HEINEKEN: Positioned for growth in Asia Pacific

Transcription

1 What s Brewing Seminar HEINEKEN: Positioned for growth in Asia Pacific Roland Pirmez Region President, HEINEKEN Asia Pacific London 21 March 2014 Heineken NV

2 Agenda HEINEKEN: Positioned for growth in Asia Pacific 1 Asia Pacific: A highly Attractive Growth Region 2 HEINEKEN Asia Pacific: Uniquely Positioned to Win 3 APB: Strong Growth Momentum 4 Regional Strategic Priorities 5 Key Markets Update 2

3 Asia Pacific is a diverse region with untapped growth potential Asia Pacific has low average PCC......and a diverse set of markets with significant potential for growth Europe Rest of World Asia Pacific Australia New Zealand Japan South Korea China Laos Vietnam Thailand Taiwan Singapore Cambodia Papua New Guinea Malaysia India Indonesia Per Capita Consumption 2013 (in litres per annum) 3 Source: Canadean Note: Rest of the world excludes Asia Pacific and Europe; Asia Pacific average includes listed countries only

4 Asia Pacific has a young and growing population Asia Pacific has a younger average population base 80% 70% 60% 50% % population under the age of 35 (2015 forecast) Asia Pacific average 52% 40% 30% 73% 72% 70% 69% 63% 62% 61% 59% 57% 49% 47% 47% 45% 44% Europe average 41% 20% 10% 0% Laos Papua New Guinea Cambodia Philippines India Malaysia Indonesia Myanmar Vietnam China New Zealand Australia Thailand Singapore 6% 7% 6% 7% 5% 6% 4% 4% 4% 2% 3% 4% 2% 8% Total population growth ( F) 4 Source: UN World Population Prospects; Canadean 2014

5 ...Increasing wealth Rising income levels across Asia Percentage of households in China Percentage of households in India 100% 50% 0% 402M 434M 464M CAGR 215M 233M 250M 100% 24% % 6% -9% -15% 50% 0% CAGR 22% 19% 3% -7% -12% Percentage of households in Vietnam Percentage of households in Thailand 100% 50% 0% 21M 23M 25M CAGR 23% 29% 13% 0% -11% 100% 50% 0% 19M 21M 23M CAGR 11% 7% -1% -6% -9% 5 Source: EuroMonitor Annual Income <$2.5K $2.5-5K $5-10K $10-25K >$25K

6 Rising urbanisation a key driver of increased beer consumption Urbanisation rate is set to rise across Asia Pacific Rising urbanisation to support increased beer consumption 84% 75% 73% Europe Average 74% Average PCC in Vietnam 56% 54% 50% 39% 36% 34% 33% Asia Pacific Average 59% 2x 21% 13% South Korea Malaysia Taiwan China Indonesia Philippines Laos Thailand Vietnam India Cambodia Papua New Guinea Rural Urban 6 Source: United Nations, Department of Economic and Social Affairs, Population Division

7 Premium segment opportunity in Asia Pacific is compelling IPS penetration is low in large markets, offering significant upside for growth % IPS of total beer market % Premium segment expected to grow significantly ahead of mainstream Asia Pacific beer growth 8.7% 15% 8% 7% 6% 6% Europe average 10% 3.5% Total beer market size 2013 (MHL) Taiwan Vietnam Cambodia Indonesia Thailand Laos South Korea 4% 3% India 2% 2% Papua New Guinea China 0.3% Philippines Asia Pacific average 3.9% IPS Mainstream Forecast volume CAGR in Asia Pacific ( F) 7 1. Includes lager market only Source: Canadean, HEINEKEN

8 Asia Pacific region expected to contribute over 70% of global beer growth in the next 5 years Incremental beer market volume ( F) in MHL3 31 (13) China SE Asia & Pacific Islands Rest of Asia and Oceania Total Asia Pacific Latin America North America Africa and Middle East Europe World % of World Growth 53% 12% 7% 72% 16% 3% 15% -6% 8 Note. Countries included in Southeast Asia and Pacific Islands are: Cambodia, Indonesia, Laos, Malaysia, Papua New Guinea, Philippines, Singapore, Thailand, Vietnam, Australia, New Caledonia, New Zealand, Solomon Islands Source: Canadean

