Changing
consumer preferences
Management
capabilities
Industry
consolidation
Health
and Safety
Report of the Supervisory Board
What could happen
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, market share and possibly our
brand equity.
Recent developments
The popularity of craft beer and the rise of low- and
no-alcohol products have been the most noticeable
changes in consumer tastes i n recent years.
HEINEKEN has fully embraced these trends, as
shown by the acquisition of Lagunitas, the addition
of several specialty beers to its craft portfolio and
the launch of Heineken® 0.0. to complement its
low- and no-alcohol category.
What are we doing to manage this risk
HEINEKEN has further strengthened its commercial
organisation, innovation programme and 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.
Explore Further:
- Del iver top l ine growth, pages 9-15.
- Advocating responsible consumption, pages 120, 134-137.
What could happen
HEINEKEN relies on the skills of its people to lead
its growth agenda and deliver on its strategic
ambitions. HEINEKEN may not be successful
in attracting, developing and retaining diverse
and talented people and leaders with the
required capabilities, which may jeopardise its
capacity to execute its strategy and achieve the
targeted returns.
Recent developments
By embedding the HEINEKEN Leadership
Expectations in our people processes, we continue
to grow leaders who are focused on developing
the business, their teams and themselves and who
are true role models. We pay special attention
to how we build talent and leadership capability
in emerging market regions like Asia and Africa
alongside further evolving our approach to
attracting great external talent through our
refreshed employer brand campaign, Go Places!
What we are doing to manage this risk
The development of quality People Plans in our
Operating Companies and Functions is focused
on leadership, talent, functional competencies
and critical capabilities, and inclusion and diversity
across the organisation. We continue to focus our
efforts on digital, end-to-end management and
revenue management. We also ensure that we
have robust talent identification and development
programmes in place, alongside the critical
leadership development interventions that are
required to lead in a competitive, complex and
increasingly digital world.
Explore Further:
- Engage and develop our people, pages 19-20.
- Values and behaviours, pages 142-143.
Heineken N.V. Annual Report 2018129
Financial Statements Sustainability Review Other Information
What could happen
Consolidation of the alcoholic beverage industry
may affect existing market dynamics due to
competitive disadvantage with suppliers and
increased competition on commercial spend
and customer acquisition strategies.
Recent developments
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.
What we are 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.
Explore Further:
- Deliver top line growth, pages 9-15.
- Drive end2end performance, page 16.
- Main changes in consolidation, page 32.
What could happen
HEINEKEN is committed to providing a safe
workplace for all employees and contractors.
Despite the controls in place, incidents and
accidents may happen in the brewery, our supply
chain and along the route-to-market, leading
to physical injuries or fatalities to employees,
contractors or members of the public.
Recent developments
Given our growing presence in emerging markets,
safety is an ongoing challenge and a permanent
focus area. Throughout all operations, the
HEINEKEN Life Saving Rules target the activities that
carry the greatest safety threats to employees and
contractors. Despite these efforts, several significant
fatal accidents have occurred, underlining the
importance of realising further improvements in the
area of safety. In particular, a specific programme
to improve road safety, being one of the highest risk
areas, has been set up and is being rolled out.
What are we doing to manage this risk
HEINEKEN has established 'Safety First' as a key
employee behaviour and Health and Safety as a
priority of its Brewing a Better World programme.
The global safety programme aims to enhance
global standards, organisation and processes,
and strengthening safety leadership and safety
behaviours. Continuous improvement is achieved
through global compliance monitoring, systematic
gap-closing and central reporting of accidents,
incidents and near-misses. Extra focus is placed
on high risk operating companies and activities
for which special programmes are developed.
Explore Further:
- Promoting Health and Safety, pages 120, 138-139.