HEINEKEN

CAGE Consumer Analyst Group Europe Conference

Heineken NV / Heineken Holding NV
17 March 2015

Disclaimer
This presentation contains forward-looking statements with regard to the financial position and results of
HEINEKENs 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 HEINEKENs ability to control or
estimate precisely, such as future market and economic conditions, the behaviour 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, changes in pension costs, the actions of government regulators and
weather conditions. These and other risk factors are detailed in HEINEKENs 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 forward-looking 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 specialised
research institutes in combination with management estimates.
2

The leading premium global brewer

with sustainable growth platforms
1

A BROAD PREMIUM PORTFOLIO,

LED BY Heineken

COOL MARKETING, INNOVATION

& COMMERCIAL EXECUTION

GLOBAL REACH ENABLES

BALANCED GROWTH

DRIVING COST EFFICIENCIES

5
BREW A BETTER WORLD

Generate sustainable medium-term top-line growth,

gradual margin expansion and
consistently strong free cash flow generation

1. Broad premium portfolio led by

Heineken

Leveraging on Heinekens global brand building capabilities

GLOBAL BRANDS PORTFOLIO

Heineken CLEAR LEADERSHIP IN

INTERNATIONAL PREMIUM SEGMENT

Priority Brands Portfolio

Indicative price index2 vs. Mainstream
(Mainstream base = 100)

7.8

7.6
7.4

Heineken

Brand equity1

7.2
7.0

Stella Artois

6.8
6.6

Budweiser

Dos Equis Carlsberg

6.4

Corona

Tiger

6.2
6.0
0%

5%

10%

15%

20%

25%

Mainstream Heineken Strongbow

IPS share

Source: Canadean
IPS: International Premium Segment - volume sold outside home market
1 ONEquity 2013: Brand equity score is based on average score on most recent quarter for all markets available on ONEquity:
Respondents are asked to rate brands on a 1-10 scale, where 1 means 'poor' and 10 means 'outstanding
2 Sol in Brazil, Amstel Premium Pilsner in Russia, Desperados in UK, Affligem in Spain, Strongbow in USA, Heineken average in mature markets

Sol

Desperados Affligem

1. Broad premium portfolio led by

Heineken

Established local / regional brands driving scale and premiumisation

Mexico

Poland

Heineken

Bohemia
Dos Equis1

Gulder

Zywiec

Tecate1
Sol
Indio
Superior
Carta Blanca

Dr. Diesel
Zlaty Bazant
Krusovice

Star
Legend1
Maltina1
Fayrouz1

Ohota

Warka
Krolewskie
Specjal
Lezajsk

Turbo King1
33 Export
Life
Goldberg
Malta Gold

Tri Medvedya
Zhigulevskoye
Okskoe

Tatra

Heineken
Strongbow

PREMIUM

VALUE

Russia
Heineken
Desperados
Amstel

INTERNATIONAL
PREMIUM

MAINSTREAM

Nigeria

Kloster

1 Represents Regional brands

Heineken may include Heineken Light
Selected brands per country

Heineken
Desperados
Paulaner

UK

USA

Vietnam

France

D.Rep
Congo

Indonesia

Heineken
Desperados
Amstel
Sol
Tiger
Affligem
Kronenburg 1664
Bulmers Cider
Old Mout Cider

Heineken
Amstel Light
Strongbow
Newcastle1
Dos Equis1
Affligem

Heineken
Tiger1
Desperados

Heineken
Desperados
Affligem
Sol

Heineken

Heineken

Pelforth
Fischer

Legend1
Mutzig1
Fayrouz1

Fosters
John Smiths
Strongbow

Tecate1

Biere Larue
Anchor1

Primus1
Turbo King1
Maltina1

NTay

Bintang

2. Cool marketing, innovation & commercial execution

HEINEKEN: 2015 Creative Marketer Of The Year

LEADING IN SOCIAL AND DIGITAL MEDIA

#1 ON

FACEBOOK

(Number of Fans)
19.4M
Heineken
12.5M
Budweiser

8.0M
Corona
7.7M
Stella Artois
2.1M
Carlsberg

Facebook fans as at 2 February 2015

WORLD CLASS MARKETING

Video:

