Canada
South America
Central America
Regional Review
The Americas
Class action lawsuit
In late 2003 and early 2004, class action
lawsuits were filed against Heineken and
a number of other producers and
distributors of alcoholic beverages,
claiming that their advertising and
marketing of certain drinks, were directed
at under-age consumers. We shall defend
ourselves energetically against these
accusations. Heineken USA's advertising
and marketing activities are responsible
and are addressed specifically to con
sumers over the legal minimum age for
consumption of alcohol of 21. Moreover,
the Federal Trade Commission, which
regulates advertising in the US, concluded
after its most recent study in 2003 that
there was no evidence whatever of the
alcoholic beverage industry targeting
under-age consumers with its advertising.
Heineken brand sales markedly higher
While the Canadian beer market overall
remained static, partly due to the Sars
epidemic, the imported beer segment
posted substantial growth of close to g%.
The Heineken brand outperformed the
import segment by a small margin, with
sales of canned beer growing fastest,
thanks to various promotions.
Beer consumption remained relatively
stable, with the lower sales in Brazil, which
accounts for over half of the South
American market, being balanced by higher
demand in Argentina and Chile. All of the
growth in our sales, from 0.4 million hecto
litres to 4.2 million hectolitres, reflects the
consolidation of our interest in CCU as from
1 April 2003. Sales of Heineken beer in South
America held steady at 0.5 million hecto
litres.
Operations
Through its interest in CCU, Heineken has
secured a very strong position in Chile,
and a good position in Argentina. As well
as beer, CCU also produces and markets a
wide range of wines and soft drinks. Its
modern breweries in Chile and Argentina
have a combined annual capacity of
6 million hectolitres of beer and sell 4.3
million hectolitres of soft drinks and
1 million hectolitres of Chilean wine, of
which about half is exported. CCU markets
a number of lager brands and speciality
beers in Chile and Argentina. CCU started
brewing Heineken beer in April 2003.
Strategically, Heineken and CCU
complement one another perfectly, and
their alliance has enhanced the Heineken
brand's growth potential in both Argentina
and Chile. In Argentina in particular, the
addition of the Heineken brand to CCU's
portfolio is creating good opportunities for
expanding the distribution, which will
benefit the growth of the other brands as
well as Heineken.
In Brazil, Heineken has a 20% stake in
Cervejarias Kaiser Brasil, the third largest
brewer in Brazil with a market share of 12%.
The other South American markets are
supplied with imported Heineken beer.
Sales in these countries, of which
Colombia is the largest import market,
are still modest.
Performance review by country
With the economy picking up, the beer
market in Argentina improved greatly.
Heineken's sales rose to i.g million hecto
litres, reflecting the consolidation of CCU's
Argentinean activities. Heineken beer
volume held steady despite the transfer
of the distribution licence for Heineken
beer from former partner Quilmes to CCU.
Ensuring sales continuity involved a major
operation in which CCU and Heineken
worked closely together, not only to get
the brewing and distribution facilities
ready on time, but also to maintain
relationships with our customers.
As the economy revived, the beer
market in Chile grew strongly. Our sales
rose to 4.0 million hectolitres, reflecting
the consolidation of CCU's Chilean
activities. Heineken beer volume remained
stable.
Heineken brand sales in Brazil were
down, despite growth of the premium
segment.
Sales of imported beer in Colombia
and Bolivia were depressed by the strong
euro, compounded in Colombia by
increases in local tax and import duties.
Central American beer consumption rose
a little and our sales in the region increased
from 0.8 million hectolitres to 1.5 million
hectolitres, due to the consolidation of
the interest in Cervecerias Baru-Panama
and Cerveceria Costa Rica with effect from
1 October 2002. Sales of Heineken beer
were up slightly.
Operations
Heineken operates in Central America in
alliance with FIFCO. In Costa Rica,
Heineken has had a 25% interest in Cerve
ceria Costa Rica, the country's only brew
er, since 2002. The majority shareholder
is FIFCO. In Panama, Heineken has had
a majority interest in Cervecerias Barü-
Panama, one of the country's two brewers,
since 2002. FIFCO is the minority share
holder. Via its alliance with FIFCO,
Heineken has an indirect 8% interest in
Nicaragua in COCECA, the country's only
brewer.
HEINEKEN N.V. ANNUAL REPORT 2003
38