Western Europe 5.9 Netherlands Innovation drives Heineken brand market share growth 40 Heineken N.V. Annual Report 2004 Report of the Executive Board Regional Review r Group Volume Western Europe in millions of hectolitres 2000 40-7 Reference to market positions 2001 43.7 and market shares in the relevant 2002 42 2 countries is based on available market information and refer 2003 44.7 to an estimate of market ratios. 2004 43.5 Against this background, and as a result of innovative marketing and new products, Heineken's leading brands showed great resilience, maintaining market share in tough markets and winning share in several important markets. Regional review Growing consumer preference for premium and speciality beers is creating ample opportunities for Heineken to further improve performance, given that we have strong, high-margin brands in both these segments. Growth for Heineken was stronger than for Amstel, whose position in the mainstream segment of the market made it more vulnerable to price competition. In Western Europe, Heineken's overall beer sales volume decreased to 43.5 million hectolitres, from 44.7 million in 2003. Our operating result improved thanks to the benefit of tight cost control and strong marketing. Sales volume of the Heineken brand in the region increased. Operations Heineken is Western Europe's largest and leading beer brewer. We have market leadership positions in the Netherlands, Spain, Italy and Greece and we are the number two player in France, Ireland and Switzerland. Our position in Germany was strengthened substantially by two acquisitions in 2004 and by a third in January 2005. Heineken, and in some cases Amstel, are also brewed under licence or imported into several other Western European markets. Total beer sales million hectolitres pf Market share percent Market position position The dominance of lager in the Dutch beer market grew further in 2004. Lager's share of the total market is now approximately 93%. A cool summer and a weak economy caused the Dutch beer market to contract by almost 2%. Against this, Heineken Brouwerijen's beer sales volume slipped from 6.0 million hectolitres to 5.9 million hec tolitres. The slight loss of market share was due to our relatively strong position in the on-trade, where sales fell more sharply than in the rest of the beer market. But thanks to successful marketing and innovation initiatives, the Heineken brand specially was able to keep its share of the market. The lower sales volume, coupled with higher promotional spend and higher provisions for bad debt in the on-trade, translated into a lower operating result. The supermarket price war, which started in the last quarter of 2003, depressed margins of all packs and brands in the off-trade.

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