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Notes to the Consolidated Financial Statements
Introduction
Revenue is recognised based on the price specified in the contract, net of returns, discounts, sales taxes and
excise taxes collected on behalf of third parties.
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Revenue
The majority of HEINEKEN's revenue is generated by the sale and delivery of products to customers. The product
range of HEINEKEN mainly consists of beer, soft drinks and cider. Products are mostly own-produced finished
goods from HEINEKEN's brewing activities, but also contain purchased goods for resale from HEINEKEN's
wholesale activities. HEINEKEN's customer group can be split between on-trade customers like cafés, bars and
restaurants and off-trade customers like retailers and wholesalers. Due to HEINEKEN's global footprint, its
revenue is exposed to strategic and financial risks that differ per region.
Revenue is recognised when control over products has been transferred and HEINEKEN fulfilled its performance
obligation to the customer. For the majority of the sales, control is transferred either at delivery of the products
or upon pickup by the customer from HEINEKEN's premises.
Discounts
HEINEKEN uses different types of discounts depending on the nature of the customer. Some discounts
are unconditional, like cash discounts, early payment discounts and temporary promotional discounts.
Unconditional discounts are recognised at the same moment of the related sales transaction.
HEINEKEN also provides conditional discounts to customers. These contractually agreed conditions include
volume and promotional rebates. Conditional discounts are recognised based on estimated target realisation.
The estimation is based on accumulated experience supported by historical and current sales information. A
discount accrual is recognised at each reporting date for discounts payable to customers based on their expected
or actual volume up to that date.
Other discounts include listing and shelving visibility fees charged by the customer whereby the payments to
customers are closely related to the volumes sold. HEINEKEN assesses the substance of contracts with customers
to determine the classification of payments to customers as either discounts or marketing expenses.
Discounts are accounted for as a reduction of revenue. Only when these payments to customers relate to a
distinct service, the amount is classified as operating expense.
Other revenues include rental income from pubs and bars, royalties, income from wholesale activities, pub
management services and technical services to third parties. Royalties are sales-based and recognised in profit or
loss (consolidated income statement) on an accrual basis in accordance with the relevant agreement. Rental
income, income from wholesale activities, pub management services and technical services are recognised in
profit or loss when the services have been delivered.
Excise tax expense
Local tax authorities impose multiple taxes, duties and fees. These include excise on the sale or production of
alcoholic beverages, environmental taxes on the use of certain raw materials or packaging materials, or the
energy consumption in the production process. Excise duties are common in the beverage industry but levied
differently amongst the countries HEINEKEN operates in. HEINEKEN performs a country by country analysis to
assess whether the excise duty is sales-related or effectively a production tax. In most countries, excise duties are
effectively a production tax as excise duties become payable when goods are moved from bonded warehouses
and are not based on the sales value. In these countries, increases in excise duties are not always (fully) passed
on to customers and HEINEKEN cannot, or can only partly, reclaim the excise duty in the case products are
eventually not sold to customers. Excise tax is borne by HEINEKEN for these countries and shown as expenses.
Only for those countries where excise is levied at the moment of the sales transaction and excise is based on the
sales value, the excise duties are collected on behalf of a tax authority and consequently deducted from revenue.
Due to the complexity and variety in tax legislation, significant judgement is applied in the assessment of
whether taxes are borne by HEINEKEN or collected on behalf of a third party.
To provide transparency on the impact of the accounting for excise, HEINEKEN presents the excise tax expense
on a separate line below revenue in the consolidated income statement. A subtotal called 'Net revenue' is
therefore included in the Income Statement. This 'Net revenue' subtotal is 'revenue' as defined in IFRS 15
(after discounts) minus the excise tax expense for those countries where the excise is borne by HEINEKEN.
Heineken
N.V.
Annual
Report
2023
