The statement put out by the Heineken family announcing that it had rebuffed SABMiller’s recent takeover approach was pretty unambiguous, affirming their “intention to preserve the heritage and identity of Heineken as an independent company.” It went on: “The Heineken family and Heineken NV’s management are confident that the company will continue to deliver growth and shareholder value.”
It immediately did, as the share-price promptly rose by 2%. And why not? Under the Heineken and Hoyer families’ control the firm is the world’s third-biggest brewer, with 9.3% of the global beer market, according to Euromonitor. SABMiller has a little more, and only AB InBev is significantly bigger, with about 20%. So there’s not a lot wrong with the way things are currently being done at the fourth-generation brewer.
True, the shareholder structure is a little complicated, and the families control the business despite owning only 23% its economic value. But as Vanessa Strike, a family business expert at Rotterdam School of Management, says: “If investors don’t like that, they can always sell the shares.”
What the public shareholders are buying into is precisely the family’s know-how. First, there is its marketing savvy. The brewer first became well known outside the Netherlands when it won the contract to run the restaurant and bar in the Eiffel Tower in 1889, and is as famous for its ads as its beer.
Then there is its internationalism. As early as the 1930s Heineken was brewing in Indonesia and Malaysia and exporting to China and New Zealand, and soon after was in Africa. Now Heineken owns 170 beer brands and has breweries in 70 countries.
But most of all, there is the strong family ethos. For the first 125 years since its foundation in 1864, it was led by just three family heads, and since then by fourth-generation Charlene de Carvalho-Heineken. One of Carvalho-Heineken’s sons, 30-year-old Alexander de Carvalho, has a seat on the board. Few businesses have such stability, or continuity.
That won’t change. “Both families are very involved in managing the strategic direction of the firm, even though they are very quiet about it, and I don’t think that’s something they are going to give up very lightly,” says Strike.
Heineken also likes doing business with other families, which further embeds the long-termist culture. It bought troubled family-owned brands in Spain and Italy, including Cruzcampo. In 2010 Heineken bought the beer business of family-controlled Femsa, American’s biggest bottler of Coca-Cola, in a share-swap deal that gave Femsa 20% of Heineken and a seat on the board.
In their book International Entrepreneurship in Family Businesses, three Spanish academics argued that Heineken’s success during the second and third generations’ years of rapid expansion was its ability to transmit the family’s passion to non-family members. Heineken is, they said, “an example of how the brand can pass from the family to the firm”.
Heineken is the family business par excellence. The shareholders are right to raise a glass to it.