Regional Review continued
Central & Eastern Europe: Countries
Russia
| Consolidated beer volume | 13.0 million hectolitres |
| Market share | 13.2 per cent |
| Market position | 3 |
The market developed very positively in 2006, thanks to economic conditions, good weather and an exceptional trading environment in the third quarter. Our volumes grew well, both organically and through the first-time consolidation of Ivan Taranov. Volumes reached 13 million hectolitres.
Volumes grew across the portfolio, with the Heineken brand up by more than 30 per cent, and Ochota, our leading mainstream brand, up by 26 per cent. We also recorded strong growth in the premium portfolio, with Zlaty Bazant®, Amstel Pulse, Bitburger®, Guinness® and Bud®, |as well as with the recently acquired mainstream brands. Three Bears®. Bochkarov® volumes were lower.
Heineken Russia’s revenues doubled as a result of first-time consolidations, volume and price growth. EBIT increased as well, mostly because of the first-time consolidation. The increase of our sales and marketing investment and integration costs limited organic growth.
Amstel Pulse, introduced at the end of 2005, recorded high sales and positive consumer appreciation.
In 2006 we focussed on the integration of the recently acquired brewers and development of the existing business: we completed the first brand portfolio review, identifying 14 key strategic brands and 9 top premium brands. We also completed the production allocation study of the 10 breweries and defined our distribution strategy. We introduced several new products and packages, mostly new PET, with good consumer response.
Poland
| Consolidated beer volume | 11.0 million hectolitres |
| Market share | 33.6 per cent |
| Market position | 2 |
The Polish beer market enjoyed another positive year, up 6.4 per cent. Grupa Zywiec performed very well, with volumes rising more than 8 per cent and growth in all brands.
Zywiec, Poland’s leading national premium brand, reached 2.7 million hectolitres, which represents an 8.3 per cent growth. Warka® Jasne Pelne, our mainstream brand, enjoyed a 25 per cent growth. The Heineken brand had a good year too, up 14.7 per cent, confirming its leadership in the international premium segment.
Revenues were ahead of last year, driven by the strong volumes and a better sales mix. Costs related to the brewery closure at Bydgoszcz at the end of 2006 and other Fit2Fight-related costs hit EBIT, which was slightly down on last year. EBIT was also affected by changes in package and channel mix.
In December Grupa Zywiec completed a buy back of 5.3 per cent of its outstanding shares.
Germany
| Consolidated beer volume | 3.6 million hectolitres |
| Market position | 4 |
The German beer market improved in 2006, after several years of decline, thanks to the World Cup soccer competition hosted there and favourable weather conditions in the first half of the year.
BrauHolding International, our joint venture with the Schorghuber Group, increased its volume organically. In particular the speciality beer, Paulaner® Weissbier, recorded a good year with a volume growth of 14.2 per cent, in part driven by exports. BrauHolding International became the leader in the ‘weiss’ beer segment.
Volumes in economy brands fell substantially, resulting in slightly lower EBIT.
Austria
| Consolidated beer volume | 4.5 million hectolitres |
| Market share | 50 per cent |
| Market position | 1 |
In 2006 we carried out an extensive brand portfolio optimisation programme, which resulted in a marketing focus on key brands and price increases. Related volume decline was limited to the Zipfer® and Gösser® brands but Puntigamer® and Kaiser® showed single-digit growth and the Heineken brand grew by over 34 per cent from a low base.
EBIT grew substantially also thanks to stringent cost control, especially in fixed costs.
Better pricing and sales mix compensated for some volume pressure. The on-trade market remains challenging.
Pago, our fruit juice operation, grew slightly in volume terms and the turnaround is proceeding according to expectations.
Greece
| Consolidated beer volume | 3.3 million hectolitres |
| Market share | 82.1 per cent |
| Market position | 1 |
The Greek beer market grew thanks to better summer weather and increased tourism. Volumes grew healthily.
Revenues rose, driven by a price increase of 3.5 per cent executed in March and the good volumes. Volumes in the on-trade outperformed, improving the mix and profitability. EBIT increased at a double-digit rate, helped by reductions in fixed costs and a better allocated marketing budget.
The Heineken brand grew 6 per cent and Amstel volumes were stable. We launched Amstel Pulse in the second half of the year.
Greece was one of the first countries to enjoy the roll-out of sub-zero coolers that allow beer to be served at a temperature below zero degrees Celsius, in both the off- and on-trade.
Other markets in Central and Eastern Europe
Brau Union Romania recorded a very strong performance, in both volume and profit. Volumes grew by 20 per cent, surpassing 4 million hectolitres. The performance was driven mainly by the Goldenbrau and Bucegi® brands, which underwent re-styling, with new packaging. A new seasonal beer of the Ciuc® brand, Ciuc® Winter, was introduced at year-end.
In Hungary, trading conditions remained challenging as a result of intense competition, cheap German imports and a sluggish economy. Nevertheless, Heineken Hungary volumes were slightly up, with an excellent 8 per cent growth in the Heineken brand. EBIT grew significantly due to a better sales mix and improved cost control.
The Bulgarian market rebounced from the effects of the excise duty increases in 2005. We enjoyed 9 per cent volume growth, which translated to an improvement in EBIT. The returnable version of the BeerTender was introduced in December.