Heineken

Brand

2. Cool marketing, innovation & commercial execution

Innovation: A key competitive advantage

Innovation rate1

New pack types

Brand extensions

7.7%
2020 Target: 6%

5.3%

5.9%

2012

2013

4.1%
3.0%

2010

2011

Innovation revenue
1.5bn

2014

Radler and alcohol free

propositions

40% CAGR
0.4bn

2010

2014

From 1 January 2013, the innovation rate is calculated as revenues generated from innovation introduced in
the past 40 quarters for a new category, 20 quarters for a new brand and 12 quarters for all other innovations,
excluding packaging renovations divided by total revenue

Improving draught offer

2. Cool marketing, innovation & commercial execution

Driving excellence in commercial execution

TARGETED CHANNEL
STRATEGIES

GLOBAL BRANDS
ACTIVATION

BUILDING
PARTNERSHIPS

BUILDING SALES
CAPABILITIES

3. Driving cost efficiencies

A key component of medium term margin guidance

Cumulative cost savings (2006 2014HY) 1,720 million

Committed to driving further cost savings:

10

Rightsizing the organisation to optimise cost structure

Driving End2End productivity to grow topline and profits
Leveraging global scale through Global Business Service organisation:
Additional efficiencies in HEINEKEN Global Procurement (HGP)
Extending geographic scope and activities of HEINEKENs
Global Shared Services (HGSS)

4. Global reach enabling balanced growth

Group beer volume1 by region (2014)
AME
15%

WE
21%

Americas
29%

CEE
23%

Developed/Developing as a %
of total Group (2014)

63%

50%

61%

37%

50%

39%

Asia Pac
12%

Group Operating profit (beia)2 by region (2014)

WE
25%
CEE
9%

AME
21%

Americas
27%

Asia Pac
18%

11

1 Group beer volume is consolidated beer volume plus attributable share of volume from joint ventures and associates
2 Group operating profit (beia) is consolidated operating profit (beia) plus attributable share of operating profit (beia)
from joint ventures and associates. Excludes Head Office.

Group beer Group revenue

volume
Developing
Developed

Group
operating
profit (beia)2

Africa Middle East

Reaching new consumer groups and making beer
an attractive proposition to people in the region
Incremental c.200million people by 2018,

with growth in legal drinking population

in the region

Beer and soft drinks the beverages of choice

in Africa

Strategic priorities

12

Build winning brands attractive propositions

for the emerging consumer

Capture magic price points

Perfect market execution

Grow Coca-Cola franchise

Grow with the continent

2014FY

Total
Change (%)

Organic
Change (%)

2,643

3.5

4.4

84

-3.8

-3.1

655

7.9

8.8

24.8%

+100bps

Total volume

31.6

7.6

7.5

of which:
Beer volume

25.0

7.4

7.3

CONSOLIDATED
Revenue
Revenue/hl (in )
Operating profit (beia)
Operating profit (beia) margin

Video: Primus 50cl

Case study : Attractive propositions for the emerging consumer

13

Americas
Portfolio strategy driving strong revenue growth
and share gains in key markets
Favourable beer market fundamentals with

significant income growth in key developing

markets and premium expansion in mature
markets

Strategic priorities

14

Capture growth in premium segment

by deploying global brands portfolio
Innovations tailored to meet market demands
Focused capital investment in high growth
markets
Leverage strong parterships for growth
Drive cost efficiences through leveraging
scale and capabilities

2014FY

Total
Change (%)

Organic
Change (%)

4,631

3.0

6.9

85

-0.7

3.2

780

8.6

16

16.8%

+80bps

Total volume

54.6

3.8

3.7

of which:
Beer volume

53.2

3.9

3.9

CONSOLIDATED
Revenue
Revenue/hl (in )
Operating profit (beia)
Operating profit (beia) margin

Video: Dos Equis in USA

Case study : Leveraging on changing consumer demographics

15

Asia Pacific
Solid growth from premium brands driving main market share gains,
continuing to invest in capacity

A diverse region with increasing wealth and rising

urbanisation.

