Regional Review continued
Asia Pacific: Countries
Singapore
Asia Pacific Breweries (Singapore) continues to be the largest player in the market. Beer volumes (including export) were up 7 per cent. Tiger brand volumes were higher. We re-designed the brand’s logo and TigerLive, a multi-sensory brand entertainment centre opened in December. Heineken brand volumes were stable. EBIT was slightly higher despite an increase in marketing investments.
We launched APB’s Archipelago Brewery range of specialty beers in the market, including Traveller’s Wheat®, Straits Pale® and Trader’s Ale®.
Malaysia
The Malaysian market was affected by yet another year in which excise duty was increased, resulting in weaker trading and lower volumes and causing the total beer market to shrink by 8 per cent. However, with higher marketing investments to build stronger relationships, Guinness Anchor Berhad’s volume was down by 2 per cent.
China
In China, profit in the beer market continued to be hurt by fierce competition, low selling prices and high overcapacity levels. In terms of hectolitres, China is the largest beer market in the world but in terms of profit, this market continues to be relatively small.
Heineken Asia Pacific Breweries China (HAPBC, the APB vehicle managing the Chinese operation) grew high single-digits and EBIT became positive, helped by the improvement in Hainan and Shanghai and the contribution by new associates. Volume of the Heineken brand increased by 9.8 per cent. HAPBC operates 12 breweries in Hainan, Shanghai, Guang Dong, Jiangsu and Tianji through its subsidiaries and associates. Three more breweries are under construction. Jiangsu DaFuHao is in the process of building two more breweries. APB’s stake in Jiangsu DaFuHao in China was increased from 40 to 49 per cent.
In 2006 several new beers were introduced including Reeb Antarktik, Reeb Ice beer and Reeb 1841 Pilsner. The volume of the Reeb brand grew by 6 per cent in Shanghai.
Vietnam
The growth of the profitable Vietnamese beer market continued unabated. The Heineken brand developed well and volumes were up by 20 per cent, bringing the total Heineken volume in Vietnam close to the 1 million hectolitre mark. EBIT grew as a result of the better volumes and an increase in price for Heineken in cans implemented at the end of 2005.
Asia Pacific Breweries extended its market coverage with the acquisition of Foster’s breweries in Danang in Central Vietnam and in Tien Giang on the north of the Mekong Delta. In January 2007, APB also acquired the assets of Quang Nam Brewery in Central Vietnam. The acquisition makes the company a strong number-two player in the market with national coverage. The deals also expanded our portfolio in Vietnam with the brands Foster’s® lager and Biere Larue®, BGI®, Flag®, Song Han®, Larger® and Larue®. These brands will help increase our market share in the international premium and national mainstream segment. During the year we introduced locally-brewed Coors Light®, completing our range of international premium beers.
Thailand
The development of the beer market in Thailand was hampered by stricter government rules on the selling, distribution and advertising of alcoholic beverages. Heineken continues to be the beer of choice in the premium segment despite the fact that the operating environment in Thailand became more restrictive with new regulations. Total volumes were up by 6 per cent but EBIT was lower as a result of marketing investments in building the Cheers® brand, the new local mainstream brand introduced in 2005.
New Zealand
Fierce discounting by our competitors in New Zealand resulted in lower volumes and reduced EBIT. In addition, the New Zealand dollar fell against the Euro by 9 per cent. Growth of the Heineken brand remained steady as the premium beer segment continued to expand in 2006. The company has also developed plans to strengthen its brands through innovation and further marketing investments.
Strong position
P.T. Multi Bintang Indonesia was able to increase volume and maintain its leading position in the market.
Indonesia
The beer market in Indonesia continued to grow until an excise duty increase was introduced in November 2006. The market came under pricing pressure due to discounting activities by a competitor. Volumes and EBIT at Multi Bintang Indonesia increased and the company maintained its leading position in the market. The Heineken brand enjoyed very strong growth.
Other markets in Asia Pacific
In July we held the ground-breaking ceremony for the new Laos brewery, which will be operational by 2007.
Papua New Guinea had an excellent year with 13 per cent-higher volumes, slightly better pricing and good cost management resulting in a substantially improved EBIT.
In Australia, the international premium beer segment continued to grow. Heineken brand volumes rose 33 per cent. Heineken beer is now produced locally by our partner Lion Nathan.
In Taiwan, the Heineken brand performed exceptionally well, with a volume increase of 36 per cent as a result of improvements in the economy and excellent performance by the Taiwan team, that made Heineken the favourite international beer in Taiwan.
Volumes in Cambodia continued to develop well and EBIT increased.
