10.7
Spain
Outstanding profitability and strong efficiency gains
42 Heineken N.V. Annual Report 2004 Report of the Executive Board Regional Review Western Europe
Soft drinks
Vrumona was the only soft drinks company in the Netherlands that managed to grow market share in
2004, driven primarily by anticipating changing consumer demands and meeting them with timely
new product launches. As a result of this growth, Vrumona became the second largest player in this
category. Despite the market share growth, however, Vrumona's overall sales volume declined.
Vrumona's operating result decreased. Across the Netherlands, sales of all traditional carbonated soft
drinks declined largely due to greater dietary concerns among consumers. Light and non-carbonated
soft drinks, though, continued to grow. In these segments, we introduced several successful new
products, such as Sisi Fruitmania and Crystal Clear. Joy, the tooth-friendly children's drink, won a na
tional prize for best beverage innovation.
Overall, the Spanish beer market grew
by approximately 3% in 2004. As with other
markets in Europe, discounting intensified
at retail level and sales volume in the
on-trade declined. In contrast, the off trade
segment continued to grow and we were
able to raise prices in line with inflation.
Despite the increased price competition and decline in on-trade sales, sales volume of our key brands
expanded in line with the market. Heineken Espana maintained its leading position in the branded
beer segment, thanks largely to successful marketing. Overall sales volume was stable. In this context,
we focused on driving costs down and on making improvements to our product mix. We now no longer
brew any private label beer in Spain, as we focus on the higher margin segments of the market.
Consequently, our branded volume increased modestly, with the Heineken brand providing most of
the growth in this segment.
Efficiency gains
We achieved substantial efficiency gains, driven by improvements in purchasing, logistics, point of
sales materials and reductions in inventory. In addition, we outsourced some of our non-core activities.
Variable costs rose due to both portfolio adjustments and the shift towards one-way packaging.
The integration of Heineken Canarias into Heineken Espana has proceeded well, yielding our targeted
synergy benefits. The Canarias operations are now supplied by Heineken Espana and we have
harmonised the IT systems.
Brands
Heineken Espana's main focus in 2004 was, once again, on building a strong brand portfolio in which
every brand plays a specific role. While Heineken is the cornerstone of the portfolio, Cruzcampo
is assuming an increasingly important role as a top mainstream beer with a strong Andalucian
heritage. In 2004 Cruzcampo celebrated its centenary, an event which gave us a strong marketing
platform for the year. The activities involved a national advertising campaign with the slogan:
Too years of living your life with all your heart'. In addition, we relaunched Shandy Cruzcampo
in 2004 with new packaging and a new advertising campaign.
Consumers continue to respond well to our advertising and sponsorships. Our website
www.Heineken.es is popular and, in line with our focus on music, is becoming a national reference
point for music events of all descriptions.
Other marketing successes for the year include a prize for 'Legado de Yuste', an abbey beer
launched in 2002. This specialty brand continues to grow and was chosen as one of the 100 best ideas
of 2004 by a prestigious economic magazine.
Total beer sales
million hectolitres
<5 "1 Market share
-L percent
1 Market position
position
