategic shift shows it is wary of making the same mistake. In merging the marketing and sales at an executive level rather than operational, the Danish brewer recognises that it is less about whether it should be two roles or one and more about whether the commercial and marketing functions are aligned in the business.
Jason Cobbold, managing director of strategy and innovation agency Redscout’s London office, said: “Your commercial strategy is the biggest driver of brand equity in many ways because the level of which you’re going to price are immediate signifiers of how strong the brand is.
“That’s particularly true in the beer and spirits categories where often there’s a disconnect between marketing strategy and how you show up in the off and on-trade. The more you can bring those together then the more single minded your brand is.”
It is a tricky tightrope for Heineken to walk, one that it will need to ensure both marketing and sales are singing from the same hymn sheet when it comes to objectives.
Freddie Baveystock, strategy director at Rufus Leonard, which works with companies that have merged both marketing and sales, said: "In a world driven by data, both sales and marketing need to be focussed upon getting what people want to them when they want and in the way they want. So there is no logic to keeping them separate you want one data set.”
Mixing marketing and sales isn’t a new phenomenon but companies are now realising it through a clearer lens than previous attempts. Companies like British Gas and AA have nurtured a healthy commercial proposition as a result, of their realisation that the commercial dynamics of a business are just as important to growth as advertising.