Regional Review Africa/Middle East Middle East Operations Heineken has fully consolidated breweries in Egypt and Lebanon, the only breweries in those countries. Al Ahram Beverages Company, which is market leader in Egypt, also has an extremely successful product in Fayrouz, a non-alcoholic malt drink. The brewery started producing Heineken beer in December 2003. As well as gener ating major cost savings, local production will also enhance the Heineken brand's growth potential in Egypt. After substantially increasing its interest in the Almaza brewery in Lebanon in 2002, Heineken also acquired the distri bution operation in 2003. In addition, Almaza secured the worldwide rights to Laziza, the Lebanese beer brand, which has given it a strong position on the home market. As a result of an exchange of shares, Heineken's interest in Almaza S.A.L. decreased from 81% to 67%. Heineken has minority interests in Tempo Beer Industries in Israel and Jordan Brewery in Jordan, which brews Amstel beer under licence. The most attractive export markets in the region are the Gulf states. Performance review by country In Egypt, although consumer purchasing power was impaired by increased prices caused by the steep decline in the value of the Egyptian pound, the beer market grew appreciably and Al Ahram Bev erages Company's sales kept pace. Sales of Fayrouz, a non-alcoholic malt drink available in a range of fruit flavours, were up by almost 50%, which translated into dramatic growth in the brand's share of the soft-drinks segment. Despite an excellent performance by Al Ahram Beverages Company, the result in euros was down slightly, due to the decrease of almost 40% in the value of the Egyptian pound. The beer market in Lebanon was static and sales of Heineken and Amstel were satisfactory. The unstable situation and low tourist numbers in Israel kept the beer market weak and Tempo Beer Industries returned a lower result. Further cost savings were made. In Jordan, Jordan Brewery's sales and result were slightly down on the year before. The beer market in the Gulf states, the most attractive export markets in the region, softened a little, mainly due to the lack of tourists and the negative effect on purchasing power of the strong euro in making imports more expensive. As a consequence, our sales were slightly lower. REPORT OF THE EXECUTIVE BOARD 43

Jaarverslagen en Personeelsbladen Heineken

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