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HEINEKEN: Positioned for growth in Asia Pacific Roland Pirmez
Region President, HEINEKEN Asia Pacific
London | 21 March 2014 | Heineken NV
What’s Brewing Seminar
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
3
59
48
29
79
70
45 43
39 38 34
29
22 21 19
13
6 2 1
Europe Rest ofWorld
AsiaPacific
Australia NewZealand
Japan SouthKorea
China Laos Vietnam Thailand Taiwan Singapore Cambodia PapuaNew
Guinea
Malaysia India Indonesia
Asia Pacific is a diverse region with untapped growth potential
Asia Pacific has low average PCC...
Source: Canadean
Note: Rest of the world excludes Asia Pacific and Europe; Asia Pacific average includes listed countries only
...and a diverse set of markets with significant potential for growth
Per Capita Consumption 2013 (in litres per annum)
4
73% 72% 70% 69% 63% 62% 61% 59% 57% 49% 47% 47% 45% 44%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Laos Papua NewGuinea
Cambodia Philippines India Malaysia Indonesia Myanmar Vietnam China NewZealand
Australia Thailand Singapore
Asia Pacific has a younger average population base
Source: UN World Population Prospects; Canadean 2014
Asia Pacific has a young and growing population…
6% 7% 6% 7% 5% 6% 4% 4% 4% 2% 3% 4% 2% 8%
% population under the age of 35 (2015 forecast)
Total population growth (2013-18F)
Asia Pacific average
52%
Europe average
41%
5 Source: EuroMonitor
...Increasing wealth Rising income levels across Asia
Percentage of households in China Percentage of households in India
Percentage of households in Vietnam Percentage of households in Thailand
0%
50%
100%
2007 2012 20170%
50%
100%
2007 2012 2017
0%
50%
100%
2007 2012 2017
21M 23M 25M
402M 434M 464M 215M 233M 250M
19M 21M 23M
0%
50%
100%
2007 2012 2017
CAGR
24%
19%
6%
-9%
-15%
23%
29%
13%
0%
-11%
22%
19%
3%
-7%
-12%
11%
7%
-1%
-6%
-9%
CAGR
CAGR CAGR
<$2.5K $2.5-5K $5-10K $10-25K >$25K Annual Income
6
Rural Urban
84%
75% 73%
56% 54%
50%
39% 36%
34% 33%
21%
13%
SouthKorea
Malaysia Taiwan China Indonesia Philippines Laos Thailand Vietnam India Cambodia PapuaNew
Guinea
2011 2015
Urbanisation rate is set to rise across Asia Pacific
Rising urbanisation to support increased beer consumption
Source: United Nations, Department of Economic and Social Affairs, Population Division
http://esa.un.org/unpd/wup/CD-ROM/Urban-Rural-Population.htm
Rising urbanisation a key driver of increased beer consumption
Asia Pacific Average
59%
Europe Average
74%
Average PCC in Vietnam
2x
7
8.7%
3.5%
IPS Mainstream
24%
15%
8% 7% 6% 6%
4% 3%
2% 2% 0.3%
Taiwan Vietnam Cambodia Indonesia Thailand Laos SouthKorea
India Papua NewGuinea
China Philippines
1. Includes lager market only
Source: Canadean, HEINEKEN
Premium segment opportunity in Asia Pacific is compelling
IPS penetration is low in large markets, offering significant upside for growth
Premium segment expected to grow significantly ahead of mainstream
% IPS of total beer market 2013 Asia Pacific beer growth
Total beer
market size
2013 (MHL)
Forecast volume CAGR in
Asia Pacific (2013-18F)
Asia Pacific average
3.9%
Europe average
10%
5 32 3 3 19 3 21 22 1 536 16
8
112
25
15 152
34 5
31 (13) 209
China SE Asia & PacificIslands
Rest of Asia andOceania
Total Asia Pacific Latin America North America Africa and MiddleEast
Europe World
Incremental beer market volume (2013-18F) in MHL3
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
Asia Pacific region expected to contribute over 70% of global beer growth in the next 5 years
% of World
Growth 12% 7% 16% 3% 15% -6% 72% 53%
9
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
10
14
5
5
3
1
HEINEKEN
