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Heineken’s contribution to the UK economy through its beer and cider businesses is vast and growing. The acquisition of Scottish & Newcastle in 2008 is just part of that developing story, says Lawrie Holmes

hen Heineken, one of the world’s largest beer producers, acquired British brewer Scottish & Newcastle (S&N) in 2008, few could have predicted what would happen next. Months later, the world was plunged into financial crisis with the collapse of Lehman Brothers, raising concerns about consumer demand in mature markets such as the UK.

Stefan Orlowski, the Australian-born managing director of the group’s UK business, quotes Jean-François van Boxmeer, Heineken’s chairman and chief executive, as saying about the takeover of S&N: “Strategically, it was a great deal, but the timing was not great. A few months after the acquisition we had the Lehman Brothers collapse. If we were smart enough to have predicted that, we wouldn’t be here sitting around this table and all the things that followed.” With help and support from UK Trade & Investment, Heineken has taken the decision to build on the S&N legacy and has created a UK business that accounts for 0.5 per cent of Britain’s GDP, and is worth a quarter of the country’s brewing industry. It’s not only beer that Heineken dominates in; the group’s cider business – the largest in the world – buys up a third of the UK’s entire apple harvest and there’s a

NEW RECIPE

“Then in 2003 a decision was taken by Heineken to reformulate the UK sold product to its international recipe, the Heineken that is present in 176 countries around the world. And we withdrew the ‘cold filtered’ Heineken we had here that was under four per cent alcohol to the international five per cent Heineken you will find in Taiwan, Thailand, wherever you travel in the world.”

That move coincided with termination of the Whitbread deal, Heineken then relying on sales of its imported brand in the on- trade (pubs and bars) market and the

vast pub estate that it has recently taken sole charge of. In every sense, Heineken is embedded in the UK economy. The 2008 acquisition of S&N by Heineken and rival Carlsberg, which took a smaller number of S&N international businesses in the £7.8bn deal, was undoubtedly a key moment in the UK story of the Dutch majority family-owned business. Yet Heineken has been on these shores for many years, in a licencing deal with UK brewer Whitbread. “The Heineken brand has been present for decades in the UK; you’ll probably remember the ‘beer that refreshes the parts other beers cannot reach advert’,” says Orlowski.