Spain
The fine summer had a favourable effect on beer sales in
Spain. Sales by our affiliate El Aguila S.A. also showed an
increase, but the market share was still slightly under
pressure.
Thanks to the higher sales, combined with a considerable
decline in financing charges, the earnings proved to be
more favourable than we had expected.
A substantial rationalization programme will be carried out
at El Aguila in the years to come. In this connection four
breweries will undergo considerable improvements and
renewals, i.e. the establishments in Madrid, Zaragoza,
Cordoba and Valencia. They will also take over the
production of three breweries which are to be closed within
the foreseeable future. The three in question are the
obsolete production units at Alicante, Cartagena and
Merida. The social consequences will be minimized.
The restructuring and modernization programme calls for
considerable investments in the technical and commercial
field involving a sum of N.fl. 325 million in the years to
come, to be financed locally. This will exert a temporary
pressure on the earnings, but we are optimistic about their
long-term development.
The accession of Spain to the European Community will
undoubtedly lead to a further internationalization of the
Spanish market. This will not only be reflected in increased
activities by foreign breweries, but also in a growing
interest shown by the Spanish consumer in international
beers. Since Heineken has already built up a position in
Spain, our enterprise will certainly be able to benefit from
this anticipated development.
Sales of imported Heineken beer grew satisfactorily during
the year under review. As from 1986 its distribution will be
looked after by El Aguila.
Italy
Partly under the influence of the fine summer and autumn
weather, beer sales in Italy showed a recovery compared
with the previous year. This led to higher sales by our
operating company Birra Dreher S.p.A., both of the Italian
brands and of the Heineken beer brewed there. The market
share further increased. Margins, too, showed a modest
improvement.
The investments in the breweries were again considerable.
At Popoli the expansion to a capacity of 550.000 hectolitres
was completed. A new bottling line for non-returnable
bottles was taken into use, as well as new beer tanks. The
new bottling line at Macomer became operational early in
1986. A considerable modernization programme was
undertaken in the brewery at Massafra.
The brewery in Genoa was closed at the end of the year
under review.
Sales of Amstel. which is brewed under licence by the
Peroni group for the Italian market, lagged behind expec
tations.
Greece
As in 1984 the Greek beer market showed a slight growth.
Our subsidiary Athenian Brewery S.A., where both Heine
ken and Amstel are brewed, achieved higher sales. The
market share remained above 50% in 1985.
The government authorities allowed a price increase in
both March and September, as a result of which the
pressure on margins was to some extent reduced.
The labour relations in Athenian Brewery were satisfactory.
At the establishment in Athens the packaging department
was modernized; in the brewery at Thessalonika the
storage facilities for finished product were extended.
Towards the end of the year under review agreement was
reached regarding the acquisition of the assets of the
brewery and maltworks of Breweries of Greece S.A. at
Patras.
The brewery has a capacity of about 900,000 hectolitres
and meets our requirements for production facilities in the
longer term. Athenian Brewery will produce Amstel beer in
the newly purchased brewery, whilst the production of
Löwenbrau beer will be continued. The latter brand will be
produced on a contract basis for Breweries of Greece S.A.,
which will itself continue to look after the marketing and
distribution.
Ireland
Taking into account the still weak economy, our Irish
operating company Murphy Brewery Ireland Ltd. devel
oped reasonably.
Both sales and market share showed an increase, mainly
as a result of the higher sales of the Heineken brand in the
increasing lager segment. This growth is expected to
continue in the years to come.
Murphy's Irish Stout was given an entirely new presentation
and was also introduced in the United Kingdom.
In accordance with the plans the extensions and renewals
at the brewery in Cork were completed at the end of
1985.
