Heineken

Group Memebers

• Neil Yadav• Richard Farrugia• Benjamin Chua• Michael Bestari• Divyesh Poojary• Charles Yulius• Fany

Introduction

• One of the oldest internationally recognized beer in world.

• Valued in 2009, as the second most recognized beer in world.

• Started and founded in 1873 by the Heineken family and run directly till 2002.

• Currently the management and company is directed by Mr. Jean. Boxmeer.

Introduction

• Heineken has 170 subsidiary brands of Beer operating in over 150 countries around world.

• The overall beer industry is highly competitive due to the presence of large brewery companies and acquisition of smaller player.

• Heineken controls 8% of the global market share of Beer industry world wide.

• The major TOP THREE players in beer industry are A-B Inbev, Sab miller and Heineken.

Heineken International Group and product structure

• Heineken and Amstel are principal brands of Heinken International. Group brews and sells more than 200 premium international, regional, local and speciality beers and ciders.

• Two traditional Beer are produced by group :-1. Heineken Tarwebok / Special dark. Sold only in Netherlands and U.S.A2. Heineken Oud Bruin Heineken Main Products Portfolio:-

Amstel Primus

Birra Moretti SagresCruzcampoStrongbow BulmerNewcastle Brown Ale

Kingfisher

Tiger

Fosters

Heineken

Question 1> What strategy does Heineken follow in the global beer

market?

• Heineken follows the FIT2FIGHT strategy • Heineken main strategy is for merger and

acquisition of the local and recognized brands of the niche markets.

• Heineken understands the importance of these strategic companies placed in the pockets of world whereby directly they gain the local market share.

• Since 2008, Heineken has been implementing Cost cutting measures for its operations as well as management.

Major Joint Ventures and Associates

Major Joint Ventures:-1. Asia pacific Breweries ( Singapore )2. United breweries limited ( India )3. Compania Cervecerias Unidas S.A ( Chile )4. Brau Holding International & Co ( Germany )5. Brassiere du Congo ( Congo )

Major Associates :-1. Cervecerias Costa Rica ( Costa Rica )2. Brassiere Nationale d`Haiti S.A ( Haiti )3. JSC Fe Efes Karaganda ( Kazakhstan )

Question 2> Financial position of Heineken?

2009 2008 2007 2006

Return On Equity

20.2% 7.3% 14.1% 21%

Profit Margin

7.77% 2.42% 6.42% 10.24%

Return On Assets

5.66% 1.69% 6.75% 9.31%

Total Debt Ratio

0.72 times 0.77 times 0.52 times 0.58 times

Total Asset Turnover

0.73 times 0.70 times 1.05 times 0.91 times

Profitability Ratios

Efficiency Ratios

Question 3> What is the structure of the global Beer industry?

•Beer market has been growing steadily with highest growth expected from the premium beer market with expectation of it to reach $230 billion by 2012 compared to market in 2004 valued at $125 billion.•Heineken is 3rd most recognized and valued beer company in world after A-B Inbev and SAB Miller

Comparison of Market leaders

Question 4-What changes has Heineken made that will help it deal with its challenges?

• Heineken was operated traditionally by the controlling family through the years. To change the culture they hired an outsider to lead the company.

• Earlier due to a larger management board and structure, more time was wasted for Decision Making, whereas now they have cut down the board from 5 to 3 executives.

• Majority of customer base for Heineken was above 40 year old. Thus through new advertisement targeting younger population and also including non alcoholic fruit flavoured drinks they have gained significant market in middle-east Muslim world.

Summary

• Major source of revenue comes from their subsidiaries.

• With the growing premium beer market in world Heineken has seen the increase in sales however, their performance dropped.

• Changes their strategy to adapt to changes in the external environment.

• To be more competitive, Heineken has sped up the decision-making process.

Purify the Water and stored in large tanks

Lightly heated and roasted barley used

Mixing barley in water for 7 days which transforms into malt to form mash

Starch from mash brewed to fermentable sugar to form wort which added with hops gives bitter taste

Wort cooled in fermentation tank and mixed with Heineken A yeast and is matured for 4-6 weeks

Beer is filtered for impurities & pasteurized for packaging in cans and bottles to be distributed around world

PURIFY WATER

PROCESS BARLEY ADD THE HOPS

FERMENTATION

FILTER AND PACKAGING

12

3

45

Heineken Production Process

QUESTION & ANSWERS

Thank You

SWOT Analysis

Strengths1.Strong Brand name.

2.Expertise In quality Beer production.

3. Strong Distribution Network

Weakness1.Lower Profit Margins due to

Increase in Raw materials and Petrol prices around world.

Opportunities1.Capitalize on the growing Asia

market & middle east.2.Diversify into less calorie and

more flavour Beers.3.Bring Special Beers in market for

women

Threats1.Competitors doing bigger M & A deals poses as a strong threat

to Heineken.

BCG Matrix Evaluation for Heineken Market Share in 5 Continents

http://www.heinekeninternational.com/FAQ_Question18.aspx

Star

Asia Pacific

Dogs

America

http://online.wsj.com/article/SB10001424052748703573604574491202399103112.html

Question Mark

Africa

Cash Cows

Europe