New managing director of Heineken Ireland, Gerrit van Loo, has been talking to customers around the country to get a feel for the Irish beer market, writes Gabrielle Monaghan

When Dutchman Gerrit van Loo took up his post as managing director of Heineken Ireland in May, he spent his weekends visiting Dublin's pubs to observe Irish drinking habits first-hand.

"One day, I made my way through the pubs from Temple Bar through the north of the city, from 4pm to 1am, and stood outside smoking with other people," he explained. "It's a very easy way of meeting a lot of consumers."

The 18-year Heineken veteran moved to the brewer's Cork operation from Spain, where he spent four years as commercial director of the company's second most profitable market after the US.

Van Loo has overseen Heineken's marketing, sales or commercial divisions everywhere from Africa to Eastern Europe, so was eager to understand the dynamics of Ireland's €3.1 billion beer market.

"Beer is a huge part of the Irish culture but one of the biggest differences I found was that most brands are available in all pubs, whereas in the Netherlands or Spain, bars only stock, for instance, Heineken brands. So instead of the consumer just asking for a lager in a pub, in Ireland people ask for their particular brand," he said.

Van Loo joined Heineken Ireland, owner of the Murphy's brewery for the last 19 years, at a time when the Irish pub industry is beginning to stem declines that have occurred every year since the start of the decade. Sales of beer in Irish pubs and restaurants dropped 1 per cent in the first six months of this year, compared with a fall of 8 per cent in the same period in 2005, Heineken said when it released earnings this week.

The pub trade still dominates the market, with a 77 per cent share.

The Amsterdam-based brewing giant said its Irish beer volumes climbed 3 per cent in the first half, growing twice as fast as the overall market.

Heineken now has a 21 per cent share of beer sales here, up 1.2 percentage points from the first half of 2005. Coors Light dominated Heineken's first-half volume growth in pubs, jumping 40 per cent, helped by the advertising campaign "A Taste Born High in the Rocky Mountains" that has been running since last year. In bottled form, Coors Light is also the leading beer sold in Dublin pubs.

The brewing industry attributes the decline in beer consumption from its peak in 2000 to the introduction of the smoking ban more than two years ago, the growing popularity of wine, spirits and cider, and a more health-conscious Irish consumer.

While beer accounted for about 70 per cent of the alcoholic drinks market in 1990, by 2005 that proportion had slumped to 52 per cent.

By contrast, more than half of Irish adults drink wine regularly, compared to just 28 per cent in 1990, according to the Wine Development Board.

However, Van Loo believes the Irish pub market has turned a corner - the investment many publicans have made in heated outdoor areas for smokers, food service and entertainment is starting to reap benefits, he says.

"The guys who did invest over the last few years are quite happy at the moment," he said. "While the market will probably only increase 1 to 1.5 per cent a year over the next two years, if we can grow market share Heineken will continue to be a healthy business."

Diageo, however, paints a different picture. When it reported results on August 31st, the world's largest drinks company said the Irish alcoholic beverage market contracted 3 per cent in pubs and restaurants in the year ended June 30th. Volumes of its beer, which includes its Budweiser licence, fell 3 per cent while volumes of its iconic Guinness brand shrunk 8 per cent.

Guinness has tackled a slump in demand for stout through a series of price increases, limited edition brands and by trialing its lower-alcohol stout, Guinness Mid-Strength.

Heineken, on the other hand, has been focusing on building awareness of its namesake brand among younger consumers. It sponsored the Heineken Green Energy, Oxegen and Electric Picnic music festivals, as well as the UEFA Champions League and rugby's Heineken Cup.

As a result of its efforts, volumes of the beer brand in the first half increased 3 per cent in the on-trade and 8 per cent in off-licences and supermarkets.

The company is spending €2 million this year on extending the Coors Light outdoor advertising campaign and expects to receive a boost from sponsorship of the rugby World Cup next year.

It's also adding its Easy Draught system to restaurants, with 20-litre kegs connected from a fridge directly to a tap, to increase sales from eateries, and is rolling out its other Dutch lager, Amstel, in Dublin and the rest of Leinster. In addition, it's pushing specialty brews such as Sol, Paulaner and Polish beer Zywiec.

Van Loo is confident Ireland's expanding Polish population, estimated to be more than 150,000, will add a new impetus to the Irish beer industry as more immigrants decide to settle in Ireland.

"I was recently in the Trinity Rooms in Limerick and noticed there were Poles on both sides of the bar and mixing very well with the Irish," he said. "In the past, many Poles were saving up money to bring home but many like it here and are going to stay."

However, like Diageo, stout continues to remain a thorn in the side of Heineken's business. While Murphy's held its 5 per cent market share during the first half, volumes of the stout declined. In the 12 months to June, stout's share of the beer market fell to 36.8 per cent from 39 per cent a year earlier. Lager, by contrast, commanded a 56.5 per cent share.

The pint of plain is becoming less appealing to increasingly sophisticated Irish consumers, who are influenced by their higher disposable incomes, the media, television and cinema. Cocktails overtook beer as the drink of choice among women amid shows such as the now defunct Sex and the City, which depicted four single women sipping Cosmopolitans in the latest Manhattan nightclubs.

Wine, meanwhile, became more fashionable after Sideways, a film about two friends on a stag outing in the vineyards of California.

"It is extremely difficult to recruit new customers to stout, and it seems Big Brother is experiencing that too," Van Loo said.

Heineken Ireland's new managing director, though, is determined to use his marketing flair to make the business a success in the face of continuing challenges to the domestic beer industry.

The Dutchman doesn't give up easily. As a young naval officer in the military service, Van Loo once travelled 250 kilometres from his home town to personally persuade the Navy selector to give him one of the top jobs, as a psychological assessor of potential officers.

Factfile

Name: Gerrit van Loo

Position: Managing director, Heineken Ireland

Age: 44

Career: He graduated from the Free University Amsterdam in 1987 with a masters in law and bachelor of business economics. After finishing his military service, Van Loo became a management trainee at Heineken.

Before taking up his latest post as managing director of Heineken Ireland, Van Loo spent four years as commercial director of the brewer's operation in Spain, where he oversaw a €100 million marketing budget.

Family: Married with one son and one daughter

Hobbies: He is a sailing enthusiast and an avid golfer when time allows. He also enjoys running and staying fit.

Why is he in the news? Heineken reported on Wednesday that beer volumes increased 3 per cent in the first half of 2006, or twice as fast as the overall market, and that the company increased its share of the domestic beer market.