Heineken Company Presentation

Global Corporate Relations | March
August2014
2013
Content
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HEINEKEN | Proud, Independent, Responsible Global Brewer
The world’s most international brewer

No 1 in Europe and No 2 in the world by revenue

Operations in over 70 countries globally
Brewing great beers, building great brands
Committed to surprising and exciting
consumers everywhere
Long and proud history and heritage
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HEINEKEN | Our Values
Enjoyment
we bring enjoyment to life
Respect
for individuals, society and the
planet
Passion
for quality
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HEINEKEN | Brewing Great Beers, Building Great Brands
Heineken®, our flagship brand, is the world’s
leading international premium beer
Desperados, Sol, Affligem and Strongbow Apple
Ciders complement our global brand portfolio
Altogether, we have over 250 international
premium, regional, local and specialty beers and
ciders in our portfolio
Passion for quality and Innovation are at the
heart of how we build great brands and delight
our consumers
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HEINEKEN | A Long and Proud History & Heritage
1864
The Heineken Family
enters the beer business
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1869
We switch to bottom
fermentation: clearer,
purer, long lasting beer
1886
Dr. H. Elion cultivates
the Heineken A-yeast
=> unique flavour
1889
We are crowned at the
Grand Prix Paris for quality,
focused innovations
HEINEKEN | A Long and Proud History & Heritage
1928
Early stages of unique
advertising and becoming
truly international
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1929
HEINEKEN moves
into Asian markets
1933
Heineken® is the first
import beer to the US after
Prohibition is repealed
1954
1968
Alfred Heineken begins
HEINEKEN acquires
‘Beer Can Travel’ global Amstel Brewery
marketing strategy
HEINEKEN | A Long and Proud History & Heritage
1982
Production transfer from
Amsterdam to Zoeterwoude
in the Netherlands
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2003
Acquisition of BrauBeteiligungs A.G.
(BBAG) in Austria
2008
Acquisition of
Scottish & Newcastle
2010
Acquisition of
FEMSA Cerveza
2012
Acquisition of Asia
Pacific Breweries
HEINEKEN | Truly Global Presence
>165 breweries in
over 70 countries
>85,000 employees
>Group Beer
Volume* in 2013:
195.2 million hl
* Consolidated beer volume plus
attributable share of beer volume
from joint ventures and associates
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HEINEKEN is Unique
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Shaping Our Future | Our Global Priorities
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1
Grow the Heineken® brand
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Be a consumer-inspired, customeroriented, brand-led organisation
3
Capture the opportunities in emerging
markets
4
Leverage the benefits of HEINEKEN’s
global scale
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Drive personal leadership
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Embed and Integrate Sustainability
Priority 1 | Grow Heineken® Brand
Heineken® is our most valuable brand
The world’s leading international premium
beer with 20% category share
Strong global brand equity
Strong global platforms to further grow the
brand
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Priority 2 | Be Consumer-inspired, Customer-oriented, Brand-led
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1
Expansion of global brands
Desperados, Sol, Affligem and
Strongbow Apple Ciders
2
Continue to invest in and win with
local brands
3
Create value for our customers
4
Innovation at the heart of our
business
Priority 3 | Capture the Opportunities in Emerging Markets
HEINEKEN has transformed its
emerging market footprint
57% of HEINEKEN’s operating profits and 62% of volumes
come from higher growth markets
% of total Group in 2013
62%
49%
57%
Seize significant growth potential in Africa
In Asia Pacific, seize opportunity for premium beer
38%
Group beer
volume
Developing
51%
43%
Group
revenue
Group
operating
profit (beia)1
Developed
Head office & eliminations excluded from ‘% of Group’ calculation
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Priority 4 | Leverage the Benefits of HEINEKEN’s Global Scale
The establishment of Global Business
Services is a key enabler
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HEINEKEN Global Shared Services
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HEINEKEN Global Procurement Company
Global brand building
Supply Chain optimisation
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Priority 5 | Drive Personal Leadership
>70 operating companies
>85,000 employees
One HEINEKEN culture driven by
