41 Heineken N.V. Annual Report 2004 Report of the Executive Board Regional Review Western Europe
THE WESTERN EUROPEAN BEER MARKET IS ONE OF THE MOST PROFITABLE IN THE WORLD. IN 2004, THE BEER
MARKET DECLINED SLIGHTLY AS A RESULT OF THE RELATIVELY POOR SUMMER, WEAKER EUROPEAN ECONOMIES
AND UNFAVOURABLE DEMOGRAPHICS. THE COMBINATION OF THESE ELEMENTS CAUSED A GENERAL DECLINE
IN THE ON-TRADE. IN OVERALL VOLUME TERMS, THE OFF-TRADE GREW BUT WAS DOMINATED BY INCREASING
COMPETITION ON PRICE AT A RETAIL LEVEL AS SUPERMARKETS FOUGHT TO WIN AND RETAIN CUSTOMERS.
An increase in on-trade selling prices, lower staffing costs and other improvements in the cost
structure across the supply chain had a positive impact resulting in an increase of the operating result.
Brands
The market share of the Heineken brand remained stable thanks in part to marketing, packaging
innovations and promotions. One of the innovation successes of 2004 was BeerTender®. The con
sumer response - within a few months we sold more than one million kegs - exceeded our forecasts
and prompted our decision to build a second kegging line at Zoeterwoude.
Other new marketing initiatives included a twelve-pack of one-way, 25-cl glass bottles, re-launched
with a new twist-off cap. The David dispensing system which appeals to smaller on-trade establish
ments through the use of 20-litre kegs, continues to grow strongly.
Marketing highlights also include the 'Heineken loudspeaker hat' promotion during the European
Soccer Championship. Hundreds of thousands of orange and green hats, which doubled as loud
speakers, were sold through on- and off-premise outlets and were made available to the fans, for foot
ball matches involving the Dutch team. An active PR programme gave the Heineken brand a significant
presence in all media.
The brand was also highly visible once again at Pink Pop, the Fast Forward Dance Parade and Dance
Valley, which helped to reinforce the brands contemporary music credentials.
Amstel further strengthened its number two position in the Netherlands, helped by creative sales
promotions such as the new 'Our beer' advertising campaign and by the introduction of Amstel Lite
(with 30% fewer calories than regular Amstel) in July. As of early November, Amstel also became
available in BeerTender® kegs.
Sales volumes of our specialty brand, Wieckse Witte, and our Brand premium beer, suffered as a
result of supermarket discounting. To reinforce its premium position, Brand introduced a new golden
12-bottle crate, which will support its premium positioning with both trade and consumers. Brand
Urtyp and Brand Cuvee continued to grow in their high-end niche market, with most top-restaurants
now serving Brand Urtyp as an aperitif. As of early November, Brand became available in
BeerTender® kegs.