Heineken boss says drinks brands will innovate or die

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Heineken boss says drinks brands will innovate or die

Maggie Timoney CEO, Heineken USA


Maggie Timoney left Ireland for the USA in the mid-1980s on a basketball scholarship and joined Heineken in 1998 after graduating. Photo: Michael Mac Sweeney/Provision
Maggie Timoney left Ireland for the USA in the mid-1980s on a basketball scholarship and joined Heineken in 1998 after graduating. Photo: Michael Mac Sweeney/Provision

Bad weather has left Maggie Timoney stuck in Miami. She’s scrambling to get a flight out of the city after thunderstorms scuppered the previous day’s exit plan.

While there’s turbulence in the air, there’s some shaky ground beneath.

Appointed last year as CEO of Heineken’s US arm, the Co Mayo native from Ballina has to deal with a market where overall beer sales have been falling, creating somewhat of an existential crisis for brands that were once the mainstay of the sector. Think Budweiser and Miller.

One of the world’s biggest packaging groups, Ardagh, which has its roots in Irish Glass, announced last year that it was closing one of its US beer bottle-making plants due to weak demand.

There’s still a huge beer market in the US – worth an estimated $112bn (€100bn) a year – but it’s been upended by rapidly changing tastes and trends, especially among younger consumers, and increasingly popular Mexican brands including Corona.

While Heineken owns a stable of brands, the Dutch group’s flagship beer commands an estimated 1.8pc share of the US market: small in the scheme of things, but worth fighting for.

Timoney thinks she’s been able to bring a new perspective to the US market, where she has worked in previous roles with the brewer, especially in trying to cope with the state of flux the US market is in.

It’s not unique in dealing with the challenges. Consumers, bombarded by advertising from myriad sources, flit like teenagers from one love to the next. Today’s fad could be tomorrow’s lip-curler.

“We need to understand why consumers are moving away from beer into other categories,” she says. “It’s a global trend. The moderation, the health and wellness trend, is firmly there. Consumers are looking for lower calorie, lighter flavours – and not necessarily beer, but maybe even a hybrid of beer and spirits. In the US, we also have flavoured malt beverages.”

Those flavoured malt beverages – they include concoctions such as the dubious-sounding Jack Daniel’s Country Cocktails, Corona Refresca from Constellation Brands, and Bud Light Lime – are a growing category, with the top seven brands in the US generating sales of more than $1.7bn last year. But it’s still small beer, compared to, well, beer.

“You have beer, you have wine, you have spirits [when will the renewed gin fascination fade?], and in the US now, with cannabis being legalised in not all states, but some states, that’s also another threat for beer,” says Timoney.

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Last year, Constellation Brands bumped up its stake in Canada’s largest cannabis producer, Canopy Growth, from 9.9pc to 38pc for $4bn (€3.6bn).

Cannabis can be used to infuse drinks from beer to coffee, and Molson Coors established a joint venture last year with Canadian dope grower Hexo.

But not all drinks firms have the munchies for pot.

Is the product a concern for Heineken?

“Cannabis is not legal at a federal level, so that’s a whole quagmire,” says Timoney. “When consumers have occasions and choices for those occasions such as spirits, wine or beer, then you’re fighting for the share of that occasion. You need to make sure that you’re innovating and that your products stand for something and are differentiated.

“You have to be on top of your game from a marketing perspective.”

She points out that consumers are increasingly brand promiscuous.

“Their repertoires are increasing, not only in the US, but also in Europe and Ireland.”

Timoney says she was surprised to be named as the recipient this year of the All-Ireland Marketing Champion award from the Marketing Institute of Ireland. She’ll receive the gong at an event next week in Dublin.

The executive left Ireland in the mid-1980s on a basketball scholarship to Iona College outside New York. She worked in the drinks industry after graduating, and joined Heineken in 1998.

She was initially a national planning manager for Heineken’s US sales arm and subsequently had roles in the Netherlands with the group before being appointed general manager for Canada.

Later, she was the senior vice-president for human resources in the US, and was appointed head of Heineken’s Irish unit in 2013.

“I was a bit surprised,” she says of receiving the award, pointing out that past recipients have included illustrious names including the recently deceased Feargal Quinn.

“When I reflected on the award, I did think that marketing has come such a long way.

“For me to be honoured with the marketing champion award really makes me feel proud of all the work that, in particular, Heineken Ireland has done on the marketing spectrum, and how we’ve really pushed ourselves to think more broadly about the consumer.”

One of the products launched by Heineken Ireland under her watch was the Orchard Thieves cider brand.

It has grabbed a double-digit share of the cider market in Ireland, which has been dominated by C&C’s Bulmers. C&C has fought back though, and in its first-half results for the financial year that recently ended, it said that Bulmers returned to volume growth in Ireland.

C&C had a disastrous foray into the cider market in the United States, highlighting how difficult and competitive the country is.

Heineken has launched its Strongbow cider brand in the US, but tweaked it to make it sweeter to appeal to US palates.

But the cider category will always be relatively small, while even craft beers – long a strong growth market – have gone off the boil. “There’s a lot of craft breweries in the US,” Timoney says. “Craft beer has slowed down. Cider is a small piece of the market,” adding that the cider market is also unpredictable.

“Cider and craft beer are under pressure,” she says. “Craft has slowed down a lot in the US in the past two years.”

More rapid innovation is one of the keys in a changing market, insists Timoney.

While Heineken spent five years developing its non-alcoholic Heineken 00 beer, she says that proposition was unique in its gestation because the group needed to ensure it was as good as it could be since it would be marketed under the Heineken name.

Innovate or die, so the maxim goes.

“The rate of innovation in the US is at a higher pace than in Ireland,” she says. “From a Heineken perspective and from a supplier perspective, we have to be much faster. From ideation to creation has to be a much faster time frame.”

She points out that some firms in the industry can do the turnaround in as little as three months.

“We have to be much braver in trying new things,” adds Timoney. “About one out of 10 products will fail. But you have to try and you learn faster and you apply your learning to the next product. At some point you’re going to get it right for the consumer.”

And just because a product doesn’t work now, doesn’t necessarily mean it won’t ever. “Sometimes you’re ahead of the consumer and the consumer doesn’t even know they want that product yet,” Timoney says.

“You may have to shelve it. But I always say, don’t bury it. That product or that idea may work in five years’ time.

“If you innovate for the consumer, and you keep the consumer at the heart, then your chances of success will be much greater.”

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