People are looking for better experiences when they go out, Rice says and adds Heineken UK wants to meet that challenge and ensure the on-trade gets back to being a thriving environment.
“The industry has had a really challenging few years,” Rice says. “We’ve come out of Covid and then you need to get people getting back into the pubs and bars, which is a challenge in itself.
“Our vision for the future is a thriving and sustainable on-trade but there are significant headwinds facing the industry – whether you be a supplier or whether are a publican.”
He adds customers at pubs are more discerning and want more from visits to the on-trade as a key trend seen since coming out of Covid.
“It’s a super exciting time and we’re 100% committed behind it,” he adds.
Costs have gone up across the board. “This is one of our biggest challenges,” Rice begins. “Whether it’s the cost of raw ingredients, glass, electricity, malted barley, all have gone up by almost triple figures, which is just phenomenal.
“Or, if you’re a pub operator you’ve got the same rising costs but you’ve also got wage inflation that goes with that and you’ve also got a cost-of-living crisis where people are going out less but the good news is when they do go out, they spend more money.”
The drinks business has plenty of options for licensees when it comes to scratching the itch of customers wishing to spend their disposable income.
Rice states: “We want to support our customers through a few different ways. The first is we’ve amended some of our roles in the business to really focus on gaining some of the knowledge and insight we’ve seen in our pub business, and bringing that to our customers because that’s a real competitive advantage for us.
“We’ve got a track record of successfully launching big and powerful brands that are fantastic for our publicans and for our customers.
“The recent launch of Cruzcampo, where we see a brand with premium credentials at an accessible price point, and bringing the number one draught lager from Spain to the UK, is a great opportunity for us and our customers.”
The second area for Heineken is its determination to help its customers through some of these current challenges. Its Business Builder services scheme offers discounts on services only possible through its scale, and also through Star Pubs & Bars, which could be on anything from waste removal to rising costs.
Services can also include social media training, PoS, free beer training and other bolt-ons.
Every beer in its right place
“The good news is for our businesses is we’ve got brands that can hit every different consumer price point and every different consumer need,” says Will Rice, Heineken UK interim on-trade director.
“We would start with Foster’s and Strongbow. Foster’s accounts for 40% of all beer sold so that is huge for us and an important brand. And it’s similar with Strongbow and John Smith’s. They are what we call classic, core areas of the market.
“If you were to go up a rung, this is where you see brands like Heineken, Cruzcampo and Inch’s cider coming into play. These brands offering something a bit more: Inch’s is all around sustainability, Cruzcampo is about bringing that authentic taste of Seville – a Spanish lager is clearly a big opportunity at the moment and is doing phenomenally well in the UK.
“Then a further level above that we have brands like Birra Moretti, which has been rated number one premium continental lager. It’s had phenomenal growth over the last number of years and we’re really proud of what we’ve done. There’s also Old Mout on a cider perspective but beyond Birra Moretti, we have Beavertown and Brixton, which are in the craft sphere and they all roll off the tongue.
“When you actually look at all those different brands you have – and that’s just some of them – we are fortunate we’ve got a lot of great brands to play with.”
Rice says: “The final point is around sustainability. Landlords are asking ‘what’s your sustainability strategy?’ and people weren’t doing that over the past couple of years, they only wanted to ask ‘what’s your rent bid?’ There’s two areas as the UK’s leading brewer where we really wanted to help.
“The first is on SmartDispense, which is an industry-leading dispense system but with two new additions in terms of pieces of technology – remote manager and cellar manager – which can, ultimately, bring down your energy bills by up to 36%. It’s a phenomenal piece of the kit.”
The cellar manager looks at the temperature of the cellar and when it hits the desired temperature, it will turn off the cellar cooling. So rather than just keeping that cellar cooling going and going when it’s not needed, it stops and saves power.
With the remote manager, the beer comes out of the keg and into the system and when the temperature is correct there, it turns itself off to, again, save power and money.