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Diversity
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Capability
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Personal accountability
Priority 6 | Embed and Integrate Sustainability
Sustainability is a critical part of how we do business
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10-year integrated sustainability programme launched in 2010
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On track to meet 2020 goals
Highlights of 2012:
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Continued progress water and energy efficiency of our breweries,
offices and warehouses
93% of our new fridges are green
Local sourcing projects in 10 countries across Africa, benefiting more
than 100,000 farmers and their families
Global Industry Commitment to a new series of targeted actions to
reduce alcohol related harm
Our Supplier Code signed by 528 global and more than 34,000 local
suppliers
Highlights of 2013 available in April 2014, pending publication of Sustainability report 2013
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Ownership Structure and Stock Exchange Listing
Per 1 February 2014
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Organisational Structure
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Our Executive Board
Jean-François van Boxmeer
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Chairman of the Executive Board and
Chief Executive Officer
René Hooft Graafland
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Member of the Executive Board and Chief
Financial Officer
Our Leadership Structure and Team
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Content
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World-class Brand Portfolio
Heineken® is our flagship brand and the
world’s leading international premium beer
Desperados, Sol, Affligem and Strongbow
Apple Ciders complement our global brands
portfolio
Altogether, HEINEKEN has over 250
international premium, regional, local and
specialty beers and ciders
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Heineken® | Clear Leadership in International Premium Segment
Heineken® share of IPS (2013)
20%
10%
9%
5%
4%
3%
3%
2%
2%
1%
Source:
Canadean and HEINEKEN
2013 reflects latest
Canadean estimates
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Heineken® | Our Flagship Brand
The world’s most valuable international
premium beer brand
You can find Heineken® in almost every
country in the world
It sets us apart from our competitors
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Heineken® | Passion for Quality
One world, one taste, one unchanged recipe
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Heineken® | Open-minded
Available everywhere in the world
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Heineken® | Igniting Conversations
Leading premium product platforms
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Heineken® | World-class
Premium mindset in everything the brand does
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Heineken® | Igniting Conversations
Strong presence in social media
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Heineken® | Igniting Conversations
The Man of the World uses his imagination to win and get to the Grand Final.
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Heineken® | Igniting Conversations
... and rugby THE game
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Heineken® | Igniting Conversations
Always at the heart of social, catching experiences…
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Heineken® | Igniting Conversations
… and partner with the ultimate Man of World – James Bond
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Heineken® | Igniting Conversations
Making responsible consumption aspirational
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Desperados
A daring proposition pushing the beer category
limits
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A unique Tequila Flavoured Beer with super premium
positioning
More than a beer for more than just a party: a tequila
flavoured party
A successful and profitable business model
Sol®
The beer of independent Mexico
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The original, easy to drink Mexican beer, born in 1899 in
independent Mexico
Part of the HEINEKEN portfolio since the FEMSA beer
business acquisition in 2010
Enjoyed in over 40 countries around the world
Affligem®
Timeless pure indulgence from Belgium
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An award-winning Belgian Abbey beer with a
1000 year history
Unchanged recipe that is only brewed in Belgium
under the close supervision of the monks of the
Affligem Abbey
Part of the HEINEKEN portfolio since 2002
The legacy of craft will be shared with over 20
countries in 2014.
