24 Risk Management (continued) Strategic risks (continued) Changing consumer preferences What could happen Recent developments Management capabilities Recent developments Industry consolidation Recent developments Heineken NV. Report of the Report of the Financial Sustainability Other Annual Report 2016 Introduction Executive Board Supervisory Board Statements Review Information Consumers' preferences and behaviours are evolving, shaping an increasingly complex and fragmented beer category. This requires HEINEKEN to constantly adapt its product offering, innovate and invest to maintain the relevance and strength of its brands. Failure to do so would in the longer term affect our revenues and profit as well as market share and possible loss of brand equity. What are we doing to manage this risk Over the past years, HEINEKEN has further strengthened its commercial organisation, its innovation programme and its marketing and sales capabilities. Significant investments have been made in consumer and market intelligence, new products and formats (both through innovation and through acquisitions) and in brand protection to anticipate and respond to industry changes. The increasing popularity of craft beer has been the most noticeable change in consumer tastes over the past years, and has been fully embraced by HEINEKEN, as shown by the partnership with Lagunitas and the addition to its craft portfolio with several specialty beers. Changes in consumer perceptions in relation to alcoholic beverages however, are more gradual but could gain further traction on the back of negative publicity related to increased health risks. What could happen HEINEKEN relies on the skills of its people to lead its growth agenda and strategic change programmes. HEINEKEN may not be successful in attracting, developing and retaining talented staff with the required capabilities, which may jeopardise its capacity to execute its strategy and achieve the targeted returns. What are we doing to manage this risk In order to secure a strong management talent pipeline, HEINEKEN has redesigned its appraisal and evaluation processes, as well as the range of management development programmes and initiatives. Management capabilities and succession planning have been enhanced by the implementation of functional resource committees and a renewed People Strategy, supported by a global people management platform. Hiring employees with particular expertise remains challenging, both in emerging markets due to competition between multinationals, and in developed markets where traditional industries face competition from new economy employers. As an answer, HEINEKEN has launched in 2016 its first ever global employer brand campaign, targeting especially the young and diverse audience it needs to fuel its talent pipeline. What could happen Consolidation of the alcoholic beverage industry has accelerated in 2016 and may affect existing market dynamics in the future due to competitive disadvantage with suppliers and increased competition on commercial spend and customer acquisition strategies. What are we doing to manage this risk HEINEKEN is constantly working on improving its cost efficiency, while rolling out its strategy to maintain and develop its competitive advantages, in particular in the premium and cider markets. Through a number of acquisitions, HEINEKEN has evolved its footprint extensively to reach an optimal balance of both higher growth developing markets and more stable developed markets, and to build an extensive and complementary brand portfolio alongside its flagship Heineken® brand. Despite recent market consolidation, beer remains a very local industry with respective country shares more relevant than global share. HEINEKEN remains committed to winning through a portfolio strategy focused on premium and led by Heineken®. Within individual markets, international and local brands complement Heineken® and provide valuable scale.

Jaarverslagen en Personeelsbladen Heineken

Jaarverslagen | 2016 | | pagina 25