Strongbow Cider’s U.S. Sales Key to Heineken Stock’s Growth: Heineken N.V. (OTCQX: HEINY)

Only five months after the CEO of Heineken NV said the company couldn’t compete with craft beers in the United States, the company’s stock started trading on the OTCQX market.

On its first day out, Mon. Jan 27, 2014, Heineken N.V. (OTCQX:HEINY - News) share price closed at $31.86, up 6 cents from its close of $31.80 the previous day. The stock was heavily traded with 78,996 shares changing hands, nearly twice its three-month average volume of 44,824.

Countering Craft Beers

During a conference call to analysts in 2013, Heineken CEO Jean-François Van Boxmeer stated that the Netherlands-based company’s flagship brand could not directly compete with a craft beer sector that has hogged U.S. beer growth over the past decade, according to Beverage Daily.com.

Van Boxmeer went on to say that instead of trying to compete directly with the phenomenon of craft beers in the United States, the company would grow its market share with its Strongbow cider brand. Heineken’s Strongbow Gold is an alcoholic apple cider that was launched in Italy in 2011 and has enjoyed some success. Heineken has been expanding the cider to new markets as a natural product for quenching the growing demand for sweeter tasting, natural based alcoholic drinks.

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Mexican-Beer Strategy

In a question-and-answer session with analysts, Van Boxmeer said the brewer would grow its cider sales in the United States using the same marketing strategy it used to grow the sale of its Mexican beers at double digit rates in the U.S. over the last eight years. That strategy consists of targeting only the “upper side” of the market because the company doesn’t have the scale to compete in the mainstream, he added.

Cider Sales Booming

Focusing on growing hard-cider sales in the United States appears to be a forward-thinking strategy.

Sales of the top-10 cider brands in the United States grew by 62.6% to 9.58 million, 2.25-gallon case depletions in 2012, according to Impact Databank. The fact is that most major brands enjoyed double-digit increases. Strongbow sales saw a 9.1% increase to 867,000 cases in 2012.

Making a strong foray into the burgeoning U.S. cider market is not a sudden move by Heineken. The brewer has been carefully plotting its strategy since 2008 when it acquired Scottish & Newcastle, giving Heineken ownership of Strongbow, which has already captured 24% of the global share of cider sales.

Hard-Cider Competition Brewing

However, Heineken is not the only brewer planning to exploit the growing U.S. cider market, Anheuser Busch Inbev SA (NYSE:BUD - News) also has also been taking steps to ensure its footprint. According to a memo published by Just-Drinks, Anheuser Busch is planning to launch a hard cider, called Johnny Appleseed on or about Apr. 7, 2014. The product will target 21-to 27-year-olds. In addition, MillerCoors has confirmed it will roll out a hard cider product in the United States this year, according to Just-Drinks.

Find out what could be the best investor’s move when it comes to HEINY by getting the complete report here, or by cutting and pasting the following link in your Web browser:

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Let the Cinder Wars Begin

It appears that Heineken’s foresight and advance planning has put it in the lead in the cider race for now. But there can be no doubt that the ultimate success of its hard cider sales in the United States will greatly affect the share price of its stock.

Currently, Heinken is the number one brewer in Europe and the number three brewer by volume in the world. With recent acquisitions in Africa, India, Asia and Latin America, the company continues to increase its presence within emerging markets, which will contribute to its ongoing growth.

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