Heineken Sub

It’s not news that Nespresso has been one of the great brand success stories of the past 20 years. For Nestlé, Nespresso was a bold line extension wrapped in a whole new business model. Instead of relying on retail, they gambled on a product ecosystem and subscription model to maximize recurring revenues. History has proven Nestlé to be visionaries, but it took them more than 20 years to arrive at a winning strategy.

These days, Nespresso machines are common fixtures on kitchen counters and home bars. Now, with an eye on the other end of the bar, Heineken and Krups are banking on a product called THE SUB. It’s a new approach to home-draught beer that mimics Nespresso’s business model in almost every way.

Heineken’s elevator pitch sounds like a good one: perfect, super-chilled beer on tap that stays fresh for 15 days. THE SUB unit itself is designed by Marc Newson. It’s a design piece with a slightly playful form factor that’s underlined by the product’s name.

To buy in to Heineken’s new business model, you need hardware (€249 RRP) and software. The software is a new-format refill cartridge that Heineken calls THE TORP (i.e. like torpedo). Customers can subscribe to buy TORPs – and earn rewards – from an extensive range of Heineken labels as well as limited-run, seasonal flavours.

TORPs

But considering the success of Nespresso and the size of Heineken, the roll-out of THE SUB has been strangely low-key. In fact, since Heineken’s announcement in October 2013, THE SUB only began a slow crawl into its launch markets at the end of last year. It’s now available in the Netherlands, France, Italy and Spain but it isn’t making big waves. A debut is mooted for the UK but little hard information is available.

The brand’s social channels are quiet and even recent news about new flavours, price campaigns and limited edition releases has been flat.

Interesting treatment choices for THE SUB's first ltd. edition release
A strange choice of treatments for the first ltd. edition release

So far, the collaboration with Marc Newson has proven to be the programme’s biggest talking point. Below the headlines, there has been criticism of the two-litre TORPs and doubt that the monogamous relationship with Krups can create enough momentum for the new system to reach tipping point.

For licensing partner Krups, THE SUB is an evolution of the BeerTender system it launched together with Heineken in 2005. Criticisms of that system largely centered on the freshness of Heineken’s 5-litre size, a narrow choice of flavours and the logistics of exchanging reusable kegs.

THE SUB and its recyclable TORP seem to be a rational reaction by Heineken and Krups to lessons from the past. But in trying to create a system that appeals to everyone, they may end up not satisfying anyone.

Nespresso’s closed ecosystem model relied on a fast and wide proliferation of hardware. Nespresso licensed its machines widely while monopolising the coffee pod business. Unlike Nespresso’s pods, Heineken’s flavours are available everywhere and in more economical formats.

Another famous ecosystem is iPod/iTunes. That was a much more exclusive model with Apple controlling both hardware and software. But Heineken’s one machine/one supplier system overlooks the fact that Krups isn’t Apple and home-pouring isn’t new.

It remains to be seen if THE SUB manages to do for beer what Nespresso did for coffee, or whether unopened TORPs are destined to catch dust like betamax video tapes.

Meanwhile, it’s 38º outside and we’d certainly be glad to receive a trial unit at the Brand Jam offices.