Heineken – the Last Family-Owned Beer Giant

Heineken - the Last Family Owned Beer Giant

Heineken - the Last Family Owned Beer Giant

In a time of mergers and acquisitions, the Dutch brewer strives to keep its identity and profits

Heineken is currently the third largest brewer in the world and talk is rife that there might be some big changes in the landscape, dominated by the number one and two in the business – Anheuser Busch InBev and SABMiller. Two weeks ago Heineken rebuffed an offer from SAB and 51% of ownership still remains within the family that founded and turned the company into one of the most recognisable brands in the world.

Gerard Adriaan Heineken founded the company exactly 150 years ago in Amsterdam and it has grown leaps and bounds ever since. Their “Heineken A-yeast”, developed in 1886 by Dr. H. Elion, a pupil of Louis Pasteur, made the beer a household name and is still the key ingredient to this day. With every generation the company continued its expansion – Gerard’s son Henry Pierre led the expansion in the American market, right after the end of prohibition there; Freddy Heineken turned it into a global company with acquisitions and organic growth on all continents.

Nowadays the company is run by Freddy’s daughter Charlene de Carvalho-Heineken and it was her decision to reject the deal from SABMiller. Before her father’s death in 2002 she was largely uninvolved in the business, partially due to his kidnapping in 1983 (his ransom is the largest ever paid and is the theme of a movie with Anthony Hopkins). But in the last 12 years she and her husband Michel De Carvalho, who also happens to be vice-chairman of Citigroup, have taken a hands on approach and plan to leave the company in their children’s hands.

“It’s not about sentimentality,” De Carvalho says about the rejected offer. He describes Heineken as company driven to achieve results and offer quality while providing excellent returns to shareholders. The numbers do back him up to a large extent.

As of today the stock price is 58.19 euro, spiking with around 19% after the announcement of the rejected offer and also being described by analysts as having the cheapest valuation among the three big brewers. 2013 was a hard year for the company with revenue growing only 1.3%, but things seem to be picking up at the start of 2014. Revenue increased with 4.6% and the company is seeing improved sales in Western Europe, the Americas and Africa Middle East.

After their failed bid, SABMiller are rumoured to be a target for AB Inbev, which might improve the former’s offer for Heineken. If they were to merge, this would leave two equally sized competing groups in global beer production, instead of one behemoth. But Heineken do seem to be a company that defies the trend for acquisitions and might continue going alone, preserving their heritage and profiting from it.

Heineken is now available in the Trading 212 PRO Platform, as well as Anheuser Busch InBev.


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