Region expected to contribute over 70% of global

beer growth in the next 5 years1
Greenfields in Myanmar in Q1 2015; Shanghai
and beverage plant in East Timor by 2016
Strategic priorities

16

Leverage HEINEKENs global scale

Accelerate innovation
Invest ahead of the curve to capture future growth
Position Tiger as the iconic Asian beer brand
Capitalise on the strength of the mainstream portfolio
1 source: Canadean

2014FY

Total
Change (%)

Organic
Change (%)

2,088

2.5

5.3

Revenue/hl (in )

112

-1.4

0.4

Operating profit (beia)

550

2.5

5.4

26.3%

0bps

Total volume

18.7

4.0

4.9

of which:
Beer volume

18.3

5.5

5.2

CONSOLIDATED
Revenue

Operating profit (beia) margin

Video: Uncage Tiger

Case Study: Tiger as iconic Asian beer brand

17

Central & Eastern Europe

Continued focus on value strategy, premiumisation,
innovation and driving efficiencies
Significant value opportunity despite challenging

channel dynamics

Strategic priorities

18

Focus on revenue per hectolitre and profitability growth

Heineken brand offers an exciting premiumisation
opportunity
Innovation is key to winning with customers and
driving mix improvement

Focus on driving excellent outlet execution

Functional productivity a key driver for growth

* Excluding Pago sale, consolidated operating profit (beia) organic growth would have been +1,4%

Total
Change (%)

Organic
Change (%)

2,868

-7.4

-3.7

65

-2.7

1.4

272

-6.3

-4.5*

9.5%

+10bps

Total volume

44.4

-4.8

-5.1

of which:
Beer volume

42.3

-4.4

-4.7

CONSOLIDATED
Revenue
Revenue/hl (in )
Operating profit (beia)
Operating profit (beia) margin

2014FY

Western Europe
Strong execution and higher investments driving market share gains

Region benefits from high spending power and

rising urbanisation, despite structural challenges

HEINEKEN is the leading brewer in the region

and 2x the size of nearest competitor

Strategic priorities

19

Drive revenue management systematically,

with a premium skew

Be commercially assertive

Extract cost for revenue

Take responsiblity and fight for the category

Leverage scale and simplify

2014FY

Total
Change (%)

Organic
Change (%)

7,478

0.3

2.2

Revenue/hl (in )

127

1.9

0.5

Operating profit (beia)

852

-0.1

4.5

11.4%

0bps

Total volume

59.0

-1.6

1.7

of which:
Beer volume

42.5

0.5

2.3

CONSOLIDATED
Revenue

Operating profit (beia) margin

Video: Desperados
Case Study: Premiumisation

20

5. Brew a Better World

Supporting the business agenda through CSR

21

Strategy driving margin expansion

Historical margin progression provides evidence of delivery

90 bps
60 bps
16.2%

40 bps
14.3%

2011

22

14.7%

2012

15.3%

2013

2014

Summary
Leading premium global brewer with sustainable growth platforms

Broad premium portfolio led by Heineken

Cool marketing, innovation and commercial execution

Relentlessly driving cost efficiencies

Global reach with strong access to growth markets

Brewing a better world

Recent results further support that our strategy is working, and that HEINEKEN
will deliver sustainable medium and top line growth, gradual margin expansion
and consistently strong free cash flow generation

23

APPENDIX
CAGE Consumer Analyst Group Europe Conference
Heineken NV / Heineken Holding NV
17 March 2015

2014 Key Highlights

Strong performance reflects effectiveness of our strategy

Group revenue +3.3% organically with group rev/hl up +1.4%

Top and bottom line growth across the business

Heineken volume +5.1% reporting positive growth in all regions

Double digit growth for global brands Sol, Desperados and Affligem

Innovation contributed 1.5bn of revenue and rate accelerated to 7.7%

25

Consolidated operating profit (beia) margin up 90bps, well ahead of

medium term margin guidance (40bps)

Diluted EPS (beia) up 11%, proposed DPS up 24% (36% pay-out ratio)

2014 Financial Summary

2014FY

2013FY

Total
Change (%)

Organic
Change (%)

21,191

21,174

0.1

3.3

91

92

-0.9

1.4

3,359

3,192

5.2

7.8

19,257

19,203

0.3

3.0

Consolidated operating profit (beia)

3,129

2,941

6.4

8.7

Consolidated operating profit (beia) margin

16.2%

15.3%

+90bps

Net profit (beia)

1,758

1,585

11

Net profit

1,516

1,364

11

3.05

2.75

11

1,574

1,518

3.7

2.5x

2.6x

Mhl/m

Group revenue
Group revenue/hl ()
Group operating profit (beia)
Consolidated Revenue

Diluted EPS (beia) in

Free operating cash flow
Net Debt/EBITDA (beia) ratio
26

14