Welcome - Heineken

Welcome
Nigeria | November 2012
Heineken N.V.
Leader in Affordability
Boudewijn Haarsma
Managing Director, Consolidated Breweries Plc
Consolidated Breweries | November 2012
Heineken N.V.
[[[MOVIE]]]]]
[Short movie about Savings segment in Nigeria]
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Agenda
Leader in Affordability
1 History and Mission
2 The ‘savings’ market for
beer and malt-drinks in Nigeria
3 Profile and performance
4 Our Priorities for Action
4
Consolidated Breweries: History and key milestones
Consolidated Breweries Plc
1992
1991 BGI/Castel sells shares to Leventis
2000 HEINEKEN Technical Services
Agreement; HEINEKEN 23.5% of
shares, Leventis 23.5%
2005 Leventis sells shares to HEINEKEN,
resulting in HEINEKEN obtaining a
50.05% controlling interest in
Consolidated Breweries
Continental Brewery Ltd, Ijebu-Ode, 1979
2009 Acquisition of malt factory
DIL/Maltex (98%)
2011 Acquisition of Williams Dark Ale
and Benue Brewery Ltd.
(85%; State owns remaining 15%)
Eastern Brewery Ltd: Awo-Omamma, 1980
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2012 Acquisition of 57% stake in
Champion Breweries Plc. (State owns
10%, 33% publicly listed)
Consolidated Breweries: Board Composition
& Shareholder Structure
10 Board members including:
 4 HEINEKEN Non-Executive Directors
 1 Executive Director (Managing Director)
Shareholding Structure (as at 30 June 2012)
35,9%
53,5%
10,6%
HEINEKEN
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Odutola Holding
1353 Other shareholders
A clear Mission Statement
“To produce and market high quality beverages at affordable prices to the
Nigerian consumer, with an equal regard for shareholder value, customer
satisfaction and employee welfare in a framework of good corporate
citizenship.”
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Affordable prices: at least 20% below market leader (Lager)
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Cost leadership: with a variable cost target below that of the market leader
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Respect for quality: in production, branding & best value for money

Balanced benefits: customer, shareholder, employee
Agenda
Leader in Affordability
1 History and Mission
2 The ‘savings’ market for
beer and malt-drinks in Nigeria
3 Profile and performance
4 Our Priorities for Action
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High relevance for affordable beer in
Nigeria
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61% live on less than $1 a day
and income inequality is rising
A Nigerian needs to work for
2 hours to buy 1 bottle of beer
Affordability allows more people
to enjoy beer, or enjoy beer for longer
Affordability is a concern of
key stakeholders
Trading ‘down’ from
mainstream/premium occurs
significantly less than trading up from
local brews and cheap spirits to real beer
Sources: Economic data: National Bureau of Statistics, Worldbank;
Stakeholder analysis: GBI Beer Industry Reputation Survey;
Down/uptrading: internal market research
Trading up from ‘home’ brews and
cheap spirits (shots) to real beer
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GIN
RUM
SCHNAPPS
BITTERS
N 40-50 (3 cl)
N40-50 (3 cl)
N 30-40 (3 cl)
N 40-50 (3 cl)
PALM WINE
BURUKUTU
PITO
SHEPPE
OGOGORO
N 100-130 (75 cl)
N 90-110 (75 cl)
N 70-90 (75 cl)
N 30-50 (3 cl)
N175-200 (75 cl)
Source: Internal market surveys 2012
N 150
(60 cl)
‘Home’ brews compete on more than just price
• Heavy drinks
• Home brews
• Medicinal value
• Low alcohol
• High alcohol
• Part of broader
repertoire
• High Alcohol
STRENGTH
REWARD
SHEPPE
PALM WINE
35%-40% ABV
3%-5% ABV
ESCAPE
NUTRITION
OGOGORO
BURUKUTU
45%-65% ABV
3%-6% ABV
• Used for effect
•Low Consumption
Repertoire
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• Social drinking
•Nutritional value
& goodness
•Filling & thick
•Tradition

Motivation: cultural/functional (34%), convenience (20%), taste (19%), price (19%)
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Perceived issues: harms health, causes anti-social behavior, no quality control

