Regional Review continued
Western Europe: Countries
Brand portfolio
Heineken owns and manages a strong portfolio. Our international and local brands include lagers, specialty beers, light beers (low-calorie beers) and alcohol-free beers.
The Netherlands
| Consolidated beer volume | 5.7 million hectolitres |
| Market share | 49.8 per cent |
| Market position | 1 |
Our volumes were fractionally down. Amstel and Brand® beer grew well, whilst volumes of the Heineken brand slightly decreased.
Revenues remained broadly unchanged. EBIT (BEIA) was virtually unchanged, as the effect of a better sales mix was offset by lower results in the wholesale operations. On the other hand, the result of the brewing activities grew thanks to ongoing savings in fixed costs.
The DraughtKeg was a great success, with 5.4 million kegs sold by year end. The installation of the much needed additional filling capacity in our Dutch brewery in Zoeterwoude is progressing according to plan. BeerTender, the other innovative draught system for home use, is now available in 11 of our brands. By the end of 2006, six million BeerTender Kegs had been sold.
In November, new Amstel returnable bottles were rolled out with the restyled label, featuring the well-known bulls-eye. Other packaging types will also be improved accordingly. The upgrade of the labels will be rolled out internationally.
Our soft drink operation, Vrumona, recorded a positive volume growth, which resulted in an increased EBIT.
Spain
| Consolidated beer volume | 11.2 million hectolitres |
| Market share | 30.4 per cent |
| Market position | 1 |
Heineken España revenues increased by 7.7 per cent thanks to strong volume growth driven by all three key brands: Heineken, Amstel and Cruzcampo. Buckler®, our alcohol-free beer, continues its success and volumes grew by 1.7 per cent in 2006, following on strong growth posted in 2005.
EBIT grew organically thanks to the buoyant volume growth and a better pricing and sales mix, despite higher costs related to the expansion of the distribution business and the new collective wage contracts.
In August Heineken announced the sale of the land in the centre of Seville where the existing brewery is located. The receipts from the sale will be paid in instalments over three years (2006-2008). The construction of the new 4.5 million hectolitre brewery in Seville is proceeding according to plan and operations will start in 2008.
France
| Consolidated beer volume | 6.6 million hectolitres |
| Market share | 30.9 per cent |
| Market position | 2 |
France remains a challenging market for brewers, particularly in the on-trade in the first half of the year. The implementation of the Loi Dutreil, the law which restricts discount payments to retailers, but gives our customers the opportunity to include discounts to consumer prices, had a significant impact in 2006. Heineken France volumes decreased in line with market trends. Both Heineken, up 1 per cent, and Desperados, up 0.9 per cent, outperformed the market.
Our revenues were up 1.7 per cent organically year-on-year. Part of the success was due to the Heineken brand, which clearly benefits from the focus on innovation, and the new BeerTender compatible with the DraughtKeg. Likewise, our consistent price policy, improved sales mix and successful marketing concepts such as ‘Culture Bière’ in Paris, a vibrant, gastronomic and retail experience dedicated to the celebration of beer, helped protect revenues.
EBIT improved thanks to a better contribution from our wholesale operations, ongoing cost cutting in the context of the Fit2Fight programme and the improved mix. In addition, the book gain from the sale of four distribution centres was realised.
Italy
| Consolidated beer volume | 5.7 million hectolitres |
| Market share | 31.9 per cent |
| Market position | 1 |
The market in Italy increased, despite an excise duty increase, driven by low-priced imports.
The Heineken brand showed healthy growth, reaching a record volume. Birra Moretti, our key brand in Italy, continued its growth to more than 2 million hectolitres. During the summer we launched Birra Moretti Zero, a non-alcoholic beer, targeting the growing alcohol-free segment.
EBIT increased thanks to stronger pricing and stringent cost control, despite the lower profitability in the wholesale business. Part of the Fit2Fight programme in Italy is focused on improving the performance of distribution.
As a result of the closure of the Pedavena brewery and further restructuring, headcount was reduced by more than 325.
Other markets in Western Europe
In the United Kingdom, Heineken brand volume rose by 24 per cent. This reflects consumers’ growing acceptance of the brand’s premium positioning and an improved distribution network.
In Ireland, we reinforced our number one position in the growing lager segment, increasing our overall market share to more than 21 per cent. Volumes were up 2 per cent, and Heineken Ireland outperformed the market. EBIT grew as a result of good top-line growth.
The sponsorship of the Heineken Rugby Cup contributed to this success, as did the roll-out of our David draught system. The on-trade is in slight decline due to changing beer drinking habits and anti-drink-driving activities.
In Switzerland volumes grew by 1 per cent with considerable performance improvements in Heineken and Calanda®.
