Review by region
and crates have been introduced to replace their obsolete industrial packaging. At the same time
new marketing campaigns, which met with a positive response from consumers, got under way.
Specially for the EB brand - for some time - extra marketing efforts are necessary.
Major steps have been taken to improve the cost structure. Following completion of the reorganiza
tion set in motion in 1999, Zywiec entered into negotiations with the trade unions and the local
authorities concerning the closure of the smaller breweries in Gdansk and in lancut. The brewery in
Gdansk has meanwhile been closed. Also, in line with the other breweries in the Zywiec Group,
the Warka brewery will contract out its transport activities to third parties. The production planning
of the breweries has been integrated. New, automated systems intended to improve efficiency
and effectiveness have been introduced in the entire organization. Zywiec raised its share capital to
reinforce the group's financial structure.
2001 is the final year of the integration and improvement programme. The activities remaining
include completion of the introduction of a joint sales organization, improvements in distribution
and the brand portfolio, and optimization of the costs and legal structure.
The beer market in Poland grew once again, driven by favourable demographic conditions and
a shift from the consumption of vodka to beer. This trend is expected to continue for a number of
years. There has been a sharp increase in competition, making necessary price increases possible
to a limited extent only.
The decision by the government to increase the beer excise duty to levels exceeding those of the
surrounding countries, including EU member state Germany, leads to relatively high consumer
prices and will hamper the development of the beer market. The proposed changes in legislation
with regard to beer advertising will make the position of the Polish beer industry even more difficult.
As a result of the changes in the organization, as well as the stiff competition, sales were under
pressure. In particular, sales of the EB brand and some lower-priced regional beers were below last
year's level. Together with the limited potential for increasing selling prices plus the big marketing
drive and the costs of the reorganizations, this resulted in a lower profitability. The Heineken brand
performed well and displayed excellent growth from a still modest base.
Slovakia Zlaty Bazant and Corgon gain market share
High inflation and unemployment reduced the population's spending power. This put pressure on
the beer market and selling prices. Nonetheless, the sales of our key brands Zlaty Bazant and
Corgon increased substantially and our market share rose. The brand strength of Zlaty Bazant in the
region also makes the brand interesting for export to neighbouring countries.
At the end of 2000 we purchased the remaining 41% of the shares of the Corgon brewery. Zlaty
Bazant and Corgon have meanwhile merged to form Heineken Slovensko. The integration of the
Martiner and Gemer breweries, which were acquired at the end of 1999, proceeded to plan. The sim
ilarly named brands constitute a good addition to our brand portfolio.
Our malt-house in Slovakia has a good reputation in the market as a reliable supplier of good
quality malt. The sales of malt increased by 50%.
Bulgaria Zagorka and Ariana recover market share
The improved economic conditions and associated rise in spending power gave a new impulse to
the beer market.
The sales volumes of our Zagorka and Ariana breweries rose substantially and our market share in
creased. The fierce price competition in the market resulted in a marginal loss. Shortly before the
summer season we introduced Amstel onto the market.
The modernization of the breweries and distribution system is making steady progress.