5.8 60 Nigeria Other countries Increasing volume and driving efficiencies 57 Heineken N.V. Annual Report 2004 Report of the Executive Board Regional Review Africa and the Middle East HIGHER SALES AND IMPROVED OPERATING RESULT BEER AND SOFT DRINK SALES VOLUME IN AFRICA AND THE MIDDLE EAST EXPANDED AGAIN IN 2004, THANKS MAINLY TO WIDER DISTRIBUTION AND INCREASE OF PRODUCTION CAPACITY. TOTAL GROUP BEER VOLUME GREW 6.1% TO 13.5 MILLION HECTOLITRES. SOFT DRINKS SALES ROSE 2.7% TO 2.6 MILLION HECTOLITRES. AFTER FALLING IN 2003, OPERATING RESULTS IN LOCAL CURRENCIES BOUNCED BACK STRONGLY, THANKS TO VOLUME GROWTH AND COST CONTROL. Total beer sales million hectolitres Market share percent I Market position position In Nigeria, Africa's second largest beer market and the most important African market for Heineken, our main operating company - Nigerian Breweries - raised volume output by i.2% to 5.8 million hectolitres in a market that remained stable. The stable beer market bore a strong relationship to the economy, which came to a standstill in the second half of 2004. Inflation and national strikes also had a dampening effect on consumption. Despite this, Nigerian Breweries was able to raise market share and prices. Together with efficiencies offered by the new brewery at Ama, which entered service during the year, we were able to achieve a substantial increase in operating result both in local currency terms and in euro. The new brewery, with a capacity of 3.4 million hectolitres, is achieving significantly lower energy and water costs. The old brewery near Enugu was closed. The commissioning of the new brewery led to an increase in depreciation, but we were able to offset this through savings on packaging and material costs and higher prices. In South Africa the region's largest beer market, Heineken established Brandhouse, a joint venture with Diageo and Namibia Breweries. The creation of Brandhouse follows the acquisition by Diageo and Heineken of a 28.9% stake in Namibia Breweries Limited in July 2003. Among its brands are premium beers including Windhoek, Heineken, Guinness and Kilkenny. This venture combines the sales, marketing and distribution of 40 top premium brands and its perform ance so far confirms our belief that we have created a strong platform for future growth. Sales volume of the Heineken brand in South Africa increased substantially. Also AmsteTs sales volume increased. As part of this new venture, Namibia Breweries in Windhoek, Namibia, started brewing the Heineken brand locally for Namibia, South Africa and other countries in the region. Despite periodic unrest during the year, Brasseries, Limonaderies et Malteries in the Democratic Republic of Congo reported strong volume growth in beer and soft drinks. The growth came thanks to intense marketing activities to counter competitive pressures. A relatively stable exchange rate and inflation also contributed to the positive performance.

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