Report of the Executive Board
Risk management
continued
Main risks
Under the explicit understanding that this is not
an exhaustive list, Heineken's major strategic,
operational, financial and regulatory risks are
described below, including the risk mitigation
measures in place or planned enhancements.
Strategic risks
Heineken brand perception and Company
reputation
As both the group and its most valuable brand
carry the same name, reputation management
is of utmost importance. Heineken enjoys a
positive corporate reputation and our operating
companies are well respected in their region.
Constant management attention is directed
towards enhancing Heineken's social,
environmental and financial reputation. The
Heineken brand is key to Heineken's growth
strategy and is the most valuable asset of the
Company. Anything that adversely affects
consumer and stakeholder confidence in the
Heineken brand or Company could have
a negative impact on the overall business.
The Company reputation and sales could be
damaged by product integrity issues. Therefore,
production and logistics are subject to rigorous
quality standards and monitoring procedures,
which are further strengthened in 2006. Brand
perception is managed by strict marketing control
procedures. A Code of Business Conduct and
Whistleblowing Procedure aim to prevent any
unethical and irresponsible behaviour by the
Company or its employees. Reference is made
to Heineken's Sustainability Report 2006 for
reviewing Heineken's priorities in the area of
social responsibility supporting Company
reputation.
Pressure on alcohol
An increasingly negative perception in society
towards alcohol could prompt legislators to
introduce restrictive measures. Limitations
in advertising and availability could lead to
a decrease in sales and damage the industry
in general. 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. With
this policy, Heineken promotes awareness of
the advantages and disadvantages of alcohol,
encouraging informed consumers to be
accountable for their own actions. In 2006 the
launching of the 'Enjoy Heineken Responsibly'
programme (a responsibility message on back
labels directing consumers to a dedicated
website) in Heineken's markets was finalised.
Markets are becoming more and more engaged
to promote responsible consumption, in partnership
with third parties. The alcohol policy compliance
monitoring was strengthened in 2006.
In 2006 the European Commission announced
the creation of an EU Forum on alcohol, similar
to their approach on obesity. The role of the
industry has been acknowledged and
developments around the issue are closely
monitored.
Attractiveness of beer category under pressure
Heineken has many operations in mature - mainly
Western European - beer markets where the
attractiveness of the beer category is being
challenged by other beverage categories. In
jthese markets, management focus is on product
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.
A Q Heineken N.V.
HO Annual Report 2006