Carlsberg
Kirin
SABMiller
ABInbev
1. Broad market leadership positions only
2. 28 breweries in India includes 9 contract breweries
Source: Most recent competitor financial results
HEINEKEN best placed to access regional growth opportunities HEINEKEN has leadership in the largest number of markets1
Number of #1 and #2 market positions in Asia-Pacific
52 Breweries2
10,800 Employees
Over 50 Brands
4
1
1
2
2
1
1
1 1
28
1
1
5
2
1
Legend
Broad market
leadership
Leadership in the IPS
Breweries
Sri Lanka #2
Thailand #1
Malaysia #1
Singapore #1
Indonesia #1
Laos #2
China #2
Mongolia #2
Cambodia #2
New Caledonia #1
New Zealand #2
Papua New Guinea #1
Solomon Islands #1
Vietnam #2 UBL India #1
HEINEKEN Lion Australia #2
Hong Kong #2
South Korea #2
HEINEKEN Kirin Japan #2
Taiwan #2
11
A winning brand portfolio
1. Anchor is a regional brand in Hainan only
A premium-led brand portfolio complemented by strong mainstream brands
HEINEKEN Asia Pacific: Group Volume and Operating profit (beia) by Segment (2013)
40% 55%
60% 45%
Volume Operating profit(beia)
Mainstream
Premium
Vietnam Indonesia China Singapore Papua
New Guinea
New
Zealand
India
1
12
0.8
0.5 0.5 0.3
0.2 0.15 0.13 0.12 0.10 0.10 0.05 0.01
China Vietnam Australia Thailand India South Korea Taiwan Japan New Zealand Cambodia Malaysia Singapore Indonesia Philippines
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
Well positioned to capture IPS growth
CAGR IPS segment 2013-18F
HEINEKEN broad leadership markets
HEINEKEN segment leadership markets
Other markets
8.6 3.9
10% 11% 7% 7% 11% 7% 3% 4% 3% 9% 5% 6% 5% 3%
2013 IPS market size (mhl)
2018F IPS market size (mhl)
2013-18F CAGR
China 14.3 22.8
Southeast Asia and Pacific Islands 10.9 16.7
Rest of Asia Pacific 3.6 4.9
10%
8.9% +15.6MHL
6.2%
Forecasted Incremental IPS Volume in MHL (2013-18F)
13
Examples of key partnerships across the region
Strong ties
1. Refers to VBL entities only (central and southern Vietnam)
2. Guinness Anchor Berhad is a listed entity with a public free float of 49%
Strong partnerships a key success factor for HEINEKEN Asia Pacific
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
Market Partner
HEINEKEN
Equity Stake
Vietnam1 60%
India 38.7%
Australia 50%
Malaysia2 25.5%
Japan 51%
Thailand 36.8% Chanyawan Group & Sarasin Group
14
HEINEKEN Asia Pacific:
2013 Group Volume split
(MHL)
HEINEKEN Asia Pacific:
2013 Group Operating Profit (beia)
split (€m)
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
HEINEKEN’s business in Asia Pacific is well diversified
Indochina
Other Southeast Asia
North Asia
Oceania & Pacific Islands
South Asia & Others
1
2
3
4
5
22.7MHL €604M6
15
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
16
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
APB successfully integrated within HEINEKEN
Engagement
Change Communications
Cultural Awareness
Corporate Culture Alignment
Incentives
Team building
17
One Regional Office, One Company, One Identity
18
Asia Pacific region contribution to HEINEKEN group operating profit (beia) has doubled
HEINEKEN Asia Pacific region (€m)
Increasing importance of Asia Pacific region to HEINEKEN’s business
257
580
2011 2013
Group Operating profit (beia)
WE 26%
CEE 10%
26%
AME 20%
Asia Pacific
18%
Group Operating profit (beia) 2013
1,160
2,394
2011 2013
Group Revenue
WE 33%
CEE 12%
25%
AME 21%
9%
Group Operating profit (beia) 2011
Americas
Asia
Pacific
Americas
19
APB has achieved solid volume growth
1EBIT (beia) includes HEINEKEN‘s share of net profit of joint ventures and assoicates
Continued strong growth momentum of APB post acquisition
...and strong profit growth momentum1
