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 in recent years. In
particular, there is an increased consumer focus on
health and well-being resulting in a growing interest
in low-alcohol, low-calorie and low-carb propositions.
What are we doing to manage this risk
HEINEKEN has fully embraced these recent
developments, by a focused craft and variety
strategy as well as increasing investment in the
zero alcohol category, beyond Heineken®. We are
increasing our portfolio and launching Zero Zones.
While expanding into adjacent categories, we
ensure we focus on natural credentials similar
to brewing and maintaining a focus on adult,
brewed and refreshing products.
Explore Further:
- Deliver top line growth, pages 10-15
- Advocating responsible consumption, pages 137-140
What could happen
HEINEKEN relies on the skills and capabilities of
its people to deliver on its strategic ambitions.
If HEINEKEN is not successful in attracting,
developing and retaining diverse and talented
people and leaders with the required capabilities,
this may jeopardise its capacity to execute its
strategy and achieve the targeted returns.
Recent developments
The opportunities that data and digital provide,
results in a significant increase in focus on the
acquisition of digital talent and in reskilling existing
employees. In order to make the most of a diverse
workforce and also attract top talent, a strong
focus on Inclusion and Diversity strategy is required.
In addition, emerging markets are challenged with
economic and/or political uncertainty which leads
to highly mobile talents and brain drain.
What we are doing to manage this risk
We continue to grow leaders who are focused
on developing the business, their teams and
themselves by embedding the HEINEKEN
Leadership Expectations in our people processes.
Alongside this, we continue to evolve our approach
to attracting great external talent through our
refreshed employer brand campaign, Go Places!
Furthermore, we are advancing our Inclusion
and Diversity agenda through building inclusive
leadership capabilities, developing a global
ambassador network and women's development
programme. We are also increasingly focused on
understanding the impact of digital on our people
agenda and how it will impact our organisation,
capabilities, leadership and culture.
Explore Further:
- Engage and develop our people, pages 19-20
- Values and behaviours, page 145
- Inclusion and diversity, page 146
Financial Statements
Sustainability Review
Heineken N.V. Annual Report 2019^ 30
Other Information
What could happen
Consolidation in 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. Further impact could
come from the consolidation on customer side.
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. HEINEKEN
is actively cooperating with local craft brewers,
participating in capital and sharing knowledge,
in order to keep the beer category attractive
and to stay relevant for consumers. To continue
winning on the customer side, HEINEKEN explores
and implements news ways of working and new
channels, including digital/ecommerce platforms.
Explore Further:
- Deliver top line growth, pages 10-15
- Drive end2end performance, page 16
What could happen
HEINEKEN aims to provide a safe workplace
for all employees and contractors. Despite
the controls in place, HEINEKEN employees,
contractors and visitors may suffer from
uncontrolled events in the brewery, supply chain,
along the route-to-market or in our offices, which
could lead to illness, serious injuries or fatalities.
Alcohol abuse by employees is a risk for health
safety and reputation.
Recent developments
Despite our efforts related to safety, several
significant fatal accidents have occurred, underlining
the importance of realising further improvements in
the area of safety. The lack of quality (emergency)
health care in general remains a challenge in
all developing countries for our national and
international employees and their family members.
Major epidemics and natural disasters remain a risk
for the business continuity.
What are we doing to manage this risk
HEINEKEN has established 'Put Safety First' as a key
behaviour for employees of all levels, and Health
and Safety as a priority of its Brewing a Better World
programme. Throughout the entire supply chain,
the HEINEKEN Life Saving Rules target the activities
that carry the greatest safety risks to employees
and contractors. Special focus areas with dedicated
support are and will be road safety, contract safety and
leadership development. We provide medical care,
including HIV and emergency care. This is continuously
being supported and monitored by Global Health.
Operating companies facing epidemics or other natural
disasters are receiving specific support when needed.
Explore Further:
Promoting Health and Safety, pages 141-142