Strongbow Apple Ciders
Reaching consumers that beer can’t
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HEINEKEN is the world’s leading cider producer with leading
cider research and development capabilities
Strongbow is the world’s leading cider brand
Available in a great new range of flavours: Gold, Honey and
Red Berries
Proposition with unisex appeal
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Delighting Our Consumers with Innovations
Innovation is at the heart of our Company
strategy to deliver top-line growth
We work to continually surprise and excite
our consumers and meet changing consumer
preferences
We reached an Innovation Rate of 5.9% in
2013
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Successful Innovation across HEINEKEN
HEINEKEN has achieved an Innovation Rate
of 5.9%
This is a combined result of successful
local innovations launched across our
HEINEKEN markets and roll-out of
innovations with global approach
In October 2013, HEINEKEN unveiled The
SUB® - an at-home draught beer system
to be launched in markets from 2014
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Radler | A major contributor to Innovation Rate
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A refreshing mix of beer and natural lemonade
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Attracts new drinkers into the beer category
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Strong profitability
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Strengthens brand equity
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Launched in 31 markets across all 5 regions
Draught Experiences for On-trade | Heineken Extra Cold
Extra cold beer
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Served between -3oC and +1oC
“A new beer experience”, beer poured from a
stylish column coated with a layer of ice
More than 85,000 installations across 107
markets
Draught Experiences for On-trade | David GREEN
The world’s 1st GREEN draught system
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Uses 50 to 70% less energy than regular beer
coolers
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Easy to use for outlet staff
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No cleaning cost, no beer losses
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100% Quality & Profitable
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Mobile and built-in versions
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Guaranteed fresh beer for 30 days
David GREEN: 55+ markets
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David XL GREEN: 10+ markets
Draught Experiences for On-trade | Orion
Draught beer as fresh as from the brewery
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Branded beer tanks visible in an outlet
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Unique consumer experience and highest freshness
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Convenience for outlet staff
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Grow volume & revenue
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Available in 6 markets
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Sustainability
What does this mean for HEINEKEN?
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Historical commitment
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One of our business priorities in our Strategy to Win
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Part of our DNA; embedded in our Company values
that guide how we relate to the world
Considering long-term impact of our actions, not
just short-term growth
A tremendous opportunity to “do good while doing
good business”
Sustainability
Why is it critical to our future?
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With success and leadership comes responsibility
It safeguards our future ability to continue to produce
beer and cider for our consumers
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Positively impact the role of beer in society
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Working together with all stakeholders we will define the best solutions
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Employees, Consumers, Customers and Retailers, Governments, NGOs,
Shareholders and Investors, Media
The most urgent challenges faced by our industry and our planet
Water scarcity
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Less than 1% of world’s water us both accessible and drinkable. We need water to grow crops
and we need it to brew beer: beer is 95% water.
The effects of climate change
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Co2 emissions contribute to climate change causing temperatures and sea levels to rise.
This has an impact on the availability and cost of raw materials and other resources.
Population pressures on food and resources
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The demand for food crops rises, making responsible agriculture and sourcing more
important than ever. We want to operate in a way that guarantees our supply of
raw materials.
Alcohol related harm
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Most people enjoy our products responsibly, a minority don’t. This is damaging to the
individuals, the people around them and to our industry, society and HEINEKEN’s reputation.
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Our response: A focused agenda
Protecting
water resources
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Reducing CO2
emissions
Sourcing
sustainably
Advocating
responsible
consumption
Protecting water resources
2020
1Baseline
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2008
1Baseline
2008
Specific water
consumption
Reduce by 25% to 3.7 hl/hl1
Water
balancing
Significant water balancing
in water scarce and
distressed areas
Reducing CO2 emissions
2020
1Baseline
2Baseline
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2008
2011, scope is 24 of our largest operations
In production
Reduce by 40%1
(eq 6.4 kg CO2/hl)
In fridges
Reduce by 50%
In distribution
Reduce by 20%2
in Europe and the Americas
Sourcing sustainably
2020
1With
Local sourcing
in Africa
60% of raw
materials locally sourced1
Sustainable
agriculture
At least 50% of our main raw
materials supplied from
sustainable sources2,3
Supplier Code
Procedure
Ongoing compliance to Supplier
Code Procedure
local sourcing we refer to sourcing within the Region Africa
on volume
hops, cider apples, other apples, other fruit, sugar, rice, sorghum, wheat, maize
2based
3barley,
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The basis for our ways of working with suppliers:
Implementation of the Supplier Code Procedure
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Advocating Responsible Consumption
2020
1Small
Industry
Commitments
Deliver global industry
commitments
Heineken®
Making responsible consumption
aspirational through Heineken®
Partnerships
Maintaining and publicly reporting
on a partnership in each market1
export markets and markets with religious restrictions are out of scope
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Values and Behaviours Embedded in our
Code of Business Conduct
Key policies for employees are embedded in our HeiCode
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Health & Safety
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Employee & Human Rights
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Cool@Work and Alcohol Policy
Benchmarking our Performance
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Memberships and Partnerships
Beverage Industry
Environmental Roundtable
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All Natural Ingredients
Nature provides us with beer’s 4 basic ingredients:
barley, water, hops and yeast
All these ingredients can be varied
in endless combinations
Some estimate there are > 40,000 different beers
in the world!
