Chief Executive's Statement
O O Qs
Report of the Executive Board^^^M Report of the Supervisory Board
In 2019, we delivered another year of superior
top-line growth. Net revenue (beia) organic growth
was up 5.6%, well balanced with an increase of
3.1% in consolidated beer volume and net revenue
(beia) per hectolitre up 3.3%. Brazil, Mexico, South
Africa, Vietnam and Cambodia were the fastest
growing markets.
The Heineken® brand posted the best performance
in over a decade with volumes increasing by 8.3%.
More than 40 countries grew double-digit, with
Brazil in the lead. Today 12 markets sell more than
one million hectolitres of Heineken® annually,
now including the UK and Nigeria. Heineken® 0.0
continues to expand and is now available in
57 markets.
Our premium portfolio was up high single-digit, led
by our international brands: Amstel, Desperados,
Tiger and Birra Moretti.
In the craft segment, our volume grew mid single-
digit overall, with a double-digit expansion in Europe
compensating for lower volume in the Americas.
Lagunitas is now available in more than 35 markets
and is produced locally outside the United States,
in the Netherlands and Brazil.
Our cider volume increased double digit outside
the UK, with South Africa and Russia in the lead.
We now produce cider in 18 markets and we are
seeing encouraging results in new cider markets
such as Vietnam and Mexico. In the UK, volume
declined mainly due to a challenging comparable
versus last year.
Volume of our low- and no-alcohol segment reached
14.1 million hectolitres. Our no-alcohol portfolio
was up double digit, driven by Heineken® 0.0.
We are responding to consumer demand for low
and no products with a broadening portfolio of 348
line extensions in 123 brands. Throughout Europe,
we promote the category through the Zero Zone,
which provides greater visibility of 0.0 beers in on-
and off-trade outlets.
Revenue growth in 2019 was essentially organic
as we acquired only a few companies including
Namystów in Poland, Biela in Ecuador and Agua
Castello in Portugal. We also took a minority stake
in craft breweries, Gallia in France and Oedipus in
the Netherlands.
In 2019 the major strategic event for the year was
the start of our new venture with China Resources
Enterprise. We are pleased to have joined forces
with the largest beer producer in China and
very encouraged by the potential for growth
of Heineken®.
Recognising the increasing importance of
connecting in a digital world with consumers and
customers, in 2019 we added a 5th pillar to our
strategic priorities to provide the right focus within
our organisation.
How we achieve results is as important as achieving
them. This is why Brewing a Better World is one of
our top strategic priorities.
On health and safety, although the rate of accidents
declined by 26% versus 2018, we need to continue
to embed our Life Saving Rules into daily practice.
Over the past decade, we have lowered our water
usage by almost a third to 3.4 hectolitres of water
per hectolitre produced and 3.1 hectolitres in
water scarce areas in 2019. As we were ahead of
our 2020 targets, in March 2019 we introduced
our 2030 water ambition 'Every Drop'. Next to
continuous improvement in water consumption,
we aim to improve the water catchment areas
surrounding our production sites.
Heineken N.V. Annual Report 201910
Financial Statements Sustainability Review Other Information
Today, 15 of these breweries in water scarce areas
have started water balancing projects, including
nature-based solutions like reforestation and
wetland restoration.
In 2018 we set out our 'Drop the C' programme to
reduce CO2 emissions, with an ambitious target to
power our production facilities with 70% electric and
thermal renewable energy by 2030. This matters
because thermal energy accounts for nearly 80%
of total energy consumption in a brewery. We are at
the onset of this journey and reached 19% in 2019.
In 2019 we increased our local sourcing percentage
of agricultural products in Africa to 44%.
Although we made progress, we still have much
more to do to reach our ambition of 60%. To that
effect, we are working with partners to increase
processing capacity in the region, for example with
new malting facilities in Ethiopia.
We spent over 10% of Heineken® media budgets on
"When You Drive Never Drink" or other responsible
consumption awareness campaigns in over
60 markets.
We aim to reduce our plastic use and contribute to
increased collection and recycling of plastic where
possible. To have the biggest positive impact, we
use regional strategies that take into account the
maturity of each region, the local use of plastic, and
the current availability of recycling infrastructure.
We closed the year with an operating profit (beia)
organic growth of 3.9%. In a context of increased
input costs, we have continued working on the
efficiency of our operations whilst steadily investing
behind our brands, our sustainability agenda and
our digital transformation.
Looking ahead to 2020, we anticipate our business
to deliver a superior top-line growth driven by
volume, price and premiumisation. We expect
a low-single digit increase of input costs per
hectolitre, with the benefit of lower prices in some
commodities largely offset by transactional currency
headwinds. We will continue our productivity
measures and cost management initiatives to fuel
our investment behind our brands, innovation,
e-commerce platforms, technology upgrades and
sustainability programmes. As a result, we currently
expect operating profit (beia) to grow by mid-single
digit on an organic basis, barring major negative
macro-economic or political developments.
We have the right geographical footprint, strategy
and capabilities to deliver superior top-line
growth. Our exposure is well balanced between
developed and developing markets. There is strong
momentum behind Heineken® and our portfolio
of premium, non-alcoholic, craft and cider brands.
We leverage our global scale while maintaining
local relevance. This allows us to replicate success at
scale and with speed. We are committed to grow
sustainably and will not compromise on our Brewing
a Better World programmes.
I end this letter by expressing my heartfelt gratitude
to my colleagues as well as to our customers,
partners and suppliers. I am looking forward to
2020 being another year of progress for HEINEKEN.
Jean-Francois van Boxmeer
Chairman of the Executive Board and CEO
Amsterdam, 11 February 2020
