Regional Review
Central and Eastern Europe
exports to the important Italian and
French markets performing particularly
well. After the expansion of the production
capacity in 2003, investment in 2004
will focus primarily on efficiency improve
ments, mainly through automation.
Because Mouterij Albert, our malt-house
in Belgium, was undergoing renovation,
it was only able to produce 230,000 tonnes
in 2003, instead of its maximum output
of 250,000 tonnes. Mouterij Albert, which
exports to some 40 Heineken breweries
around the globe, is one of the largest and
most efficient malt-houses in the world.
Mouterij Albert is involved in several
sustainable-agriculture projects.
Heineken's distribution partner in
Denmark opened a local filling plant for
Heineken beer and Heineken sales rose
strongly. Marketing support via sponsor
ship of music and dance events was
extended.
Sales of Heineken beer in Sweden,
where it is brewed under licence, were
higher.
In Norway, where production of
Heineken beer under licence started in
2003, sales grew strongly. High priority
was given to sponsorship and promotional
activities.
CENTRAL AND EASTERN
EUROPE
Sales in Central and Eastern Europe
increased from 15.7 million hectolitres
to 20.6 million hectolitres. Most of this
growth was due to the acquisition in
2003 of BBAG, whose activities have
been included in the consolidation as
from 1 October 2003. Pro-forma sales
excluding BBAG were 15% higher at
18.0 million hectolitres, with Poland
and Russia accounting for most of the
improvement.
Rising purchasing power in Central and
Eastern Europe will translate mainly into
growth in the premium segment, par
ticularly in the Central European countries
which are soon to join the EU. In some
countries, such as Poland, Russia, Hungary,
Romania, Bulgaria and Macedonia, per
capita beer consumption is below the
European average, so there is potential
there for volume growth as well.
Acquisition of BBAG
In BBAG, Heineken has acquired a large
European brewer with leading market
positions in Austria, Romania and Hungary
and regional positions in Poland and the
Czech Republic, in which it owns 22 brew
eries and sells around 13 million hectolitres
of beer. It also exports from virtually all
of these countries. Like Heineken, BBAG
combines strong local market positions,
a close affinity with local cultures and
expertise in international brand portfolios.
Its most important brands are premium
beers Kaiser and Gösser and Schlossgold
alcohol-free beer, which are on sale in
several European countries.
The acquisition of the BBAG operations
has made Heineken market leader in
eight Central European countries: Austria,
Poland, Romania, Hungary, Slovakia,
Bulgaria, Macedonia and Albania. The
existing and newly acquired activities will
be integrated and grouped under Brau
Union, the new central European oper
ating company. This will generate signifi
cant cost synergy, greater growth poten
tial and more efficient and effective brand
portfolio management.
The acquisition of BBAG will enhance the
Heineken brand's growth potential,
especially in Austria, Romania, Hungary
and the Czech Republic. Heineken beer
sales in the countries of Central Europe
are expected to grow to at least 500,000
hectolitres by 2008, an increase of over
72% compared with the volume sold in this
region in 2003.
Poland
Higher sales, higher result and growth
through BBAG acquisition
The Polish beer market grew by around
4% and Grupa Zywiec grew faster than the
market. Like-for-like pro-forma sales rose
from 8.4 million hectolitres to g.2 million
hectolitres and total sales, including the
BBAG activities which had been acquired,
amounted to g.4 million hectolitres.
Grupa Zywiec, the largest brewer in Poland,
returned a greatly improved result.
Although it profited from the very good
summer and inflation remained low, the
Polish beer market advanced at a more
modest pace than in 2002. The weakness
of the economy favoured the growth of
the mainstream segment, mainly at the
expense of Polish premium beers. As well
as the mainstream segment, there was
also growth in international premium beer
sales. Although the sales mix worsened,
a price increase and better procurement
terms translated into a substantial
improvement in the result. Cost savings
also contributed to the improved result.
The investment made in 2003 in a new
brew-house at the Warka brewery will
double production capacity to 4 million
HEINEKEN N.V. ANNUAL REPORT 2003
32