What`s Brewing Seminar — HEINEKEN Americas

What’s Brewing Seminar
HEINEKEN Americas
HEINEKEN strategy to win in Americas
0New York 19 November 2015
Marc Busain
1
2015
Region President Heineken Americas
2011
Managing Director Cuauhtémoc Moctezuma
Heineken Mexico
2003
Managing Director Positions in Burundi, Egypt and France
2001
Finance Manager, Heineken Netherlands Supply
1996
Started with HEINEKEN, Finance Manager
Democratic Republic of Congo
Agenda
HEINEKEN strategy to win in Americas
1 Revisiting the positive Americas region characteristics
2 HEINEKEN profile in Americas and contribution to HEINEKEN group
3 Regional strategic priorities
4 Key markets Update:




Mexico
US
Brazil
Canada, Caribbean and Export
5 Summary
2
1. Diverse markets with untapped growth potential
With Beer Per capita consumption varied and low relative to more developed regions
Per Capita Beer Consumption (2014)
75
Western Europe
60
45
30
15
-
HEINEKEN countries
3
Source: Canadean 2014.
Non HEINEKEN countries
1. Favourable population dynamics
Region benefits from a younger average population base
% population under the age of 35 (2015 forecast)
73%
Population growth
2015F-2020F
in percentages
12
71%
6
70%
10
67%
7
63%
7
62%
5
62%
6
62%
3
62%
7
60%
8
HEINEKEN countries
4
Source: UN World Population Prospects, Canadean.
Non HEINEKEN countries
59%
4
59%
1
56%
6
56%
4
56%
4
56%
4
54%
6
51%
4
48%
-5
46%
4
43%
5
Europe average
41%
1. Compelling Premium beer opportunity
With Premium beer share of market still relatively low in a number of countries
35%
% PS of total beer market 2014
34%
Europe average 31%
23%
16%
16%
LATAM average 15%
15%
11%
10%
9%
8%
8%
7%
5%
5%
2%
Panama
Total beer
market size
2014 (MHL)
5
3
USA
231
Chile
Canada
Peru
Ecuador
Costa Rica
Argentina
Brazil
Guatemala
7
20
14
7
2
18
143
2
Source: Canadean 2014.
Premium beer segment defined by Canadean
as >= 115 price index.
HEINEKEN countries
Non HEINEKEN countries
Honduras
2
Venezuela
22
Mexico
69
El Salvador Nicaragua
1
1
1. Resulting in favourable regional volume expectations
Key Markets Beer consumption (mhl)
 Favourable demographics with positive
population growth and age profile
CAGR
600
+0.3%
+2.7%
Andean*
400
Other LATAM
+3.1%
+2.8%
+1.7%
+2.4%
-2.4%
-1.3%
+0.2%
+1.4%
Mexico
Canada
200
HEINEKEN Americas is well positioned to
capture growth
0
Source: Canadean.
*Andean includes Venezuela, Peru, Colombia, Equador.
+2.6%
+1.7%
markets
6
Brazil
+1.7%
 Significant income growth in key developing
 Premium expansion in mature markets where
Argentina & Chile
+1.8%
 Positive beer market fundamentals with low
beer per capita consumption and Premium
segment share of market relatively low
CAGR
2010
2014
USA
2020F
2. Americas is an important contributor
to HEINEKEN’s business
Group beer volume
Heineken®
8.9mhl
28.7%
29.5mhl
7
Source: HEINEKEN Annual Report 2014.
Consolidated EBIT
24.9%
2. HEINEKEN Americas Footprint
A collection of highly diverse markets and business models
# HEINEKEN Premium market share
United States
Canada
Puerto Rico
Haiti
#2
#1
#1
French West Indies
Jamaica
#1
#1
Suriname
St. lucia
#1
#1
#2
Mexico
Central America & Caribbean
#2
#1
Costa Rica
#1
Brazil
#2
Panama
#2
9 Operating Companies
6 Joint Ventures/ Associates
40+ Export Markets
8
Chile
Argentina
#1
#2
Source: Nielsen and Canadean
Premium beer segment defined by Canadean as >= 115 price index.
Bahamas
#1
2. Americas regional brand overview
A premium led brand portfolio complemented by strong mainstream brands
Mexico
INTERNATIONAL
AND DOMESTIC
PREMIUM
UPPER MAINSTREAM &
MAINSTREAM
Coors1
Dos Equis
Sol
Indio
Tecate
(LOWER) MAINSTREAM
Superior
Carta Blanca
Kloster
Brazil
Canada
Chile
Heineken®
Amstel Light
Strongbow
Lagunitas2
Dos Equis
Red Stripe
Newcastle
Heineken®
Sol
Desperados
Xingu
Heineken®
Strongbow
Dos Equis
Newcastle
Heineken®
Sol
Royal Guard
Heineken®
Amstel
Imperial2
Budweiser2
Cristal2
Escudo2
Schneider2
Tecate
Represents Licensed brands.
