Heineken Makes Long-Term Bet on Non-Alcoholic Beer

0:00Bloomberg Businessweek Daily is brought to you by HPE, bringing you the self-driving network, a network that's self-optimizing, self-healing and self-protecting and only continues to get smarter. Learn more at hpe.com slash networking. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business.

0:41Let's create smarter business. IBM. Never bet against American grit or American energy. Through innovation, Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost and a fraction of the time. So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy.

1:19Podcasts, radio, news. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. Some good news and bad news for the makers of alcoholic beverages. The bad news is that U.S. consumption of alcoholic beverages is at historic lows right now. The good news, though, is that it appears to have stabilized. This is according to a Gallup poll released last month. We've seen the way that lower drinking rates have led to falling sales and stock market declines. in recent years for companies including Brown Forman, Molson Coors, and Boston Beer. The question, Molly, is what is the U.S.

1:55CEO of one of the largest beer companies in the world to do? And the answer, it seems, is really lean into non-alcoholic beer. That's right, Tim. That's why we've got right here with us Maggie Timoney. She is the president and CEO of Heineken USA. Maggie, thanks so much for joining us. Thank you for having me. So welcome back. Yes. How many U.S. Opens have you been to now? Oh, a lot. A lot. But not enough because it's such a fabulous New York experience and a global event. It's never enough. Never enough. We were keeping track of ours yesterday, but we don't want to date ourselves. No, not at all.

2:27It does seem like Heineken has been a staple of the U.S. Open, I mean, for 30 years at this point. Yes. But the last few years, something different has happened from a marketing perspective. I've noticed it, and you're talking about it today, and we have the beer in front of us. It's the leaning into the zero-zero. So talk to us a little bit about the opportunity there that you see and also what you've been able to accomplish so far. So we've been a partner of the USDA for 34, if you can believe it, dating ourselves 34 years. And it's such an important partnership for us because we get a chance here.

2:59I think it was over a million people that came through the grounds last year to sample products. And this is the third year in a row that we have now had Heineken 00 at the heart of our partnership with the USDA. and we've sampled people around the grounds and they just fell in love with the brand. And so this year we said, let's bring it back and let's do something a little bit different. Serena Williams is a global Heineken 00 partner. And what we did was something very unique with her. We collaborated with her and she won six U.S. Open Championships. And if you look at the cans here on your screen, everyone, you will see that we give a nod to the artwork on the tickets that were that year that she won.

3:37And if you could produce that actual stub, I mean, the young people of today, they don't have stubs, right? Everything's electronic. But people saved the stubs from their favorite event years ago. And people could enter to win and, you know, come and enjoy experiences. Come to the Heineken suite if they could produce the actual stub. And these are limited edition cans. I urge you to go get some and try some because they will run out and are running out very quickly. And these cans are also available on the alcoholic versions too, or is this just for the 00? Just for Zero Zero, because Serena is our global ambassador for Heineken Zero Zero.

4:09And I wanted to talk to you about that partnership with her, because I think maybe one of Serena's better-known partnerships now is for one of, like, a GLP-1 brand. And I think for maybe, you know, obviously it's different maybe with a non-alcoholic brand of beer, but I think a lot of people still associate, you know, beer with, like, maybe being, you know, not always, like, the healthiest drink to have. So it's like, tell me about like the juxtaposition of those two partnerships of hers together. Yeah, that's a great question. I mean, there's studies that show that people who are on GLP-1s also drink alcohol.

4:42They say, do they drink less alcohol or more alcohol? It's inconclusive. But if you want to have a beer with alcohol or without, Heineken 00 gives you the perfect choice. We perfected the perfect Heineken 00 liquid 20 years ago. and we launched it in 17, tested it in Europe and now we're the number one brand globally. We're the number one brand by value in the United States. We're number one in the on trade and it continues to grow. But when you look at consumers, even look at Gen Z, they're actually drinking now, the latest study shows, roughly the same as the adult population. And if they want to moderate, they have a choice.

5:22And if they don't want to moderate, they have another choice. So it's not like they're abstaining completely. They're just moderating or what we call zebra striping. Zebra striping. Yes. Oh, I don't think I know that. So zebra striping is like I was here last night with customers. I had a Heineken Original, then I had a Heineken Zero Zero, then I had a Heineken. So they go back and forth. So that's such a great option. And we were at the four. We've reignited a nascent category globally and particularly in the U.S. because this is the best tasting alcohol-free beer on the market. We're speaking with Maggie Tammany, the president and CEO of Heineken USA.

5:54She joins us on site here at the U.S. Open. We have some numbers here. Sales increased from 2023 through 2025, 86 % of Heineken 00. It was starting, though, from a small base, I think it's fair to say, especially when you compare it to what you are known for, which is the original Heineken. The original, yes. How much now of the overall sales mix is NA versus original? Heineken 00 is about 10 % of original. That's more than I thought it would be. And if you look at Europe, it's the penetration of non-alcohol or zero alcohol-free beers. In Spain, for example, it's around 15%. It's greater. We're still in a bit of a nascent category in the U.S.

6:39So when we launched Heineken Zero Zero, the non-alcohol beer was 0.4 % of the market. We exploded that, and now it's 1.5 % of total beer. How big do you think it gets in the U.S.? Not just Heineken, but the NA market. Yeah. I need to go. You have CalShare. who do you want later on? I'm going to have to take a bet here. Well, I mean, internally, like the numbers that you look at, does it get to a penetration of above 5 % or 10 %? When we look at it, and I've said it four years ago, three years ago, and two years ago and today, we see it getting to about 3 % of total bear. Oh, wow. But it's already 10 % of your...

7:16Of original, of the original volume. But the market is 1.4 % of total bear. It came from 0.4. Can it double? Yes, over time. Can it get to 10 % of total beer in the United States? I don't think so. When you're looking at the span of the alcoholic beverages here at the U.S. Open, obviously Honey Deuce is really iconic. The Double came out with their tequila cocktail recently as well. Is the goal here to have an iconic beer that people are also going to want to maybe take pictures with, bring these cans home, have a similar souvenir-like experience? Absolutely. But the iconic brand at the U.S. Open for 34 years, ladies and gentlemen, is Heineken.

7:59We're one of the longest-standing partners, and now we have Heineken 00. So now you can with alcohol or without alcohol. So it is iconic. This is different. For two years in a row, we had the Love Love cans, if you remember, which is a nod to the Love Love score of tennis. We also brought those nationwide to sell them. So, yeah, we will continue to innovate because consumers are looking for authentic experiences wherever they are. And can I just say one more thing? Yeah. We invest a lot of money in experiences, and we do that because consumers are looking for those authentic experiences. And as Freddie Heineken said, we don't sell beer.

8:36We sell good times. Well, I hope you had a good time with us. I did. We did. Thank you. We certainly did. Thank you so much. Maggie Timoney, she's U.S. CEO over at Heineken.

9:12Thank you. at business.optum.com. Game night rush or any night of the week, really. Genius keeps every order moving from online ordering to your kitchen, to the front counter. Big league reliability for any business. That's genius. Before you sign off, you tuned in for ways to help teams move faster, make sharper decisions, and turn scattered context into work they can use. ChatGPT for business can help. ChatGPT for business gives teams a shared workspace with admin controls, permissions, and access to work and codecs in ChatGPT. This means your business can move from question to answer and code to rollout quicker.

9:58Join over 10 million business and enterprise users worldwide already using ChatGPT for work. Download the ChatGPT desktop app or contact sales to learn more.