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Storehouse of Nutrients
No Additives; No Preservatives
Minerals
No Fat
Antioxidants
Vitamins B1, 3 and 11
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Relatively Low in Calories
≈
≈
Source: Netherlands Nutrition Centre
Average serving: Beer 250 ml, Wine 150 ml, Smirnoff Ice 250 ml.
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Beer Complements Food
The subtle taste of beer can complement
food just as well, or even better than, wine
Beer can be a perfect match for some foods,
like spicy dishes, cheese and chocolate
In pairing beer with food, you can
complement or contrast the flavours and
intensity of the food
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Beer May Have Positive Health Effects if Consumed Moderately
Source: Jonathan Powell, MRC Human Nutrition Research, Cambridge, UK
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Telling the Positive Story of Beer
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Cider – The Art of Pomology
Cider is a long alcohol drink made from fermented juice of
apples or pears
The Bulmers cider business was established in 1887
in Hereford, England
Herefordshire – still to date the heartland of our cider
production - has the perfect soil type and weather conditions
to grow cider apples
Our biggest cider brands are Strongbow Apple Ciders,
Stassen and Bulmers*
*In Ireland, Bulmers is not part of our portfolio
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HEINEKEN | Global Leader in Cider
HEINEKEN leads the global cider category with
20% market share
The global cider market was 19.9 million
hectolitres in 2012
Source: Canadean Wisdom Database February 2014
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Content
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2013 | Continued progress against strategic priorities in a challenging year
Group revenue +1.3%; +0.1% organically:
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Group revenue per hectolitre +2.7%
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Improved H2 volume performance in Western Europe and Africa Middle East
Group operating profit (beia) +2.8%; +0.6% organically:
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+20 basis points improvement in operating margins
Market share gains in key markets:
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Mexico, Vietnam, France, Russia and the U.S.
APB maintained strong growth momentum
Strengthening our business through higher investments in marketing and capital expenditure
Innovations delivered €1.1billion of revenues; 5.9% innovation rate
Accelerated TCM2 cost savings of €300 million
Diluted EPS (beia) of €2.75 includes a 10 cent negative impact from revised IAS19 and foreign
currency translational movements
Organic growth calculations throughout this presentation assume HEINEKEN’s joint venture share of 41.9% of APB prior to consolidation is maintained through to
15 November 2013. Organic growth of consolidated volume, consolidated revenue and consolidated operating profit (beia) only includes an impact from APB from 16 November to 31
December 2013. Organic growth calculations are adjusted for the previous 3-month delay reported by APB, without a restatement to 2012.
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2013 | Financial Overview
* Includes acquisitions and excludes disposals on a 12 month pro-forma basis
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2013 | Regional Review
2013 consolidated financials organic growth %
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Sustained growth of APB
APB:
2013 proforma organic growth
Tiger brand:
Proforma organic volume growth
14%
APB acquisition
CAGR +18%
7%
Volume
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+30% yoy
Operating
profit (beia)
2009
2010
2011
2012
2013
Improved performance trend in 2013 H2
Driven by Western Europe and Africa Middle East regions
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Innovation contributed €1.1bn of revenues
Innovation rate1 of 5.9% versus 5.3% in 2012
Radler beers available in 5 regions
New variants
Draught beer systems (on and off premise)
New cider flavours
1 From 1 January 2013, the innovation rate is calculated as revenues generated from innovations
(introduced in the past 40 quarters for a new category, 20 quarters for a new brand and 12 quarters 8 for all other innovations, excluding packaging renovations) divided by total revenue
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Heineken®: Clear leadership in IPS
Heineken® twice as large as nearest competitor brand in IPS
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Heineken® volume declined 1.8%, including an impact
from destocking in France and the U.S.
