for a substantial part of growth in the world beer
market. While the better priced segment there is
relatively small, the massive scale and growth of
the Chinese beer market make it highly attractive.
Moreover, there are more growth markets: central
and eastern Europe, Latin America and Africa,
also offer attractive prospects. The same applies
to the Asia Pacific region where the present crisis
has no real effect on beer consumption in the
medium and long term. The segment for
premium beers is growing in the stable beer-
market of Europe - and in other parts of the
world. Specialty beers can also look forward to
rising consumer interest.
The challenges facing the Group lie in the
continual changes in consumption patterns and
the global competitive balance. Consolidation on
an international scale has been underway in the
beer industry for some time. At the same time,
concentration on the retail and supermarket side
continues undiminished, while consumer
behaviour grows increasingly individualistic.
It will be up to us to make a practical, effective
response to these trends, with top priority going
to the further development and vitality of our
brands. The Group will continue to benefit from
growth in the premium segment. The deliberate
increasing of sales of Heineken beer in the
premium segment is a significant part of our
strategy. Also with our specialty beers like
Murphy's we see good opportunities. Even in beer
markets where there is no growth, implementation
of this strategy will lead to improved margins and
enhanced profitability.
We are pro-actively engaged in reinforcing our
market positions, in new and emerging markets
as well as in our existing ones. Part of this stra
tegy is to pursue higher sales volumes and results
through a combination of autonomous growth
and acquisitions.
Another cornerstone of our strategy is a
deliberate and continued programme to lower
cost structure. As well as protecting margins in
markets with limited scope for increasing selling
prices, this protects and enhances our competi
tive position. By implementing these strategies
we expect to further expand the Group so that
Heineken will continue to rank among the top
global brewers in terms of sales volume and
financial results in the next millennium. In this
way our share of the world beer market will
increase, and will enhance the Group's value on
a permanent basis.
We are very aware of the special role played by
alcoholic beverages in society. With an eye to
encouraging responsible consumption of
products containing alcohol, Heineken is strongly
pro-active in seeking cooperation at governmental
levels, with international organizations and with
other companies in the industry. This represents
a realistic approach on our part to the relevant
social issues. Our choice here is for dialogue and
transparency.
We see enthousiasm and commitment of
management and personnel as an important
factor for success of our company. Helped by the
commitment shown in the year under review we
look forward to the future with confidence.
We take this opportunity to remember the
tragedy that occurred in Rwanda in early 1998,
when thirty-six of our employees lost their lives in
a terrorist attack. Our thoughts are with the loved-
ones. Our sincere sympathy also lies with the
people who were seriously wounded. We have
great appreciation for our employees in Africa
and other parts of the world who successfully
carry on their work in an often very difficult
environment.
K. Vuursteen
Chairman Executive Board
N L G 13,512 million.
761 million, compared with NLG655 million in 1996
HEINEKEN N. V.
REPORT OF THE
EXECUTIVE BOARD
19 9 7
1 3
