Operational review
Our number one priority is to drive top-line growth
through the creation of a global portfolio that
combines the power of local and international brands
and which has Heineken as the jewel in the crown.
XO Annual Report 2006
Report of the Executive Board continued
Introduction
Accelerating top-line growth is a simple priority,
which gives the marketing and commercial
function of Heineken its clear and focused goal.
In order for us to meet this goal, the challenge
across the whole of our business is to balance the
management and growth of our local, regional
and international brands, with the management
and growth of Heineken, the world's most
valuable international premium beer brand.
In 2006, we made significant progress against
both sides of this equation.
The Heineken brand
The Heineken brand is our most important asset.
Although it is only 20 per cent of our Group beer
volume, it is, and will remain, at the emotional
heart of our Company. It is the clear leader in
the premium segment of the market, which is
expected to generate a significant part of the
total beer category profit growth over the next
10 years. At the end of 2006, the brand's share
of the international premium segment went up
to 19.2 per cent from 18.7 per cent in 2005.
In 2006, we achieved total Heineken premium
volume growth of 11.3 per cent - the best growth
figures for the brand since the 1980s. As important,
the growth came from all regions and from most
of the markets where the brand is enjoyed.
Achieving this level of growth on a brand with
the heritage, equity and global scale of Heineken
requires a commitment to delivering excellence
in two critical elements: innovation and
communication.
Innovation
Our innovation agenda on the Heineken brand
has the consumers and their needs as the starting
point. This means we need to consider 'total'
innovation - across the beer, the package and
the way we deliver draught beer.
It is fair to say that changes to the beer itself
have not been a feature of Heineken's approach
to innovation during the last 130 years. However,
the launch of Heineken Premium Light in the USA
coupled with an additional €43 million marketing
investment showed us the value of genuinely
understanding the consumer and the market.
In its first year, the brand achieved sales of
680,000 hectolitres, far above our original
forecast. The launch of this first true brand
extension was the most important innovation
in the actual beer since the Heineken brand
was born in 1873. It is a great example of a
bold decision backed up by the commitment
and belief of the organisation.
We are also aware of the value our packaging
creates, both for consumers and for our top-line
growth. The introduction of the 'embossed' can
is the latest in a line of can innovations which
1 Q Heineken N.V.
enables us to differentiate the brand from its
competitors and deliver a more premium
experience to our consumers. This too is the
thinking which lies behind the development of a
totally new look 'sleek' can which will help support
the next phase of growth on Heineken Premium
Light in the USA.
To complement our creative approach to
packaging, we also continued to refine our
approach to delivering fresh, quality draught
beer. Nothing demonstrates this more than the
success we have made of DraughtKeg, our go-
anywhere, five-litre keg. In 2006 we took two
crucial decisions: to accelerate the roll-out plan
(to 54 markets) and to invest in a new, additional
filling line in the Netherlands to meet the significant
current and anticipated consumer demand.
Given our success and our focus on innovation,
we are now seeing innovation of our original
innovations. We launched two new, updated
versions of the original BeerTender concept and
we also successfully combined our DraughtKeg
and BeerTender innovations when we launched
a unique one-way BeerTender keg in France.
4
Heineken group premium by region
In millions of hectolitres
O
Western Europe 7.1
Central and Eastern Europe 2.2
Americas 8.6
Africa and Middle East 1.1
Asia Pacific 3.5
Total 22.5
31.5%
9.8%
38.2%
4.9%
15.6%
100%
Global breakdown of brands
In millions of hectolitres
Heineken
Amstel
Other
Total
25.8
12.2
93.9
131.9
19.6%
9.2%
71.2%
100%
Heineken N.V. Q
Annual Report 2006