16.2
17.0
18.6
2011 2012 2013
7%
CAGR
APB: Volume (MHL)
2011 2012 2013
17%
CAGR
APB: EBIT (beia)1
20
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
21
1
2
3
4
5
6
7
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
Asia Pacific priorities
22
1. Leveraging global Heineken® brand programmes while building unique local activation
LOCAL MUSIC GLOBAL PARTNERSHIPS
LOCAL CELEBRATION GLOBAL DIGITAL
23
4.0
5.4
6.1
2007 2010 2013
Sustained growth of Heineken® brand
1. Heineken® offers a unique competitive advantage in the region
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
7.7%
CAGR Volume (MHL)
24
Strong volume growth
2. Tiger — Unleashing the potential
Establishing strong position in the region and beyond
Tiger volume in Asia Pacific
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
2011 2012 2013
2.9
4.0
5.1 33%
CAGR Volume (MHL)
25
2. Tiger — The iconic Asian beer brand Communication targeting young adults entering the premium category
TIGER TRANSLATE TIGER STREET FOOTBALL TIGER BLUE CHRISTMAS
26
2. We are going to take Tiger to the ‘next level’
NEW COMMUNICATION PLATFORM
STRONGER POSITION
EXPANDING GEOGRAPHIES
Making Tiger cool, by being distinctly Asian and challenging conventions in beer
Tapping into sharp cultural consumer needs, using the power and creativity of the Tiger symbol
Capturing the rise of the middle class in Asia, while offering something intriguing and truly differentiated in new markets
27
Rising innovation in Asia Pacific focused on introduction of margin enhancing products and supporting top-line growth ambitions.
3. Accelerate Innovation: 25 launches planned in 2014
SOL DESPERADOS STRONGBOW APPLE CIDER
TIGER RADLER
Examples include:
Tequila flavored beer
Target young adults
Alternative to spirits and cocktails
Targets non beer drinkers
Alternative to cocktails or wine
IPS from Mexico
Target successful men
Refreshing flavour well suited to Asian tastes
Beer with natural lemon juice
Recruit women to beer category
Expanding consumption occasions
28
4. Capitalise on the strength of local mainstream brands Well established local brands offer continued growth opportunities
BINTANG: INDONESIA LARUE: VIETNAM
KINGFISHER: INDIA ANCHOR: CAMBODIA
+8% growth in FY13 Has more than 100 years heritage, established since 1909 2014 focus: Expand coverage in targeted areas
#1 in Indonesia with 49% brand market share +7% growth in FY13 2014 focus: Innovation
#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
+13% growth in FY13 # 3 brand in Cambodia 2014 focus : Strengthen brand equity and increase coverage
29
5. Diverse market conditions in Asia Pacific requires strong local insights and capabilities
EXTENSIVE ROUTE-TO-MARKETS TAILORED TO DIVERSE MARKET CONDITIONS
TRADITIONAL ON AND OFF-PREMISE CHANNELS REMAIN IMPORTANT
STRONG LOCAL UNDERSTANDING OF SALES DRIVERS
Brewery
Distributors
Distributors
Wholesalers
30
5. Developing capabilities to drive excellence in outlet execution
SEGMENTING OUTLETS WITH CLEAR CHANNEL STRATEGY
UNDERSTANDING SHOPPER AND CONSUMER INSIGHTS
WE WIN BY DOING THE RIGHT THINGS IN THE RIGHT OUTLETS
Differentiated products
to provide choice
Develop innovative,
merchandising
Professionalise through
investment in systems
31
Added or extended 15 breweries the region since 20102
1. As at 28 February 2014
2. Excludes United Breweries Limited in India
6. Adding capacity to meet future demand 10 MHL of new capacity added since 20101
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
32
7. Leveraging increased scale benefits across the region
GLOBAL MARKETING PLATFORMS GLOBAL SALES AND CUSTOMERS
PROCUREMENT INNOVATION
