If you don't associate Heineken (PK: HINKY) with dogfighting, then you haven't browsed the Internet in the past few days.
An image that appears to show banners for the Dutch brewer's beer prominently displayed at a bloody dogfight has gone viral. Enraged animal activists have responded with online petitions, angry blog posts, complaints on Heineken's Facebook page, and global threats to boycott the brand.
The image shows two dogs fighting inside a caged arena while a videographer films the event and a large audience watches. Heineken banners are prominently displayed around the perimeter of the fight.
Questionable sporting event
Heineken banners dominate the dogfighting ring.
This is the second strike for a brand that drew the ire of animal lovers worldwide in 2008 for its sponsorship of bullfights in Portugal. Though bullfighting may be viewed as a questionable sport, far fewer people can even stomach the idea of calling dogfighting a sport. But some can. The Humane Society of the United States estimates that there are at least 40,000 dogfighters in America.
Dogfighting is illegal in all 50 states but is still acceptable in some parts of the world. It's hard to understand why. The so-called blood sport pits two dogs against each other in a ring. The dogs literally bite and rip the flesh off one another as onlookers cheer, scream, and place bets on which dog will win, according to the Michigan State University College of Law.
Heineken had described the bullfighting promotion -- which included the use of a local brand's logo on posters and banners in the Campo Pequeno bullring in Lisbon throughout the 2008 season -- as "part of the company's business." But it was not surprising when the world's No. 3 brewer quickly disassociated itself from the dogfight. Yesterday, it said on its international Website that it was "shocked and disappointed" by the image, and that it "is not and would never knowingly be associated with illegal activities, including those involving cruelty to animals."
Heineken called the image "a gross misrepresentation of our brand," and it warned that its legal team was investigating the matter.
Today, the same day it released quarterly earnings, Heineken updated the statement to include details about an activity it called a violation of "company and brand rules and -- more important -- against our company values." It confirmed that the image was real (not a Photoshop fake, as some supporters initially suggested). A nightclub in Mongolia "hosted a dog fight of which we had no knowledge and were not involved in any way," the brewer said. "The venue owner has verbally confirmed that Heineken banners are visible in the pictures because the previous evening the club had been decorated for a promotional event and he had failed to remove the banners once it was over. This event was in no way related to the dog fight."
The whole incident raises important issues for public companies, including the importance of monitoring and responding to social media postings, as well as the risks of doing business in emerging economies, where cultural norms and standards may differ from those in the US or Western Europe.
Despite the bad publicity from the dogfighting, today Heineken reaffirmed its focus on high-growth markets like China. It reported a rise in first-quarter net profits due to the growing popularity of its beers in all regions except Western Europe. Revenue surpassed analysts' expectations, largely because robust volume growth in emerging markets eclipsed a slight decrease in Western Europe.
Heineken has built its position in the Asia-Pacific region through Asia Pacific Breweries (APB), a Singapore joint venture with Fraser & Neave. APB operates breweries in more than a dozen countries, including Mongolia, Thailand, China, and New Zealand. In February 2010, it acquired breweries in Indonesia and New Caledonia.
Last year, APB reported 15% volume growth in Mongolia's "robust beer market." That market "grew on the back" of the country's economic growth.
As companies expand their global footprint, maybe they should take the steps to protect their brand and reputation in the process. It seems that responsible public companies that respect their business, as well as their shareholders, could capitalize on new markets without offending their customer base.
The viral dogfighting image is one of about a dozen photos posted on a Mongolian news site about a 2010 dogfighting tournament that took place in a nightclub in Ulaanbaatar, the capital of Mongolia. The bar appears to be Elite, a popular spot for meetings and events. You can see what appears to be the same venue in the following video. The lighting distorts the images, but you can see what appear to be the same Heineken banners, as well as green bottles of beer in the refrigerated case in the background.
The fact that this nightclub is also used for dogfighting may have surprised executives in Holland. But it can hardly have come as a surprise to the local distributors or anyone associated with the brewery in Mongolia. Someone from the home office should have made it clear what kinds of events and activities Heineken felt comfortable sponsoring -- directly or indirectly.
Give Heineken thumbs up for responding to the global outcry. But question the management (or lack of it) that allowed the incident to occur in the first place.
You can't stop spectators from drinking your beer at a sickening event (because maybe they carried it in with them). But you can and should stay on top of the type of businesses you supply with product and extensive advertising to make sure you get the type of publicity you really want.
If there is a club in some part of the world that hires, say, 13-year-old pole dancers -- perhaps because it is legal there -- a company based in a place like North America or Europe would probably not want it's banners hanging in that place. It is offensive to the majority of its existing customers and shareholders.
You wouldn't expect the CEO to know it was going on in every club worldwide, but when you start operations in a given location, a company could investigate local customs and behaviors, decide how they mesh with its values and beliefs -- and make it damn clear to all employees in that area that the company did not want to have any association with X, Y or Z.
I actually don't think that Heineken can be held accountable for this, there are many bars and clubs throughout the world that might have activities that might not be considered legal in other countries or that might be unattractive to many populations. Unless they specifically had knowledge of the events where their banners are displayed they can't police every pub in the world. I am certain that there are Budweiser signs and other alcohol signs in gentlemen's clubs across the US, should we also say that they are supporters of everything that happens in these clubs. These videos could easily be placed on you tube and have some similar implications.
The fact that Heineken waited until the photo went viral to address the issue bothers me. Someone who was associated with Heineken and lived in Mongolia saw these images in 2010. They were, after all, published on a Mongolian news website. Did they think it was OK and fail to alert management? Did they alert management -- and management did nothing? Either way, it shows something was wrong.
I can't imagine what goes into the training to make these animals wild enough to fight to their death. And even the animal who wins must be in so much pain and agony. Heineken would do well to try and understand how different cultures and societies work when they enter new markets. Even though they have to concentrate on winning the potential customers in those markets they need to keep their brand image intact without offending it current customer base. Prevention is always better than trying to do damage control after the fact.
It reall is disturbing to think of people forcing animals to fight.I really hope that Heineken takes strong steps to correct this, and that they take steps to make sure they do not do business with establishments that support these kind of events.
I think the upside here is that they came right out and said that the banners were theirs and explained the situation.
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