The Scotsman Interview with David Forde

4th November 2013

The Scotsman

Interview with David Forde by Martin Flanagan

4th November 2013


David Forde, who became the managing director of Edinburgh-based Heineken UK in May, is virtually Darwinian in his views on the survival of the fittest, writes Martin Flanagan.

He took on the job in Scotland after holding the same position for the Dutch brewing giant in austerity-racked Ireland from 2009. So he is well used to the testing climate for consumers on both sides of the Irish Sea.

But dealing with the downturn and the fragile, early stage of recovery is not the only challenge facing Forde. He acknowledges that Heineken and its rival brewers are operating in mature beer markets across Europe compared to the robust growth in many emerging countries.

These factors can be overcome by “creativity and innovation”, the new man says. “We are only limited by lack of creativity. As long as you are creative and innovative there are always new opportunities for growth.

“There is nothing that beats tough competition. It can be inspirational. We needed a period of tough times to get the beer industry to up its game in terms of innovation.”

The philosophy chimes with his refusal to join the shrill chorus of pub companies – of which Heineken is also one – that claims their supermarket beer-selling rivals have an unfair trading edge in that they can price low because they do not pay VAT.

“Supermarkets are customers,” Forde says firmly. “We should never forget they are customers which attract many of our other customers into their stores. At the end of the day the consumers vote with their feet and their pound. Customers are the ultimate custodians of choice.”

Heineken, the UK’s biggest brewer after the joint takeover with Denmark’s Carlsberg of Scottish & Newcastle Breweries (S&N) in 2008, has responded “innovatively” to the various market pressures.

This has ranged from a string of new products, including fruit-flavored ciders such as blackcurrant Bulmers – a category where it is market leader – to colder beer, condensation-flecked dispensers in pubs, schooner-shaped glasses, and a targeting of wine drinkers.

Forde says this constant reinvention of the basic beer format will continue, not least to try and woo female customers, who in a changing society are seen as a key cider constituency for Heineken’s brands such as Bulmers.

With a hint of the marketing background that many bosses often have in their CVs, Forde enthuses: “Fruit flavouring of cider in particular has been a massive success. It has been very successful in targeting wine drinkers to Bulmers. You add a hint of grape to cider and you head into the world of burgundy category.”

A new successful product that has been rolled out is Radlers Foster’s, a lower 2 per cent alcohol by volume beer.

A keen golfer, the Heineken UK boss says with a laugh: “It’s a 10th tee drink, and a good drinking in moderation proposition to consumers.”

Back on that general consumer backdrop, had he noticed much difference between European Union bailout recipient Ireland and the UK?

“Brewing is a good barometer of an economy, and I think there is a sense the UK consumer is struggling,” he says. “I don’t see that improving dramatically short-term despite the apparent stabilisation among corporates, the banks, the City.

“There may be more of a sense things have bottomed out in Ireland. It had its seventh austerity budget recently, and is probably further down the (fiscal) restructuring road than the UK.”

He says that it is understandable UK workers generally have been seeking pay rises after a long downturn and rising inflation.

However, he warns that the UK’s competitiveness against European and global rivals is at risk if government and business do not keep a constant eye on anything that impacts upon the cost base.

“You have to look at how competitive you are to your peers, not compared to last week or last month,” Forde says.

Asked about his management style, Forde gives the stock business answer that he prefers to be collaborative. But he adds he is “able to confront (colleagues) when necessary”.

He says a key touchstone for him is deliverability of what has been agreed.

“It is about the quality of execution. As they say, a bad strategy well executed can be better than a good strategy badly executed.”

And what happens if execution is faulty on occasion? Forde grins: “That’s a difficult meeting. As it is when I am seeing my bosses. I have the same, it’s healthy.”

There was famously good news for the brewing industry in Chancellor George Osborne’s last Budget when he scrapped the beer duty escalator that automatically raised the tax paid on beer by 2 per cent above inflation each year.

He was reportedly influenced by a net 26 pubs closing each week in the six months run-up to the Budget in these difficult economic times.

But Forde, sitting in his London offices off Oxford Street, makes it clear he is not falling over himself with gratitude for the concession.

With heavy irony, he says: “There is still more to do (in relaxing the beer tax regime). I have travelled round the world and I have never seen UK levels of excise duty.

“You can be paying £1 in every pint in tax. In terms of (high levels of) excise duty, the UK is world-class.

“You have to question the diminishing returns of that. What the UK consumer is paying is remarkably disproportionate.”

Warming to his subject, Forde says Heineken and the other brewers are great supporters of the UK economy, if nothing else for their use of raw materials.

He cites the likes of malted hops, barley and apples from farmers, water from leading councils, and gas and oil from the big energy suppliers.

Asked why the government has not therefore acted more sympathetically on taxing the beer industry, Forde answers: “It’s possible we are seen as a soft touch, and that somehow they have linked alcohol misuse with taxation. But that does not work at all.”

Away from work, apart from golf Heineken’s man in the UK is a keen runner, sometimes training for marathons by running up Arthur’s Seat in Edinburgh.

Along with more than 30 Heineken colleagues, he recently took part in the Royal parks half-marathon in London, raising £35,000 for charity.

And the weekend just gone Forde ran in the New York marathon. After which, one assumes, he will have enjoyed a glass of one of Heineken’s products.