“But the final, and most important point for us,” Rice adds. “Is we see a real infliction point coming in the market with the new EPC (energy performance certificates) legislation for pubs, which is now live. We’re not sure people are recognising this enough because you need to be rated ‘C’ by 2027 and ‘B’ by 2030.
“Non-compliance can cost pubs up to £150,000 in fines so we will kick off a sustainability fund worth £3m to invest in making pubs across the UK more sustainable and to bring down their energy costs because we see this as an emerging problem and we want to help customers through that.”
Climbing the ladder
Rice joined Heineken in 2013 and worked in Heineken’s off-trade business in Tesco after various commercial roles. When the business bought pubs from Punch, he joined Star Pubs & Bars (Heineken’s pub arm) as one of the regional ops directors, which was a “fantastic opportunity and a fantastic insight from the ‘bottom up’ to learn our pub business”.
In 2020, he became a trading director in the on-trade, looking after IFT (independent free trade) customers in the south then, subsequently, regional brewers. And then two months ago, Stephen Watt left the business and Rice was appointed as the interim on-trade director.
“I’ve worked across the three different commercial functions here at Heineken and have learned a lot in those past 10 years,” he says. “Now what I do is I lead our on-trade business, about 320 colleagues, across front-line sales, across our customer care team, a new customer experience team and our digital team.”
The elephant in the room
Back to sustainability and the Heineken man says before the pandemic, sustainability was a rising issue but now it’s a big issue and one that needs to be addressed.
“During the pandemic, it clearly wasn’t top of the priority list. Actually, the whole viability of the on-trade was top of the priority list. Are we going to get customers walking through the door? Are our draught pints going to be sold again, in the same volume, and, ultimately, we’ve seen a very different on-trade come out the back of that.
“But coming back to now, you can’t afford to avoid [sustainability]. I once I heard a quote ‘what’s the point in winning in a world that isn’t?’. When you hear something like that, you think this is why we need to lean into it. Also consumers and customers are saying, ‘what are your credentials [in sustainability]?’, particularly younger consumers, who are much more willing to hold us and our customers and pubs to account.”
He explains younger customers are the ones least likely to come to the pub because up to 25% of 18 to 24-year-olds don’t drink beer or cider but with the ones that do, the on-trade needs to make sure they come to pubs and, as an industry, we’ve all got a job to do to keep them there.
Rice states: “If you think about kegged beer and cider, and dispensing it in a glass, is one of the most sustainable dispense solutions going. Sometimes we forget that because you can get almost 100 pints out of one keg of beer, and it’s dispensed out of a glass that you wash on-site and then re-use. Well, that is pretty sustainable.”
Icon of Britain
“We can see some of the issues Brexit has had on the marketplace but we think the great British pub is an attraction for people to come to the UK, and to stay in the UK,” Rice says with real optimism.
“We’re a European company, we work with people across the world and our partners in different countries across Europe and will continue to do so. We’re proud of the fact we’ve got the great British pub here and it’s a draw and it should be a great draw for tourists too.
“I love walking around pubs in in London and seeing people of different nationalities, who are clearly tourists, ordering beers and seeing what they’re ordering. It’s fantastic to see.
“Some of my brothers and sisters have been expats, and I know many expats, and if you ask them what they miss, I would like to say it’s me, but they always say it’s the pub.”
The seasons have changed and now we are approaching many people’s favourite time of year. Rice says: “Summer and the summer weather are super important to the on-trade. We’ve all benefited from having a great May and, as an industry, we didn’t benefit from having a very poor March and April weather wise.
“Obviously, we have beer and cider, and cider does better in the summer [versus winter] so when you have great weather, it’s great to see.
“But then again, our biggest month of the year is December, of course. December is going to be super important for us as an industry because we haven’t really had a full December for the past number of years, whether it be train strikes, Covid, Omicron variants or the football World Cup. We are all hoping for December to get back to normal.”