Partner brands.
®
Heineken may include Heineken Light.
1
9
Heineken®
Strongbow
Bohemia
Affligem
USA
2 Represent
Kaiser
Bavaria
Argentina Panama
Palermo2
Bieckert2
Haiti
Bahamas
Heineken®
Heineken®
Heineken®
Guinness1
Guinness1
Guinness1
Panama
Soberana
Prestige
Kalik
Eclipse
St Lucia
Heineken®
Strongbow
Desperados
Guinness1
Piton
Jamaica
Heineken®
Guinness1
Red Stripe
Dragon
Malta
Talawah
2. Expanding our Footprint in the Craft Segment…
and the Caribbean
 Acquired 50% shareholding in Lagunitas
 5th largest craft brewer in the US by volume
 Lagunitas IPA is largest IPA Brand by volume
in the US* and c.56% volume
 IPA segment, fastest growing category in craft
 Will continue to be run by current management
 Current volume predominantly in the US
 Exciting opportunity to expand through
HEINEKEN’s global platform
 Acquired Diageo’s 57% stake in D&G taking ownership to 73%
MTO launched 6 November for remaining shares
 D&G leading share in Jamaican beer market
 Red Stripe c.40% volume of D&G brand portfolio and the #1
brand in Jamaica
 Red Stripe c.50% in Jamaica, with large international markets
including UK, Canada and US
 Further international potential given heritage and distinctive
attributes
10
 Strategic asset within key growth market
* Source: Nielsen
2. With Topline driving solid EBIT growth
Group beer volume
Consolidated revenue
Consolidated EBIT (beia)
In mhl
In €m
In €m
CAGR +4.8%
2010
11
CAGR +7.8%
2014
2010
CAGR +8.8%
2014
2010
2014
3. Regional strategic priorities
Defined strategy to capture regional specific opportunities
12
1
2
3
4
5
6
WIN IN
PREMIUM
LED BY
HEINEKEN ®
LEAD BY COOL
MARKETING
AND
INNOVATION
SHAPE THE
CIDER
CATEGORY
DRIVE
END2END
PRODUCTIVITY
BE
COMMERCIALLY
ASSERTIVE
BREWING
A BETTER
WORLD
Global strategy to exploit region specific opportunities.
1
Win in premium led by
®
Heineken
Gaining momentum with Heineken® in the US, Mexico and in Brazil
Heineken® turnaround in US
Yearly Growth
Mexico: Heineken®
in mhl
Brazil
Success Story
HEINEKEN
+48% 4Y CAGR
CAGR +52%
Back to positive
growth in 2015
Share of
Premium
17%
14%
13%
Volume
development
in khl
2007 2008 2009 2010 2011 2012 2013 2014 L52W
2015*
13
* Note: L52W ending 10/03/2015
2010
2014
10%
6%
'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 14
1
Heineken Light – ‘best tasting light beer in the US’
Video
14
2
Lead by Cool marketing and innovation
Marketing is driving consumer pull for our brands and innovations delivering sustainable top line growth
Cool Marketing
Innovation Rate
 Americas has almost tripled revenue
from innovations over the last 2 years
(to c.6%)
 Leveraging global innovation
successes eg Radler
 Focus on margin enhancing products
which support top line ambitions
15
3
Shape the Cider Category
Focus on Strongbow in the US is rapidly gaining momentum, driving double digit volume growth
 Distribution rights transfered from Vermont
Hard Cider Company (C&C) to in house from
1 January 2013
2014 % Volume Share
7%
3.4%
 Fastest growing cider brand in the US
Beginning of the
year
 #2 market share
 Depletions up ytd September over 40%
 Best Tasting hard Cider
 Strong sampling increasing brand awareness
 Flavours addressing consumer demand for
variety and choice
HUSA and Canada account for 91% of volume.
16
Nielsen Grocery through 01/03/2015, Brand Franchise.
End of year
3
Strongbow
Video
17
Driving E2E Productivity
4
To deliver increased efficiencies at the business
Productivity Improvement
15
6,000
 Ongoing productivity gains and cost saving initiatives have
improved costs as % of revenue.
