Operational Review
28 Heineken N.V. Annual Report 2004 Report of the Executive Board
Brand strategy
BUILDING A WINNING BRAND PORTFOLIO CENTRED AROUND HEINEKEN
Our brand strategy is to build a strong portfolio that combines the power of local and international
brands and which has Heineken at its centre. The consistent growth of our brands requires solid
creative brand management, which we coordinate centrally. By carefully balancing our brand port
folios and achieving optimal distribution and coverage, we aim to build and sustain strong positions in
local markets.
For the Heineken and Amstel brands, we develop and maintain central guidelines and standards for
brand style, brand value and brand development. At a central level we also support local management
of the entire brand portfolios, through benchmarking programmes designed to optimise marketing,
sales and distribution.
Commercial Excellence
ORGANIC GROWTH IS CRITICAL FOR THE FUTURE OF OUR BUSINESS
In 2004 we launched a global strategic initiative - 'Building Winning Portfolios!'. This long-term
initiative is aimed at systematically reviewing and improving the strength of portfolios in a number
of key markets and identifying those brands, that create value. Where unmet consumer needs are
identified, we are accelerating the introduction of new, consumer-relevant brand propositions.
In 2005 we will have completed reviews across the majority of key markets. In parallel, there is also a
strong focus on building the excellence required in sales and marketing to execute the portfolio plans.
To leverage our global strength and to accellerate organic growth we made good progress in
optimising operating companies' commercial policies. We did this through sharing knowledge and
experience and developing excellent brand and portfolio management skills alongside world-class
channel, sales and distribution processes. Measuring and monitoring how well we are performing
is critical to success. Given this, we paid special attention in 2004 to improving the effectiveness
of commercial spend. The result will be reallocations of commercial spend, increased return on
commercial investment and finally, performance improvement and value creation.
In addition, we introduced a global standard for measuring brand performance. This 'Heineken
Brand Dashboard', is a new system for measuring and reporting all essential key performance
indicators on sales, marketing and finance relating to the Heineken brand. This tool will make it easier
to diagnose brand health issues and to have a consistent view of the most successful growth drivers for
the Heineken brand across the business. Further extensions of the 'dashboard' to track and manage
other brands in the same way are planned in 2005.
At the end of 2004, our most senior commercial managers exchanged ideas and received
demonstrations of best practice at a two-day workshop - 'Impact 2005'. These two days resulted in a
common understanding of the goals and priorities as well as in concrete plans to leverage our
portfolio strength in all our key markets. It is an indication of how we intend to operate and build our
capability in the future.
Brands
In 2004, our total beer volume was made up as follows: Heineken brand 18.7%, Amstel 9.1% and other
beer brands 72.2%. In addition to Heineken and Amstel, our international brands comprise a collection
of specialty beers to satisfy the consumer's growing demand for variety. Sales of these high margin
products allow us to drive improvement in the sales mix.
