From its humble beginnings in a small brewery in the heart of Amsterdam to the world’s third-largest beer brewer with breweries in some 70 countries around the world, Heineken’s 158-year history is an amazing story. Founder, Gerard Adriaan Heineken was born in Amsterdam in 1841. Gerard grew up with his brother and two sisters at a time when various contagious diseases were haunting the city. By age 10, he would lose both his sister and his brother. A few years later his father would also pass away.
But it was on this day in 1864, at the age of 22, Heineken wrote a letter to his mother asking her if she would help him buy the “The Haystack” brewery in Amsterdam, a popular working-class brand founded in 1592. Keep in mind, the young Heineken had been working in the cheese industry and had zero experience with brewing beer, so this had to be a bit of a curve-ball to mom.
But he explained the opportunity he saw, beer consumption in the Netherlands had dramatically declined since the 17th century as “respectable people” drank wine, coffee, tea, cocoa, and for working men it was Dutch gin and other hard liquors. Heineken believed he could enter a space that had been badly beaten up, get it at a deep discount, improve on some of the technologies, and change the marketing to the public to create a big winner. The family got on board with his ideas and they were able to purchase the brewery at a bargain price, allowing young Gerard Heineken a chance to start making his changes.
First thing, Gerard Heineken decided to switch from traditional top fermentation to the Bavarian method of bottom fermentation, a totally different technique that produces a clearer, purer beer, which also keeps a lot longer. This allowed Heineken to pick up a reputation for quality along with the epithet ‘Gentleman’s Beer’.
Next, Heineken would hire Dr. Hartog Elion, who happen to be a student of Louis Pasteur, the French chemist, and microbiologist who discovered the principles of vaccination, microbial fermentation, and pasteurization. Thanks to his training, Elion was able to develop the A-yeast strain in 1886 which became the basis for Heineken beer and still is to this day. Gerard Heineken soon installed Elion as laboratory director and the brewer became the first in the world with a quality-controlled laboratory.
Today, Heineken is available in almost every country on the planet and is the world’s most valuable international premium beer brand, while also remaining true to its traditional recipe.
After a deeper dive into Gerard’s personal and business life, there were a few key business lessons that put the company on right track, doing what few family-owned businesses could do by surviving more than a century. Below are a few of the lessons we can all learn from as we look to pass on our legacies to future generations. (Source: thedrum.com, brookestonbeerbulletin, heinekencollection, LinkedIn/Marcel Molenaar)
Take Intelligent Risks: You’ll remember that when Heineken bought the old rundown and half-working brewery, he had no idea how to brew beer. In fact, until that moment he was running the family business of trading in cheese and butter. But he did recognize the potential of beer as he saw that the government favored the sales of beer much more than strong liquor due to it being considered ‘a healthy men’s drink’ and those in the business could count on fiscal support by that same government. Secondly he realized that the quality of beer was below average and with the right technological advancements he could make his stand out from the rest, starting with the steam machine, which helped supply unlimited amounts of boiled water, the recently invented thermometer and glucose meter all helped to improve the quality of English beer. Finally, there was the price as Heineken was able to pick up all the equipment, and the building and grounds for very little money.
You Succeed When Your Customer Does: Besides investing passionately in brewing the best beer of its days, Gerard Heineken realized he needed happy and loyal outlets, mainly bar owners and patrons of the bars. Where his competitors often used cheaper ingredients, Heineken exclusively relied on the best he could get his hands on. And not only that, he started personally teaching his customers about brewing beer, so that they could understand and appreciate the quality of the product. Furthermore, by educating his customers, he prevented the still highly perishable product from ever going bad once in the hands of the outlets. “Never order too much” was his advice to proprietors and “If you are not satisfied or the beer is tainted, please dispose of it discretely –not to harm the Heineken brand- and I will pay you your money back”. As demand for his quality product grew and understanding the power of leverage, Heineken started establishing a network of representatives. This took the Heineken brand to a whole new level as he was now able to sell his product also across all provinces of The Netherlands and as we now know, internationally as well.
Invest and Innovate or Die: One of the first things Gerard Heineken did when he took over the old brewery was to look for a Brewmaster that could help him create the finest beers possible. He found Wilhelm Feltmann. Just 22 years of age but already highly experienced in the fine art of brewing by working for breweries in Silesia, Bohemen, Frankfurt am Main and Utrecht. Feltmann had a reputation for being stubborn and hard-headed when it came to his way or working and this proved to be quite a challenge for Heineken. But above all, they found each other in the common belief and vision that “what seems impossible today will be common practice in only a matter of years”. And it was due to this vision that Heineken was the very first Dutch brewery to implement an Ammoniac cooling system so they no longer need to ship ice from Norway to their production facility and avoid the high impact that price fluctuations of this ice import could have on the result of his business.
Think Big: Soon after Heineken founded his own brewery he realized that his business was all local. But many of the technological advancements took place outside of Holland. Advancements from which he could and should benefit, so he looked across borders for all innovations that could benefit the product. Secondly, there were many competitors in the marketplace. Notably, the Amstel brewery that’s was able to produce substantially more beer than his brewery was able to. Recognizing that he could not win this battle by himself, he set out to either merge or overtake other breweries to fight off competition. Brewery Oranjeboom from Rotterdam was the first candidate and by forming Heineken Brewery Holding and after much adversity due to the economic crisis of 1874, he managed to grow his production to outpace the competition. Interestingly, it took until 1968 to acquire Amstel Beer, now part of the Heineken family. Lastly, representation of the Heineken brand outside Holland. By traveling extensively, Gerard Heineken learned all about his audience both in B2B (business-to-business) and B2C (business-to-consumer) and what it would require to win their favor for his product. But he also knew that he needed agents to represent him. Much like he did in the provinces of Holland, he started recruiting foreign representatives, that could promote his beer, find outlets and help him understand the local markets.