Pressure on alcohol
An increasingly negative perception towards
alcohol from legislators could lead to a decrease
in sales and damage the industry in general. If the
social acceptability of alcoholic beverage were to
decline significantly from current levels, sales of
Heineken products could materially decrease.
Heineken's Alcohol Policy is based on the principle
to produce, market, and sell beer in ways that
have a positive impact on society at large.
V ith this policy, Heineken promotes awareness
o' the advantages and disadvantages of alcohol,
c couraging informed consumers to be
a countable for their own actions. In 2005 the
ljoy Heineken Responsibly' programme was
inched in most markets (a responsibility message
0 back labels directing consumers to a dedicated
bsite), others will follow in 2006. Markets are
b coming more and more engaged to promote
sponsible consumption, in partnership with third
p rties. As from 2006 alcohol policy compliance
1 onitoring will be strengthened.
activeness of beer category under pressure
I ineken has many operations in mature - mainly
1 stem European - beer markets where the
a ractiveness of the beer category is being
c allenged by other beverage categories.
these markets, management focus is on
p nduct innovation, portfolio management and
cost-effectiveness in order to secure market
position and profitability. Since Heineken is
acquiring new businesses in emerging markets,
the relative dependency on profitability from
mature markets will decline over time.
Operational risks
Acquisitions and business integration
In the pursuit of further expansion, Heineken seeks
to strike a balance between organic and acquired
growth within the limit of a conservative financing
structure. In acquisitions, specifically in emerging
markets, Heineken will be faced with different
cultures, business principles and political, economic
and social environments. This may affect corporate
values, image and quality standards. It may also
impact the realisation of long-term business plans
including synergy objectives, underlying the
valuation of newly acquired companies.
Heineken further strengthened its business
development and integration activities, which
includes significant involvement from relevant
Group departments and regional management
in carrying out effective due diligence processes
and preparing take charge and integration plans.
Business continuity
Business interruptions could affect sales and
market shares. These are not considered a
major risk due to the relative size and spread
Heineken N.V. - Annual Report 2005
