In parts of the world signs of a slowdown in economic growth are starting to appear. We neverthe
less expect continued growth in the global beer market. The beer markets of Latin America and the
Far East are growing thanks to increased spending power, expanding populations and a shift from
the consumption of traditional beverages to beer. Beer consumption in the United States is showing
higher growth than in the 1990's thanks in part to a favourable demographic development. The
European beer market as a whole is virtually stable, but noticeable differences can be seen at coun
try level. Changes in the pace at which the market is growing in relation to economic development
play a part especially in regions where spending power is relatively low. In mature beer markets the
influence of economic cycles is marginal.
Consumer preference for branded beers continues to grow. Among the branded beers the premi
um beer segment in particular is expanding. This also applies to specialty beers in selected markets.
Our strategy is aimed in the first place at growth of the Heineken brand in the premium segment
and we expect Heineken to show stronger growth than the segment. This will lead to a further im
provement in our sales mix and an increase in our profitability. The increase in sales volume of our
specialty beers too will contribute to the improvement in margins. Attention will continue to be
focused on improving the company's cost structure. The profitability will also increase as a result
of achieving synergy in Spain.
On the other hand, a number of costs are increasing more sharply than inflation. The costs of
malt are rising as a result of increased demand from the brewers and lower supplies caused by the
poor harvest of brewing barley in 2000. We endeavour to pass on as many of these costs increases
as possible in the selling prices, but it will not always be possible. As result of decreasing oil prices
we expect no major increases in energy costs, cost of transport and cost of packaging materials in
Thanks to our currency hedging strategy, which means that the dollar/euro exchange rate is fixed
well in advance, we expect a positive impact in 2001 again from the American dollar exchange rate.
Increasing marketing costs will be more than offset by the growth in the sales of beer with higher
For the year 2001 capital expenditure will total about EUR 600 million, the major part of which
will be invested in replacements. In principle, these investments will be financed from liquid assets
and the cash flow, if necessary supplemented by external financing.
The work force will increase in 2001 as a result of consolidating Nigerian Breweries and beverage
wholesalers in various countries. Apart from these acquisitions there is a slight downward trend in
staffing levels, which will continue in the next few years too.
Each year the level of our profit is influenced by unpredictable factors such as exchange rates,
government measures, economic development and weather conditions. Despite these uncertain
ties we again expect an increase in net profit for the year 2001. Considering the success of our busi
ness strategy, the power of the Heineken and Amstel brand and our local brands, global coverage,
the available financial resources and our broad international experience, we also remain positive
with regard to long-term profitability.
HEINEKEN N.V. ANNUAL REPORT 2000