Outlook 2007
This outlook for 2007 provides further information on
general developments in the international beer industry,
their effects on Heineken's position, its profit forecast and
its capital investments.
Report of the Executive Board cc
General
The world beer market is expected to grow by
almost 3 per cent in terms of volume. Developing
markets like China, the Far East, Latin America
and Russia will drive a large part of the growth.
In terms of value about half of the growth will
be generated by the increase in the premium
segment of the market. The growth rate of the
premium segment is expected to be twice as
high as that of the total market. The premium
segment develops positively in mature as well
as in developing markets and with the Heineken
brand we occupy a leading position in this
attractive segment. New communication
platforms, like the UEFA Champions League
soccer and rugby, successful innovations, like
the DraughtKeg, and excellent execution in
on-trade and off-trade, will drive the volume
growth of the Heineken brand to a level that
exceeds the segment growth.
In 2006, most of our key markets developed well
and, in general, Heineken expects a continuation
of this trend in 2007.
In the USA, the Company will benefit from
the growing consumption of imported beer in
the regular and large light beer market. The
introduction of Heineken Premium Light in the
luxury light segment gave new opportunities
to trade-up the US beer consumer. Russia, our
largest operation by volume, will continue to
grow, be it at a more normal rate, and our
optimised portfolio of brands offers ample
opportunities for further growth in the premium
and mainstream segment of the market. With
the greater political stability and resulting
economic growth in Africa, beer markets in
Central Africa have returned to growth and the
Heineken Group is well positioned to benefit from
this development. The outlook for Nigeria and
Egypt, where substantial restructurings were
undertaken in 2005 and 2006, are positive. In
Eastern Europe, in particular in Poland, and in the
Far East, beer continues to gain in popularity at
the expense of local alcoholic beverages. The
southern part of Western Europe offers good
long-term volume and value growth, whilst in
Northwest Europe opportunities for strong brands
and attractive innovations are available despite
the overall decline of beer consumption as
a result of an ageing population.
Uncertainties remain in the field of government
actions like excise duty increases, smoking bans
in the on-trade and advertising limitations.
Full-year profit outlook 2007
Based on these developments, Heineken expects
strong top-line growth in 2007 as a result of
higher volumes, better pricing and an improvement
in sales mix. On the cost side, the industry is faced
with increasing input costs as a result of higher
purchasing prices for barley and packaging
materials, mitigated by lower cost of energy
and transportation.
In 2007, we expect a substantial reduction of our
fixed-cost base on the back of the realisation of
our Fit2Fight cost saving programme.
M Heineken N.V.
Annual Report 2006