Strong performances in developing markets of
Nigeria, South Africa, Russia, Chile, Brazil & China
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Heineken® volume brand leadership in France
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Surpassed 1mhl of Heineken® volume in China
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‘Open Your World’ campaign driving brand equity
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The SUB® launched in France and Italy
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Heineken® share of IPS
(2013)
20%
10%
9%
5%
4%
3%
3%
2%
2%
1%
New responsible consumption campaign in 2014:
“Dance More, Drink Slow”
IPS = International Premium Segment; based on Canadean and HEINEKEN data;
2013 reflects latest Canadean estimates
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Prioritised actions for 2014
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1
Invest in higher marketing spend to strengthen
market positions
2
Drive innovation to support category growth
3
Capitalise on premium segment growth with
Heineken® and other global brands
4
Increase capital expenditure in developing
markets
5
Restructuring and other cost efficiency
initiatives
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Maintain strong cash flow focus to
optimise financial flexibility
Outlook Full Year 2014
HEINEKEN expects
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Revenue management initiatives to drive higher revenue per hl, albeit at a more modest level compared
with 2013. Overall, this is expected to result in organic revenue growth in 2014.
A slight increase in marketing & selling (beia) spend as a percentage of revenue to increase in 2014
(2013: 12.6%).
HEINEKEN is committed to delivering a gradual and sustainable improvement in operating profit (beia)
margin over the medium-term.
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To realise its targeted TCM2 savings of €625 million covering 2012-2014 during the year
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Input cost prices to be stable to slightly lower in 2014 (excluding a foreign currency transactional effect).
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A gradual recovery in the global economy to underpin improved trading conditions in several key markets
and an improved organic volume performance trend versus 2013.
Exchange rate movements will adversely impact revenues and profits in 2014. Assuming spot rates as of
10 February 2014, the calculated negative currency translational impact on consolidated operating profit
(beia) will be €115 million. At net profit (beia), this effect will be around €75million.
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To achieve its long-term target net debt/ EBITDA (beia) ratio of below 2.5 by the end of 2014.
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Capital expenditure related to property, plant and equipment to be approximately €1.5bn (2013: €1.4bn).
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The Brewing Industry Top 10 in 2012
Source: Canadean Wisdom Database July 2013
For HEINEKEN, Consolidated beer volume 2012
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Industry Consolidation
Source: Canadean Wisdom Database July 2013
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World Beer Market Growth
Source: Canadean Wisdom Database July 2013
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Litres per Capita Consumption by Region
Source: Canadean Wisdom Database July 2013
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Consumption Volume Development 2012 versus 2011
Source: Canadean Wisdom Database July 2013
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Disclaimer
This presentation contains forward-looking statements with regard to the financial position and results of HEINEKEN’s
activities. These forward-looking statements are subject to risks and uncertainties that could cause actual results to
differ materially from those expressed in the forward-looking statements.
Many of these risks and uncertainties relate to factors that are beyond HEINEKEN’s ability to control or estimate
precisely, such as future market and economic conditions, the behavior of other market participants, changes in
consumer preferences, the ability to successfully integrate acquired businesses and achieve anticipated synergies,
costs of raw materials, interest rate - and foreign exchange fluctuations, change in tax rates, changes in law, pension
costs, the actions of government regulators and weather conditions. These and other risk factors are detailed in
HEINEKEN’s publicly filed annual reports.
You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date
of this presentation. HEINEKEN does not undertake any obligation to publicly release any revisions to these forwardlooking statements to reflect events or circumstances after the date of these materials.
Market share estimates contained in this presentation are based on outside sources such as specialized research
institutes in combination with management estimates.
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