Case Study: Heineken as a Family Business

by John L. Ward

I had occasion to hear a talk by the Chairman/CEO of Heineken, Jean-Francois van Boxmeer.  So much of what he said reaffirmed our observations and experiences. First, some context, then our shared views.

  • Heineken is about 150 years old and controlled by the fifth generation of the Heineken family. They are the third largest beer company in the world.
  • The family has often relied upon non-family management, but always participated actively as owners. Mr. van Boxmeer started with Heineken immediately out of school. He held positions in Africa, Poland and Italy and proudly announced he had never looked for a job elsewhere. He’s been CEO/Chair since 2005 – 8 years already.
  • The Heineken family has voting control but only 25% of the economic interest via a holding company owned 51% by the family that controls 51% of an operating company. The rest of the shares are publicly listed.
  • The company’s core brand represents 17% of revenues. Otherwise they have more than 250 local brands around the world, 28 of which are long-term partnerships that represent 25% of all sales.

Observations

  • Mr. van Boxmeer was asked of the advantages and disadvantages of being a family business. The disadvantage he quickly noted was the “constraints of the balance sheet – especially in an industry where you must grow or die.” On the other hand, numerous advantages:

―   Patience and the long-term view.
―   The “nerve” to courageously hang in during tough times.
―   A special spirit of passion for the business.
―   The people like working for a family.
―   The long nurtured capability to work with partners and to integrate   acquisitions into the Heineken culture.
―   Long-term value is more important than share price.
―   Market share is more important than earnings.

  • What does it take to successfully integrate acquisitions?

―   Clear direction
―   Mix people up
―   Get rid of the 10% who don’t buy in
―   Use people’s strengths

  • What about the culture?

Culture is what you do, not what you say in a brochure. The key Heineken values are

―   Passion for quality*
―   Enjoyment*
―   Respect*
―   Integrity*
―   Entrepreneurship
―   Demanding of results

The first four (*) we note are commonly distinct for family firms. It’s interesting to note the seeming contradiction of “enjoyment” and “demanding of results.” Maybe not a contradiction?

  • What he looks for for cultural fit in new hires?

―   Integrity – doing what’s best for company (what we often describe as “doing the right thing”).
―   Competence, of course.
―   Empathy.
―   Low ego – the credit belongs to customers and employees.

  • A classic cultural contradiction he noted was to balance local culture and company culture. This, he feels, is another special capability of Heineken.

In sum, the long-term view, strong DNA-based culture and special dynamic capabilities define Heineken, even as a listed company and even though the family only holds governing roles.

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