Strategy Reduces Risk
World of Helneken 39 winter 2008/2009
Over the last few years we've seen a steep rise in the cost of the
raw ingredients used in brewing, grain being one of them - this year
alone, input costs for Heineken will increase by around 15% per
hectolitre. Heineken has forward looking purchasing policies in place
to reduce the impact of price fluctuations.
"Heineken spreads the risk of barley purchases by buying around 50
per cent of its requirements pre-harvest, which allows us to agree
on the price before the harvest, reducing our risk," explains Jürgen
Mulder, Heineken's Category Manager for Barley and Malt.
The practice of forward purchasing, known as hedging, has
advantages beyond just lowering price risks. "We also hedge on
quality. The farmers' co-operatives already know what Heineken
needs in the quality chain. This starts at the seed, fertilizer and
storage stages and allows us to agree in advance which varieties
should be grown. For example, we are already planning on the
varieties to be used in 2010," Jürgen says.
"This year again, Heineken is actively involved in the selection of
the optimum harvest", says Jürgen "Because we have a physical
connection with the product, we now enter markets such as Spain,
Romania, Ukraine or Russia and we are choosy about which quality
grains we want to purchase."
Another important aspect in Heineken's purchasing model is to buy
locally produced grains whenever possible. "We are the only brewing
company with a real global beer brand and we strive to have it tasting
the same in each region," Jürgen explains. "We believe in local supply
chains, and will buy grains from around the world if it's agronomically
sound to do so. This helps employ local people and returns benefits to
The fight for stabilisation is important not just for Heineken, but also
for its suppliers and, ultimately, for the consumer. Raw material prices
today have an influence felt tomorrow and beyond. "Our approach to
purchasing helps us keep quality high while ensuring our end product
is always competitively priced," says Jürgen.
Juergen. Mulder&Heineken. com