38
REGIONAL REVIEW - AMERICAS
INVESTING FOR
GROWTH
REPORT OF THE EXECUTIVE BOARD
HEINEKEN N.V. ANNUAL REPORT 200*
USA
Consolidated beer volume 7.9 million hectolitres
Market position* 2
*ln imported segment.
According to AC Nielsen data, the US beer market grew 0.1
per cent in 2008, the result of slight growth in the first part
of 2008 and a weaker trend by the end of the year, when the
on-trade and convenience store channels in particular came
under increasing pressure due to the economic downturn.
According to AC Nielsen data, the import segment declined
1.5 per cent.
Total beer sales of Heineken USA were 2 per cent lower,
with sales volume of the Dutch brands declining -5.6 per
cent and the Mexican brands growing +8.3 per cent.
Depletions (sales by distributors to retailers) of the Dutch
portfolio and Mexican portfolio were -4.9 per cent and
+7.9 per cent respectively.
Depletions of imported Heineken lager (-4.8 per cent)
were also affected by the lack of significant new advertising
campaigns whilst sales volume was also affected by a 4.1
per cent price increase across the entire Dutch portfolio in
November 2008. Depletions of Heineken Premium Light were
only slightly lower, despite price promotions of competing
imported light beers. Amstel Light depletions were down
11 per cent.
The FEMSA portfolio gained share in the import segment and
amongst Mexican-American consumers. Growth was driven
by Dos Equis and the Tecate brand family (Tecate and Tecate
Light), which grew significantly despite a price increase of
4 per cent in October 2008.
At the 2008 Super Bowl, Heineken USA launched a new
advertising campaign for Heineken lager, which focuses the
consumer on the brand's premium equity and positioning.
Lower volume and negative currency developments led to
lower reported revenue. EBIT (beia) grew double digit on an
organic basis, thanks to significant fixed-cost reductions and
more efficiency in marketing spend. Reported EBIT (beia)
was negatively affected by the lower US dollar hedge rate
(-€45 million).
Latin America is one of the world's
growth regions when it comes to
beer. The Heineken brand has
been sold in markets across the
region and is today available in
many Latin American markets.
The Chilean and Argentinian
beer markets in particular have
seen strong growth in the last
few years with per capita
consumption reaching record
levels in Chile in 2008.
In 2003, to solidify its platform for
future growth in these markets,
Heineken agreed a 50 per cent
stake in the joint venture
Inversiones Representaciones S.A.
(IRSA), the company that holds a
controlling stake in Compania
Cervecerias Unidas (CCU).
CCU is a fully diversified beverage
company selling beer, wine, spirits
and soft drinks. It is Chile's largest
brewer. The company's most
famous beers are the Cristal and
Escudo brands. In addition, the
company brews, markets and sells
the Heineken brand in Chile and
Argentina.
In Argentina, CCU is the second-
largest brewer operating two
breweries with a market share
of over 16 per cent.
Since 2006, CCU has instigated
a number of strategies that
support and promote sustainable
operational improvements.
Most significantly, the company
has implemented a large-scale
Supply Chain Optimisation (OCA)
programme aimed at improving
iine efficiencies, and reducing
losses in packaging and glass
breakage. The OCA was first
rolled out throughout its brewery
and soft drink operations in
Santiago and later, given the clear
benefits, was extended to its
breweries in Argentina, again
leading to exceptional savings
and efficiencies.
The partnership with CCU has
certainly enabled expansion of
the Heineken brand. But it is not
only Heineken that is growing. In
2008, with sales volumes
increasing in every category,
CCU announced an investment
of $400 million over the coming
three years in order to expand
its production capacity and be
prepared for the next phase of
development.