10 HEINEKEN best placed to access regional growth opportunities HEINEKEN has leadership in the largest number of markets 1 Laos #2 1 2 Mongolia #2 South Korea #2 China #2 HEINEKEN Kirin Japan #2 Number of #1 and #2 market positions in Asia-Pacific Thailand #1 UBL India # Vietnam #2 Taiwan #2 Hong Kong #2 HEINEKEN 14 Sri Lanka #2 1 1 Cambodia #2 2 Papua New Guinea #1 Carlsberg 5 Malaysia #1 Singapore #1 2 1 Solomon Islands #1 Kirin SABMiller Breweries 2 10,800 Employees Over 50 Brands Indonesia #1 HEINEKEN Lion Australia #2 1 New Caledonia #1 New Zealand #2 ABInbev 1 Legend Broad market leadership 4 Leadership in the IPS Breweries Broad market leadership positions only breweries in India includes 9 contract breweries Source: Most recent competitor financial results

11 A premium-led brand portfolio complemented by strong mainstream brands A winning brand portfolio HEINEKEN Asia Pacific: Group Volume and Operating profit (beia) by Segment (2013) China Vietnam Singapore Indonesia Papua New Guinea India New Zealand 60% 45% Mainstream 1 40% 55% Premium Volume Operating profit (beia) Anchor is a regional brand in Hainan only

12 Well positioned to capture IPS growth 2013 IPS market size (mhl) 2018F IPS market size (mhl) F CAGR China Southeast Asia and Pacific Islands Rest of Asia Pacific % 8.9% +15.6MHL 6.2% Forecasted Incremental IPS Volume in MHL ( F) HEINEKEN broad leadership markets HEINEKEN segment leadership markets 0.8 Other markets China Vietnam Australia Thailand India South Korea Taiwan Japan New Zealand Cambodia Malaysia Singapore Indonesia Philippines CAGR IPS segment F 10% 11% 7% 7% 11% 7% 3% 4% 3% 9% 5% 6% 5% 3% 12 Note. Countries included in Southeast Asia and Pacific Islands are: Cambodia, Indonesia, Laos, Malaysia, Papua New Guinea, Philippines, Singapore, Thailand, Vietnam, Australia, New Caledonia, New Zealand, Solomon Islands Source: Canadean; China IPS volume sourced from HEINEKEN and BCG; Indonesia IPS growth includes Guinness

13 Strong partnerships a key success factor for HEINEKEN Asia Pacific Examples of key partnerships across the region Market Partner HEINEKEN Equity Stake Strong ties Vietnam 1 60% India 38.7% Malaysia % Australia 50% Thailand 36.8% Chanyawan Group & Sarasin Group HEINEKEN has a track record of building successful partnerships in the region: Clear Common Goals Trust & Commitment Complementary Capabilities Relationships & Local Network Cultural Awareness, Religious Sensitivities Japan 51% Refers to VBL entities only (central and southern Vietnam) 2. Guinness Anchor Berhad is a listed entity with a public free float of 49%

14 HEINEKEN s business in Asia Pacific is well diversified HEINEKEN Asia Pacific: 2013 Group Volume split (MHL) HEINEKEN Asia Pacific: 2013 Group Operating Profit (beia) split ( m) Indochina1 Other Southeast Asia MHL 604M 6 North Asia 3 Oceania & Pacific Islands 4 South Asia & Others 5 14 Source: HEINEKEN 1. Cambodia, Laos & Vietnam; 2. Indonesia, Malaysia, Singapore & Thailand; 3. China, Hong Kong, Mongolia, South Korea, Japan & Taiwan; 4. Australia, New Zealand, New Caledonia, Solomon Islands & Papua New Guinea; 5. India & Sri Lanka 6. Before central and intercompany costs of 24m; Group Operating Profit (beia) net of these costs is 580m

16 APB successfully integrated within HEINEKEN Delivering against an ambitious plan Maintained and strengthened our winning team ONE operating system, tools, processes and policies Unlocking top-line synergies through integrated commercial platform Confirmation of ~ 25m cost synergies by end of 2014 Embedded HEINEKEN way and aligned corporate culture Change Communications Cultural Awareness Corporate Culture Alignment Incentives Team building Engagement 16

17 One Regional Office, One Company, One Identity 17

18 Increasing importance of Asia Pacific region to HEINEKEN s business Asia Pacific region contribution to HEINEKEN group operating profit (beia) has doubled HEINEKEN Asia Pacific region ( m) Asia Pacific 9% Asia Pacific 18% 2, AME 21% WE 33% AME 20% WE 26% CEE 10% 1, Americas 25% CEE 12% Americas 26% Group Operating profit (beia) 2011 Group Operating profit (beia) Group Revenue Group Operating profit (beia) 18