33
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
34
Favourable market conditions… …leads to strong market growth
Source: CIA World Factbook, World Bank, Canadean and HEINEKEN
Vietnam is an attractive and rapidly growing beer market
22
27
32
2009 2011 2013
Total beer
Market Volume (MHL)
10%
CAGR • Population 90m
• Market volume 32mhl
• 12th largest beer market in the
World and 3rd in Asia Pacific
• Young population
• Urbanisation trend
• High GDP growth
• Rising income and affluence
• Beer culture, not liquor
• Affordable beer price
• Potential increase of per capita
consumption
Size &
Scale
Growth
Potential
Drinking
Culture
35
Strong volume growth… HEINEKEN is well positioned
to capture future growth
opportunities
HEINEKEN is winning in Vietnam Expanded brand offering driving market share gains
…delivering continued
profit growth
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 2009 2011 2013
HEINEKEN Vietnam total volume
(Indexed 2009 = 100)
2009 2011 2013
HEINEKEN Vietnam total operating profit
(Indexed 2009 = 100)
14%
CAGR
38%
CAGR
36 Note: IPS defined as off-trade price above 20RMB/L, includes super premium and premium
Source: Canadean and HEINEKEN, BCG
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
14
23
2013 2018F
China total beer volume (MHL)
+10% CAGR
120.5
284.6
90.8
21.7 14.3
2013
Affordable premium
IPS
Value
Lower Mainstream
Upper Mainstream
RMB/L
9-20
6-9
4-6
<4
>20
‘13-’18
CAGR
11%
8%
3%
-2%
10% Heineken ®
Tiger
China IPS volume (MHL)
Market
Share
4%
17%
53%
23%
3%
37 Source: HEINEKEN
Premium focus driving profitability in China
HEINEKEN has delivered strong growth in China
Priorities focused on winning in the premium segment
HEINEKEN China: Volume and Profit
Vo
lum
e (
KH
L)
0
500
1000
1500
2008 2009 2010 2011 2012 2013
Operating Profit
Tiger volume 22% CAGR
Heineken® Volume 24% CAGR
Leverage Heineken® brand strength
Expand our footprint and portfolio
Invest in brand building and consumer engagement
Invest in people and capabilities
1
2
3
4
38 Source: Canadean 2013,UBL, CIA World Factbook, World Bank, HEINEKEN
Current low beer consumption in India offers promise
India has low PCC, with high growth potential
Navigating through challenges
…and attractive demographics
2
29
59
India Asia Pacificaverage
Europeaverage
0 500 1.000 1.500
Russia
Brazil
China
India
1%
2%
11%
20%
0% 10% 20% 30%
Russia
Brazil
China
India
PCC 2013 (litres)
2030 Pop. (m)
Largest population by 2030
With largest proportion of the world’s youth
% of population <25 in 2030
Affordability Duty structure makes beer relatively more expensive than spirits Limited outlets Only 1 per 17k people Highly regulated Advertising bans Highly diverse market
1
2
3
5
4
39
UBL 51%
Others 49%
1. As at 21 March 2014
Source: United Breweries Limited, Canadean
United Breweries is the leading brewer and best placed to capture future growth
United Breweries has clear market leadership
United Breweries Limited: Shareholder structure1
Kingfisher is synonymous with beer in India and enjoys close to four times leadership versus nearest competitor brand
% Indian market share 2013
22MHL
38.7% 36.1%
Free Float: 25.2%
1
2
3
Strong foundations for growth
Kingfisher brand equity and strong brand portfolio
Extensive route-to-market and manufacturing footprint, provides consumer reach and scale benefits
Experienced management with proven track record in industry
4
40
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
Summary
Question & Answer Question
& Answer Question
& Answer
& Answer Question
& Answer
London | 21 March 2014 | Heineken NV
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