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Mr. Heineken on the company's 1986 results:
"The company again experienced a satisfactory year.
The sales volume grew further. Higher sales in our prin
cipal markets - Europe and the United States - made a
substantial contribution to this growth". These were the
words used by Mr. A. H. Heineken, Chairman of the
Executive Board, to sum up the 1986 results at a press
conference to mark the publication of the 1986 Annual
Report.
Hsineken in Europe
Italy
Spain
France
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Ireland
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Future prospects
"It was a satisfactory year
Forl986asa whole the company
increased its net sales to almost
6.7 billion guilders. The increase
was due to three factors: an excellent
summer and (partly because of that)
higher beer sales, the acquisition or
expansion of interests in a number of
breweries and the fact that those
interests were taken up in the conso
lidated group accounts.
Like all Dutch companies, Heineken
N.V. uses the guilder as its reporting
currency. The net profit of 285 mil
lion guilders (20 million more than in
1985) was adversely affected by the
guilder's strength on the foreign
exchange market. Declines in ex
change rates of local currencies such
as the Singapore dollar, the Greek
drachma and a number of African
currencies deflated local sales and
results when expressed in guilders.
Last year Heineken's capital expen
diture amounted to some 600 million
guilders. The bulk of this money was
spent in France and Spain, where a
radical restructuring process is under
way, and also on the operation to
renew bottles and crates in the
Netherlands.
What sort of a year did our operating
companies in Europe have in 1986?
We have dipped into the pages of the
annual report and noted the follow
ing comments about Spain, Ireland,
France, Italy, the Netherlands and
Greece.
Stout. The Heineken brand in parti
cular developed favourably and this
growth is expected to continue in the
years ahead.
For Birra Dreher S.p.A. 1986 was
characterised by an upward trend in
sales of the Heineken and Dreher
brands. The fine weather during the
summer and autumn was an impor
tant contributory factor. Dreher was
also able to increase its market share.
Last year Dreher also increased its
stake in the Sardinian brewery Sarde
Produzioni Agricole Industriali
(S.P A.I.) S.p.A. to 70%.
Storage tank capacity was increased
in the breweries in Popoli. Pedavena
and Massafra. The keg-filling line in
Popoli was automated.
improvement in the 1986 results.
This trend is expected to continue.
El Aguila took a number of outdated
beer brands off the market last year
and launched two new brands: Aguila
Pilsener and Adlerbrau. El Aguila
also started to import Heineken beer.
During the year under review
exports of Heineken beer to Spain
more than doubled thanks to a hefty
drop in the import duty on beer. That
drop resulted from Spain's accession
to the EC. The reorganisation of the
product range and the addition of the
Heineken brand have significantly
strengthened El Aguila's market
position.
Three outdated breweries were
closed down and improvement pro
grammes were initiated at the brewe
ries in Algete, Zaragoza, Cordoba
and Valencia.
Despite a declining beer market,
Murphy's Brewery (Ireland) Ltd.
achieved higher sales last year, both
for Heineken lager and for Murphy's
Almost all the brands marketed by
Sogébra S. A. booked higher sales last
year. The Heineken brand grew
strongest of all. In 1985 a start had
been made on a comprehensive
programme of restructuring, which
will entail the modernisation of five
breweries (Drancy, Marseilles, Mons-
en-Baroeul, Mutzig and Schiltig-
heim) and the close-down of three
breweries and one bottling plant.
The four unprofitable production
units have meanwhile been closed.
The consequences for employees
have largely been migitated by
retraining schemes and transfers
within the business. The higher sales
and the first fruits of the restructur
ing have brought a considerable
Beer consumption in the Nether
lands increased in 1986, thanks mostly
to the better weather. Heineken
Nederland B.V. profited from this
increase and achieved higher sales.
Sales in the take-home market
showed a slight decrease. In the
hotels, bars and catering market our
position was strengthened.
During the final quarter of last year a
start was made on the change-over to
the new 30-cl bottles and new crates.
The growing popularity of canned
beer led to the installation of a new
canning line at the brewery in
's-Hertogenbosch.
Soft drinks sales, both in the take-
home and in the hotels and catering
sectors, developed favourably be
cause of the fine summer. The Dutch
market volume for spirits revealed a
disappointing trend last year. None
the less, the Gedestilleerd en Wijn-
groep Nederland B.V. (Spirits and
Wine Group Holland) succeeded in
improving its result. The structurally
unfavourable trends in the spirits
market have led to the proposal to
close the Bokma unit in Leeuwarden.
Mr. A.H. Heineken: 1986 was a satisfactory year
Several years from now, its produc
tion will be transferred to our unit in
Zoetermeer, which already produces
part of the Bokma product range.
Athenian Brewery S. A. also benefited
from the favourable weather during
the summer period. The overall beer
market grew, and that growth meant
that Athenian Brewery S.A. was also
able to increase its sales. For the first
time ever, more than 2 million hecto
litres were brewed within one year.
No forecasts can be made about the
company's sales and results in the
Net profit
(in millions of guilders)
153
198
229
265
285
1982
1983 1984 1985 1986
Beer sales in Europe
(in millions of hectolitres)
1982 1983 1984 1985^1986
Geographical breakdown of sales
of beer brewed under the supervision
of Heineken
(in millions of guilders)
25.5 Europe
6.5 Africa
2.4 Asia/Australia/Oceania
7.7 Western Hemisphere
Geographical breakdown of personnel
(numbers)
6,187 The Netherlands
674 Western Hemisphere
4.094 Asia/Australia/Oceania
6.693 Africa
11.101 Rest of Europe
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near future. At the press conference
Mr. Heineken explained why:
"Heineken is a company which does
not produce on the basis of long-
term orders in hand. In other words:
our short-term sales hinge on a great
many external factors. Consequently,
it is impossible for us to express any
concrete expectations as to the level
of our sales and results over the short
term".
We seek openings for further growth
all over the world. In static markets
we endeavour to gain market share,
but in addition we try to build up a
presence in countries where per
capita beer consumption is on the
increase. Good opportunities exist in
South America, particularly in Brazil
and Argentina. But expectations for
countries like Spain and Italy are also
very encouraging.
Looking to the future, the question
that is certain to arise is how much
impact can be expected from the
European Court's ruling on the beer
legislation in the Federal Republic of
Germany. The court ruled that the
beer law, which tended to protect
local German breweries, could no
longer be used to restrict imports of
beer from other EC member-states.
Will Heineken also be starting up
operations in the German beer
market? Mr. Heineken's stance on
this is as follows: "The situation's not
yet entirely clear. But, once the dust
has settled down following the heat
ed debate in Germany, our company
will take another closer look at its
strategy. The crucial factor will be
whether the German market offers
commercially attractive opportuni
ties. We'll be taking our time before
deciding on this", says Mr. Heineken.