19 Continued strong growth momentum of APB post acquisition APB has achieved solid volume growth APB: Volume (MHL)...and strong profit growth momentum 1 APB: EBIT (beia) 1 CAGR 7% 18.6 CAGR 17% EBIT (beia) includes HEINEKEN s share of net profit of joint ventures and assoicates

21 Asia Pacific priorities Leveraging Heineken brand success Position Tiger as the iconic Asian beer brand Accelerate innovation Capitalise on strength of mainstream brands Drive excellence in outlet execution Invest ahead of the curve to capture future growth Leverage global scale 21

22 1. Leveraging global Heineken brand programmes while building unique local activation GLOBAL PARTNERSHIPS LOCAL MUSIC GLOBAL DIGITAL LOCAL CELEBRATION 22

23 1. Heineken offers a unique competitive advantage in the region Sustained growth of Heineken brand Volume (MHL) CAGR 7.7% Continued to strengthen Heineken brand position in 2013 #1 in Vietnam, Thailand, Singapore, Malaysia, Taiwan, New Zealand, Japan and Indonesia premium segment Heineken volume in China grew by 20% and surpassed1mhl +17% growth in South Korea Successful introduction of Heineken Light in Taiwan

24 2. Tiger Unleashing the potential Strong volume growth Volume (MHL) CAGR 33% 5.1 Establishing strong position in the region and beyond Strong growth contributor Capture brand segmentation opportunities by pricing between mainstream and IPS Innovation with successful launch of Radler in Singapore and Malaysia Expanded international footprint to more than 60 countries Tiger volume in Asia Pacific 24

25 2. Tiger The iconic Asian beer brand Communication targeting young adults entering the premium category TIGER STREET FOOTBALL TIGER TRANSLATE TIGER BLUE CHRISTMAS 25

26 2. We are going to take Tiger to the next level STRONGER POSITION NEW COMMUNICATION PLATFORM EXPANDING GEOGRAPHIES Tapping into sharp cultural consumer needs, using the power and creativity of the Tiger symbol Making Tiger cool, by being distinctly Asian and challenging conventions in beer Capturing the rise of the middle class in Asia, while offering something intriguing and truly differentiated in new markets 26

27 3. Accelerate Innovation: 25 launches planned in 2014 Rising innovation in Asia Pacific focused on introduction of margin enhancing products and supporting top-line growth ambitions. Examples include: DESPERADOS SOL STRONGBOW APPLE CIDER TIGER RADLER Tequila flavored beer Target young adults Alternative to spirits and cocktails IPS from Mexico Target successful men Refreshing flavour well suited to Asian tastes Targets non beer drinkers Alternative to cocktails or wine Beer with natural lemon juice Recruit women to beer category Expanding consumption occasions 27

28 4. Capitalise on the strength of local mainstream brands Well established local brands offer continued growth opportunities LARUE: VIETNAM BINTANG: INDONESIA +8% growth in FY13 Has more than 100 years heritage, established since focus: Expand coverage in targeted areas #1 in Indonesia with 49% brand market share +7% growth in FY focus: Innovation ANCHOR: CAMBODIA KINGFISHER: INDIA +13% growth in FY13 # 3 brand in Cambodia 2014 focus : Strengthen brand equity and increase coverage #1 in India with 40% brand market share; almost four times larger than nearest competitor brand Proven performance record 2014 focus: Strengthen route to market 28

29 5. Diverse market conditions in Asia Pacific requires strong local insights and capabilities TRADITIONAL ON AND OFF-PREMISE CHANNELS REMAIN IMPORTANT EXTENSIVE ROUTE-TO-MARKETS TAILORED TO DIVERSE MARKET CONDITIONS STRONG LOCAL UNDERSTANDING OF SALES DRIVERS Brewery Distributors Distributors Wholesalers 29

30 5. Developing capabilities to drive excellence in outlet execution UNDERSTANDING SHOPPER AND CONSUMER INSIGHTS SEGMENTING OUTLETS WITH CLEAR CHANNEL STRATEGY WE WIN BY DOING THE RIGHT THINGS IN THE RIGHT OUTLETS Differentiated products to provide choice Develop innovative, merchandising Professionalise through investment in systems 30

31 6. Adding capacity to meet future demand 10 MHL of new capacity added since Added or extended 15 breweries the region since Greenfield China (2011- Guangzhou; by end-2015 Zhejiang) Myanmar (End of 2014) Capacity extension Vietnam Papua New Guinea Indonesia Singapore Laos India Solomon Islands New Zealand Mongolia As at 28 February Excludes United Breweries Limited in India

