At the end of last year, when Nielsen announced that Heineken USA was up 4.5 percent in volume, the company knew it had finally moved past a dark period and was on the upward track once again.
In the early days of Heineken USA, around 15 years ago, the company grew enormously, achieving 15-, 16-, and 17-percent increases in volume every year. A lot of that had to do with the fact that the Heineken brand was very strong in the Northeast, particularly New York City, and was rapidly expanding across the country. “We were the number-one import back then,” remembers Julie Kinch, a senior vice president and chief legal officer for Heineken USA, who has been with the company since that time. “It was sort of the heyday.”
Starting in 2008, though, the company hit a lull. The launch of Heineken Light, though not a total bomb, had less of a financial impact than expected and Heineken was coming up against America’s increasingly popular craft-beer movement. Simultaneously, the company started experiencing a lot of turnover with its senior staff, and the recession began taking its own toll. And, to make matters worse, while senior management knew something was wrong, the key players did not necessarily act as quickly or decisively as they should have. “I think we had so many years of great growth that you sort of think, ‘Well this is a blip, and we just need more time,’” recalls Kinch. “There was probably a delayed response from us on the management team to the realities of how much had changed, and how much we needed to do to try to turn it around.” As the current president and CEO Dolf van den Brink reflected (he wasn’t actually there at the time), “It was a traumatizing situation.”
When van den Brink joined Heineken USA as CEO in 2009—the 3rd new CEO in three years—he knew the company had to revamp almost every aspect of its business. Instead of pretending that he knew all the answers, or hiring outside advisors, he looked inward for the solutions. Van den Brink asked about 75 people throughout the troubled organization, from all divisions, to spend half their time working alongside the management team to identify the key problem areas. “This project allowed us, in four or five months, to do two things,” explains van den Brink. “One was to get clarity about what was at hand and how to get out of it. And second, by using our own organization rather than outside consultants, we started re-engaging our employees, and making them part of the solutions going forward.”
One important finding was that the company had an attitude problem. Because Heineken had been the market leader for so long, employees had become complacent and less inclined to take risks with their work. It also had a communications problem; many employees didn’t even know the trouble the company was in, and therefore couldn’t work to make it better. And those who were concerned about the state of affairs didn’t feel comfortable voicing their opinions.
Van den Brink fixed the former by adapting a new “challenger culture” for the company. Through workshops and role-playing exercises, he made it clear that he would value employees who were “fast-moving, agile, nimble, creative, and trying to do things differently.” To address the latter, he literally tore down the walls in the office and made all the floors open and transparent to send the message that “we are serious about candor and transparency, and we are serious about speaking your mind…and it was also a message that you can trust me; you can trust the leadership in this organization; there is nothing to hide.”
Once Heineken USA changed the mindset of its employees, it got to work strengthening its brands for consumers. Not only did the company start developing and highlighting new or lesser-known brands (for example, the company introduced Newcastle Limited Editions, which ended up being a huge money-maker), it also reinvigorated its more traditional brands. Heineken obtained a new bottle (the star bottle that you see now) that served as a refreshing and much-welcomed facelift, and Dos Equis received a new marketing campaign (“The Most Interesting Man in the World”) that ended up being a huge hit (Dos Equis experienced a 27-percent growth just last year from this effort).
Heineken USA also turned to social media to re-engage with consumers. The media team launched marketing campaigns on Facebook and YouTube (even before it broadcasted those same advertisements on TV), and dedicated 15 to 20 percent of its media budget to digital. As a result, Heineken became the number-one beer brand on Facebook and Twitter, which means it engages more with its consumers through Likes, Tweets, and other forms of digital communication. (Van den Brink is currently on a trip visiting “the guys from Google, Twitter, Facebook” so he can stay up-to-date on his social-media strategies.)
Van den Brink acknowledges that it has not been an easy road since he took over in 2009. “It was really a journey,” he says. “And now, looking back, we can make it sound very coherent and very neat—but it was kind of bumpy and messy.” But the numbers show that his very deliberate turnaround strategy has worked. In 2007, 2008, and 2009, the company was losing its share in the US beer market and facing stiff, across-the-board losses. Since the end of 2011, the company has been growing its market share every quarter. Says van den Brink, “That is the ultimate yardstick of success about whether we are doing a great job or not.”
» For more of Westchester’s Top Business Turnarounds, click here.