Spain
In a stable overall Spanish beer market the
premium beers segment once again showed
growth. The Heineken brand, which is the
undisputed leader in premium beers, doubled its
growth figure, far exceeding percentage growth
rates for the segment. A new Heineken media
campaign scored major successes and further
increased brand-awareness. This favourable
development improved El Aguila's sales-mix and
offset lower sales volume for the Aguila-Amstel
brand. Encouraging news was that our focused
marketing is gradually improving the consumer
image of the Aguila-Amstel brand.
Murphy's Irish Stout, launched in 1996, has
taken it's own place in the product portfolio.
El Aguila's result improved to slightly positive.
During the course of the year under review
we exercised our rights to convert bonds into
El Aguila shares. This increased our interest to
71% and confirmed the ongoing importance of the
Spanish beer market to the Heineken Group.
Further progress was made in controlling
production costs and we started up multi-skilling
training programmes at the breweries.
These programmes will help improve the costs
structure. The ISO 9002 quality certificate
was once again awarded to El Aguila.
t a I y
Heineken Italia booked major progress with
integration of the breweries acquired in 1995 and
1996. The new combination has realized a strong
reinforcement of the market position. There was
a considerable improvement in the result of the
Italian operation.
Notwithstanding the heavy burden of
integration activities, the Italian organization
increased beer sales and performed excellently
in maintaining market share.
The Heineken brand showed satisfactory
growth while Heineken's market position was
reinforced by a renewed media-campaign, the
launch of the long-neck bottle, and sponsorship
of the Umbria Jazz Festival.
Moretti, one of Heineken Italia's strategic brands,
also posted significant growth. The tournament
between Italy's top clubs for the Birra Moretti
Trophy attracted an extremely large TV audience
and boosted brand-awareness. Dreher's volume
decline over past years was halted, while its
margins were improved.
Optimization of market approach enabled
us to reduce discounting, while the increase in
net prices exceeded inflation and operating
expenditure. We also realized a more even pattern
of sales in Italy.
The merging of the sales and marketing
organizations went ahead as did that of the
administration and other support services.
The integration of distribution proceeds apace.
The number of employees decreased.
Restructuring of production facilities will be
a primary factor over the next several years, and
as part of this process we announced closure of
the Crespellano and Baragiano breweries.
Furthermore, 1998 will also see the end to
brewing in Messina although bottling activities
will be continued there. In a streamlined form the
Pedavena brewery will be equipped for efficient
production of specialty beers. As agreed under
Italian anti-trust legislation the brewery in Udine
was sold. Negotiations to take an interest in the
brewery in Aosta by the local government are very
well advanced. The sale of the loss-making Sarbe
mineral water factory on Sardinia was completed
in November.
C reece
Athenian Brewery, market leader in Greece,
maintained its share of a growing beer market.
Sales of Amstel, the country's top beer brand,
increased further. The Heineken brand remained
the undisputed leader in the premium segment.
Sales of Ioli mineral water showed strong growth
once again. Further modernization of the produc
tion facilities was completed successfully, as were
cost control measures. Both processes used
benchmark information available within the
Heineken Group.
9,167 million. Earnings again increased.
HEINEKEN N. V.
REPORT OF THE
EXECUTIVE BOARD
19 9 7
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