32 7. Leveraging increased scale benefits across the region GLOBAL SALES AND CUSTOMERS GLOBAL MARKETING PLATFORMS INNOVATION PROCUREMENT 32

34 Vietnam is an attractive and rapidly growing beer market Favourable market conditions leads to strong market growth Size & Scale Population 90m Market volume 32mhl 12th largest beer market in the World and 3rd in Asia Pacific CAGR 10% Growth Potential Young population Urbanisation trend High GDP growth Rising income and affluence 22 Drinking Culture Beer culture, not liquor Affordable beer price Potential increase of per capita consumption Total beer Market Volume (MHL) 34 Source: CIA World Factbook, World Bank, Canadean and HEINEKEN

35 HEINEKEN is winning in Vietnam Expanded brand offering driving market share gains Strong volume growth CAGR 14% HEINEKEN Vietnam total volume (Indexed 2009 = 100) delivering continued profit growth CAGR 38% HEINEKEN Vietnam total operating profit (Indexed 2009 = 100) HEINEKEN is well positioned to capture future growth opportunities Leverage benefit of increased scale Consistent market share gain and became the second largest brewer in Vietnam Maintain premium segment leadership with Heineken, Tiger and global brand portfolio Build scale in mainstream with Larue through targeted expansion Strengthen our route to market Expand capacity to meet future demand Excel in outlet execution 35

36 IPS expected to grow three times faster than mainstream segment in China HEINEKEN is gaining share in IPS Premium segment offer fastest growth opportunities Significant IPS volume growth anticipated IPS Affordable premium Upper Mainstream Market Share 3% 4% 17% CAGR RMB/L 10% >20 Heineken 11% 9-20 Tiger 8% % CAGR Lower Mainstream 53% 3% Value 2013 China total beer volume (MHL) 23% -2% < F China IPS volume (MHL) 36 Note: IPS defined as off-trade price above 20RMB/L, includes super premium and premium Source: Canadean and HEINEKEN, BCG

37 Volume (KHL) Premium focus driving profitability in China HEINEKEN has delivered strong growth in China Priorities focused on winning in the premium segment 1500 Operating Profit 1 Leverage Heineken brand strength 1000 Tiger volume 22% CAGR 2 3 Expand our footprint and portfolio Invest in brand building and consumer engagement 4 Invest in people and capabilities 500 Heineken Volume 24% CAGR HEINEKEN China: Volume and Profit 37 Source: HEINEKEN

38 Current low beer consumption in India offers promise India has low PCC, with high growth potential and attractive demographics Navigating through challenges 59 India China Brazil Largest population by Affordability Duty structure makes beer relatively more expensive than spirits 29 Russia Pop. (m) 2 Limited outlets Only 1 per 17k people 2 India China Brazil Russia With largest proportion of the world s youth 20% 11% 2% 1% Highly regulated Advertising bans Highly diverse market India Asia Pacific average PCC 2013 (litres) Europe average 0% 10% 20% 30% % of population <25 in Source: Canadean 2013,UBL, CIA World Factbook, World Bank, HEINEKEN

39 United Breweries is the leading brewer and best placed to capture future growth United Breweries has clear market leadership United Breweries Limited: Shareholder structure 1 UBL 51% 38.7% 36.1% 22MHL Free Float: 25.2% Others 49% 1 2 Strong foundations for growth Kingfisher brand equity and strong brand portfolio % Indian market share 2013 Kingfisher is synonymous with beer in India and enjoys close to four times leadership versus nearest competitor brand 3 4 Extensive route-to-market and manufacturing footprint, provides consumer reach and scale benefits Experienced management with proven track record in industry As at 21 March 2014 Source: United Breweries Limited, Canadean

40 Summary Asia Pacific: A highly attractive growth region Largest contributor to global beer growth to 2018 IPS to significantly outpace mainstream beer growth HEINEKEN is well positioned to capture this growth: Largest number of leadership positions across Asia Pacific APB delivering against expectations Strongly positioned with Heineken to capture IPS growth Business priorities focused on further strengthening our position: Investing behind a winning brand portfolio Accelerating innovation Focus on excellent outlet execution Further building capabilities Leveraging HEINEKEN global scale 40

41 Question & Answer Question nswer Question & Answer & Answer Question & Answer London 21 March 2014 Heineken NV