Usage: 24% of population consumes low ‘informal’ alcohol more than once a year

Estimated volume: 15-25% of beer market (and declining)
Sources: Total Nigeria Beverage study 2010; Beer Reputation Survey 2012, internal estimates
Savings is an important and growing segment
in beer and malt
Market for Lager, Stout and Malt
Premium
80%
Branded beer
58%
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Mainstream
18%
Savings
15%
Informal
(low) alcohol
Source: HEINEKEN
Market Contribution (% of Total Market)
9%
= Volume of segment (hls)
70%
Mainstream
60%
50%
40%
30%
Savings
20%
Premium
10%
0%
0%
5%
10%
Market Growth
(Volume CAGR 2004-2011)
15%
Consolidated Breweries is the leader in Savings
with the broadest brand portfolio
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Consolidated Breweries exclusively competes in savings
Widest brand offering across beer segments
SAVINGS
Recom. price
Consolidated
Breweries
LAGER
N130-150
STOUT
N170-180
N 100 (33cl)
MALT
N 80
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Source: Internal market surveys Oct. 2012
SAB
Nigerian
Breweries
Guinness
Discount vs Market
leader:
25-35%
~35% (60 cl)
~45% (33 cl)
20%
Agenda
Leader in Affordability
1 History and Mission
2 The ‘savings’ market for
beer and malt-drinks in Nigeria
3 Profile and performance
4 Our Priorities for Action
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Consolidated Breweries has national
brand coverage in the savings segment
Consolidated Breweries:
Volume split by brand (2011)
Maltex
Hi-Malt
Williams
Turbo
King
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'33' Export
Clearly differentiated brand positioning
to meet unique consumer needs
Good quality beer for a ‘pocket friendly’ price.
A deserved award when unwinding with friends,
after a hard day’s work
An authentic dark ale resembling the strength
and power of real men
A stylish dark ale for ambitious men,
who don’t fear making unconventional choices
in their pursuit of success
A high quality ‘value for money’ malt,
radiating vitality, fun and energy
A nourishing malt with perceived wellness
benefits, an uniquely creamy taste
and a rich heritage
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Recommended prices as of October 1 2012
‘33’ Export
ATL Communication
Innovation
200
‘33’ Export Volume development
(indexed to 2005 = 100)
150
100
50
2005 2006 2007 2008 2009 2010 2011
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Outlet activation
& promotion
TV Ads ‘33’ Export / TV Ad Turbo King
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An established route to market:
Dual distribution system
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Consolidated
Breweries
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To develop new markets
To secure availability
To manage price compliance
Re-distribution in remote areas
Depots
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Distributors
(independent)
Bulk
Breakers
~ 5.000
Bars / Retail
~150.000
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Van Sales
~ 700
Consolidated Breweries
Depot
Distributor
Bulk breaker
Bar
3rd party owned
Owned by
Consolidated
Breweries
Acquisitions have strengthened
our footprint and brand portfolio
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Acquisition of Sona a key strategic move
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Strengthen leadership position in Nigeria by acquiring 5 breweries
and integrating assets into Nigerian Breweries and Consolidated
Breweries
Rapidly increase supply capacity (3.7mhl)
Expand geographic footprint
Expand brand portfolio with (regional) Savings brands
1. Otta
2. Kaduna
4. Makurdi
3. Onitsha
5. Uyo

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+
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Strong growth momentum
€ Revenue and Volume evolution
(indexed to 2005)
EBIT (beia) evolution (€m)
Organic CAGR (’05 – ’11)
+17%
350%
300%
250%
200%
150%
2005
100%
2006
2007
2008
2009
2010
2011
2005 2006 2007 2008 2009 2010 2011
Benue Brewery
Revenues
Volumes
Champion Breweries Plc will be consolidated as of 2012
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Investing for growth
Organic Capex (€m)
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14
12
10
8
6
4
2
0
2005
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2006
2007
2008
2009
2010
2011
Agenda
Leader in Affordability
1History and Mission
2 The ‘savings’ market for
beer and malt-drinks in Nigeria
3 Profile and performance
4 Our Priorities for Action
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Our Priorities for Action
Strengthening our leadership position in savings
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Upgrade
systems &
processes
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1
Drive top
line growth
2
Develop
people
3
Integrate
new breweries
& brands
Optimise supply
& delivery at
lowest cost
1 Drive volume growth
Weighted outlet distribution (%)
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Lager
Stout
Malt
•C
•
•C• •
•
•C•
20%
•L
opportunity
opportunity
opportunity
40%
60%
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•L

•L
80%
L = market leader
C = nearest competitor in savings
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Source: Heineken research (Trade Census 2011; total market)
100%
Increase outlet distribution by
leveraging Trade Census findings
Expand can sales
Refocus sales force execution
Encourage price compliance
Expand cold availability
Leverage national brand coverage
2 Lowest cost: A precondition to keep our brands
affordable
Variable cost target: Substantially lower than market leader
Raw
Cost effective visibility
materials
70% raw sorghum
ATL / BTL
Mix of self-collectors,
own transport & 3rd
party direct delivery
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Packaging
Transport
Paper label industry bottle
Less 1-way
Crate re-branding
Consolidated Breweries has grown rapidly
in recent years...
2009
2012
1 entity
2 plants
4 entities
5 plants
3 SKU’s
14 SKU’s
860 people
1600+ people
logistics
logistics
…and seamless integration is a key opportunity to further leverage scale benefits
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3 Integrate new breweries and brands
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Merger opportunities
Streamline the organization
brand portfolio
Use new footprint to lower transport cost
and contract brewing to alleviate regional
capacity constraints
4 People development a key priority
Talent
Management
Programme
HEINEKEN
Technical Training
School
Career
development
opportunities from
enlarged scale
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Management
Rotation
Management
Trainee
Intake
5 Upgrade systems and processes
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HEINEKEN
Knowledge
Management
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Move from local to central steering
(e.g. production planning, purchasing)
HEINEKEN ‘HeiLite ERP-system’
Standardisation of processes stimulates
focus on execution
Benefit from HEINEKEN’s global scale
(e.g. purchasing, ONE2Share,
benchmarking)
In summary
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Savings is a sizeable and growing segment, meeting a clear need for
affordable quality among the majority of Nigerian consumers
Consolidated Breweries is the clear leader in Savings, combining strong
brands with a broad market presence and a single minded segment
focus
Focus on cost leadership remains a pre-condition for success
Acquisition of BBL & Champion Breweries provides critical capacity for
future growth
A clear agenda for integration, people development and systems
upgrading to harness the benefits of Consolidated Breweries’ enlarged
scale
Questions
Nigeria | November 2012
Heineken NV