II
4.7
Russia
Strong growth in sales, presence and profitibility
49 Heineken N.V. Annual Report 2004 Report of the Executive Board Regional Review Central and Eastern Europe
CENTRAL AND EASTERN EUROPE IS ONE OF THE WORLD'S LARGEST BEER MARKETS BY REGION. MANY
MARKETS HAVE BELOW-AVERAGE PER-CAPITA CONSUMPTION AND COUNTRIES ARE PREPARING TO JOIN
THE EU. THESE ELEMENTS ARE FORECAST TO DELIVER AN ACCELERATION IN GROWTH OF PURCHASING
POWER, BEER CONSUMPTION AND TO EXPAND THE MARKET FOR PREMIUM BEER.
to 3.5 million hectolitres of beer will supply sufficient capacity for the expected future growth. These
decisions along with a strong focus on increased efficiency resulted in an increase in operating result.
Brands
Heineken, the leading international premium beer in Poland, experienced substantial growth as did
Tatra, in the standard segment. Spezial, a regional brand, grew its volume too. The sales growth
supports the company's strategy of being active in almost all market segments and reflects higher
demand for lower-priced brands among Polish consumers. Sales of Warka Jasne Peine, a national
mainstream brand, and Zywiec, the most recognised Polish premium brand, were slightly below those
of last year. Speciality brands characterised by different fermentation methods, flavours and colours
were introduced into Zywiec Group's portfolio. While Poland is a lager beer country, the financially
attractive specialty segment is developing too and Heineken imports such as Desperados, Paulaner
Hefe Weissbier, Paulaner Original Münchner, Fischer, Murphy's Irish Stout and Murphy's Irish Red are
becoming more popular.
The Russian beer market
grew 11.5% in 2004, thanks to strong
economic growth, underpinned
by high oil prices. While the rouble
fell around 9% against the euro,
it strengthened against
the US dollar by around 6%.
The two major trends of the Russian beer market are the growth of the international premium
segment, which now accounts for 6.1% of the market - up from 4.5% in 2003 - and the growth of the
PET bottle segment, which now represents 40% of the off-trade market. We are well represented in
both of these segments.
Heineken Russia had a strong year, outpacing the market with double-digit like-for-like volume
growth and gaining market share in the process. In addition, we were able to raise prices between
6% and 8%. The increase in sales volume and prices combined with operating and purchasing
efficiencies and an improvement in our product mix resulted in a sharp increase in operating result.
The newly acquired breweries, Shikhan and Volga, have strong regional brands. We anticipate
investing €130 million over the next four years in these breweries to increase capacity and upgrade
the existing facilities.
Total beer sales volume in 2004 reached 3.9 million hectolitres, up from 3.3 in 2003. Including
acquired volumes, the 2004 volume is pushed to a total of 4.7 million. Annualising the acquired vol
umes would give a total of 6.0 million hectolitres under the control of Heineken Russia with a resultant
market share of 7.1%.
Total beer sales
million hectolitres
7 Market share
percent
6 Market position
position