 Main cost saving initiatives generated over €234m savings
10
4,000
5
2,000
2012
2013
Productivity per mhl / FTE
18
2014
2015YTD
Production FTE’s
(excluding IPO synergies) in the course of three years (2011-2014):
 Supply Chain: FTE headcount optimization, Consumer value
Engineering, Energy and Electricity Savings, Network
Optimization
 Commerce: FTE headcount efficiencies, Retail operation
improvement in Mexico, Sponsorship improvements, Agency
Fees Savings
 Support: FTE headcount optimization
5
Be Commercially Assertive
To drive excellence in outlet execution
Draft Systems
Right Channels and Customers
Excellent Outlet Execution
19
6
Brewing a Better World
Sustainability is embedded in HEINEKEN Americas strategy
Safety First
Responsible
Consumption
 Eco-efficiency: Tangible
 Cool@work & alcohol policy
 Extending safety from brewery
to sales & distribution
including road safety
 Company wide Safety Strategy
(the 5C’s) and 12 Life Saving
Rules
20
Sustainability
 Deliver on global industry
commitments
 10% media spend target on
Enjoy Heineken® responsibly
targets for energy and water
reduction
 Water stewardship initiatives
in Mexico with local
community for brewers for
sustainable water supply in
scarce areas
Sustainable
Sourcing
 Haiti sorghum projects with
Clinton initiative to stimulate
local farmers harvest
 Ongoing compliance to
Supplier Code Procedure
4. HEINEKEN Mexico
Attractive growth prospect for beer
Facts




6 Breweries 
27.8 mhl beer
41.5% SOM
#2 Position
 HEINEKEN’s largest market
 Positive underlying market fundamentals,
Main Brands
including population growth, urbanisation,
growing middle class
 Beer the alcoholic beverage of choice (at 94%)
 Exciting premium segment potential, still
underpenetrated
 Applying a targeted regional strategy to drive
growth
 OXXO partnership and development of own
stores (Six) strengthening commercial
execution and maximising volume and value
21
4. HEINEKEN Mexico
Strong Topline growth since the acquisition
Strong national portfolio with
representation across varied price points
Premium
Strategy continuing to deliver
impressive growth
Revenue1
2010-2014
€M
CAGR +6%
Operating profit (beia)1
2010-2014
€M
Operating profit (beia)
margin2 2010-2014
€M
CAGR +20%
20.4%
Sub-Premium
12.9%
Mainstream
Below Mainstream
2010
2014
2010
Value
22
1 Includes domestic beer operations only
2 Includes domestic beer and export operations
2014
2010
2014
Tecate
Video
23
4. HEINEKEN USA
Portfolio Strategy driving improved share
Facts
 Economic country indicators are improving
although overall beer market flat
 9 Distribution Centres &
6 Offices (White Plains HQ)
 9.7 mhl beer
 4.4% SOM
 #2 Premium Position
 Upscale outperforming led by craft, Mexican
Main Brands
brands and cider
 Femsa transaction brought in complementary
Mexican brands Dos Equis and Tecate,
which are growing high single digits
 Heineken® brand declined since 2008
and now stabilized
 HEINEKEN ideally placed to outperform
24
4. The Mexican brands are driving market share...
With outperformance vs the US market since 2012
Dos Equis and Tecate in the US
+6.5%
CAGR OG
Tecate Original
-5% CAGR
Tecate Light
34% CAGR
Heineken US Brand split 2005
Heineken US Brand split 2014
Others
Others
Mexican
brands
Heineken
25
Dos Equis
14% CAGR
Heineken
2010
2011
2012
2013
2014
Dos Equis
Video
26
4. HEINEKEN Brazil
Driving increased share by winning in the Premium segment
Facts




 #2 in premium segment with Heineken®
 Heineken® complemented by premium
Main Brands
6 Breweries
12.1mhl Beer
9.4% Market share
#3 Position
portfolio
 Exciting potential longer term, despite
near term economic challenges
Premium
SOM
5%
5%
10%
11%
7%
6%
13%
14%
2012
2013
8%
12%
9%
bottlers provides scale
17%
6%
2010
2011
Premium SOM
27
Source: Nielsen, YTD August 2015.
2014
 Expanding capacity with 7th brewery
 Strategic partnership with Coca-Cola
2015
Heineken® SOM of Premium
2016
2017
Heineken Door Lock
Video
28
4. Canada, Caribbean and Export Markets
Diverse and profitable markets offer further opportunity for growth
Solid Regional Contributor
2014 Data
Group Beer
11,272 km
Revenue
5 Brewery markets
4 Joint Ventures / Associates
40+ Export Markets
29
Main Countries
5. Summary
What’s Brewing Seminar — HEINEKEN Americas
 Positive outlook for future Americas beer market growth
 Premium expected to outperform overall beer category
 Clear strategy in place to win in the region
 HEINEKEN Americas well placed to capture growth and
continue to drive share
30