Business interview: Stefan Orlowski Heineken UK's managing director STEFAN ORLOWSKI, boss of drinks giant Heineken UK, has no truck with those who believe emerging markets are the only game in town for the industry in tough economic times. Such thinking has it that as beer consumption is in decades of decline in Britain and western Europe, such "mature" markets are mainly there to throw off "safe" money to drive expansion in the likes of Africa, Latin America and Asia, writes Martin Flanagan. Even Orlowski's boss, Heineken chief executive Jean-Francois van Boxmeer, revealed earlier this year that emerging markets now contribute two-thirds of group volumes and 30 of the 39 acquisitions the Dutch brewing major has made in the past decade. "In any global business there's always an allocation of funds that looks for the best returns for the business and shareholders," Orlowski, a Polish Australian, says. That's balanced with the risk and also between short-term and long-term strategy. It's not a one-dimension game. He cites the decision by the Heineken group to splash out more than £400 million at the end of last year in buying more than 900 Galaxy estate pubs it was at that time running in Britain for then­‑owner, Royal Bank of Scotland. It made Heineken UK, the former British arm of the old Scottish & Newcastle Breweries (S&N), one of the biggest pub groups in the country with a stable of about 1340 outlets - about 300 in Scotland. Orlowski is keen on the link between brewing and pubs. It was an enormous amount of money to spend. But it gives us an insight. Through the pubs business we are plugged into the front line. We have to give reasons to the group board for deals like Galaxy, but there are circumstances and reasons that still make this part of the world attractive [for capital investment]. Appointed as managing director of Heineken UK in July 2009, the year after the Dutch group combined with Carlsberg of Denmark to carve up S&N, Orlowski had been group commerce director based in the Netherlands from 2007. Between 1998 and 2006, he had been employed by the brewer in senior management roles in central and eastern Europe, including chief operating officer for the region. Orlowski says the strategic logic of the joint takeover was strong, but admits ruefully that the timing, with hindsight, was unhelpful. The global financial crash was just about to strike and then there was the smoking ban in pubs. "It has been a very tough economic time since," he says. That has meant unfortunately we have had to make sure the business in the UK was fit for purpose in those circumstances. Extensive, painful restructuring followed, including brewery closures, back office and Edinburgh HQ cuts, and the sale of the Waverley TBS wholesaling business that has seen staff numbers fall by nearly half from 4600 at the time of the S&N takeover to 2400 now. However, he says the workforce level has been "stable" in the past year in the UK despite the headwinds of a pretty dire British spring and summer, and the impact on grain prices of the American drought. Orlowski sees the glass as half full, however. He is almost evangelistic in echoing the dictum of Alfred "Freddy" Heineken, the late former powerhouse chairman of the Heineken empire, who claimed that he was in the business of selling "feelings" rather than merely drinks. Orlowski says: "The moment in the early evening when someone has left work and goes for a drink might be the best moment of their day. People are under a lot of pressure, with frantic lives. Having an enjoyable drink, with good service at the bar, can be a real positive. Orlowski says a key dynamic for the UK beer industry is to understand and address the sociological changes that have seen the beer customer base change radically from "a bunch of blokes" drinking at the bar to more mixed-sex drinking "often at home and often with food. The old beer industry model is no longer prevalent. New social drinking patterns make him very keen on cider, where the company has a clear 50 per cent market-leading share worldwide. With brands such as Bulmers and Strongbow in the Heineken stable, he adds: "Cider has been in growth for the past 25 years. It offers a more mixed company social drink. Orlowski will also continue to also plough marketing spend behind other leading Heineken UK brands, including Kronenbourg and Foster's lagers and John Smith's Bitter, helped by sporting sponsorship that includes the recent London Olympics and the Uefa Champions League. In more contentious territory, Orlowski does not duck the issue of minimum prices as the Scottish Government confirmed at the weekend it would delay introducing the measure until a legal challenge to it has concluded. He brands minimum pricing a "nuclear option" that punishes responsible drinkers for the sins of the comparatively few. "We recognise there's an alcohol misuse issue with a minority of drinkers, but I don't believe minimum pricing will resolve that," he says. It's a mass measure that applies to the total populace, the majority of drinkers who are drinking sensibly. Household income purchasing power is down 7 per cent. Minimum pricing will particularly hurt those on lower incomes. He has put his money where his mouth is, visiting the underbelly of some down-and-out sites and talking with some of the inhabitants, and is convinced minimum pricing is not best route out of their hell. Orlowski also cites Heineken UK withdrawing high 7.5 per cent strength drinks such as White Lightning and Strongbow Black ciders in recent years as recognition of a problem. "I don't want to do the wrong thing," Orlowski says. I'm just a custodian for a time. I want to pass a positive legacy to my successor. Born: Poland, 31 August, 1966. Education: Melbourne, Kingswood College, Monash University BA law degree (Hons). First job: Mowing nature strips for $5 an hour and orderly in a hospital. What car do you drive? Almost forgotten how to drive now. Foot, tube, Boris bike. Kindle or book: iPad with Kindle app on it. Can't live without? My wife and two boys. Favourite places: Any place in great company. What makes you angry? Ignorance and arrogance. Best thing about your job: Beer, cider and pubs are about bringing people together, contributing to some of the best and most enjoyable moments in their day. Favourite tipple: Lager, of course Heineken. Ale - Deuchars IPA.