Asia Pacific Delivering Strong Growth Momentum
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HEINEKEN FINANCIAL MARKETS CONFERENCE 2016 HO CHI MINH CITY, VIETNAM HEINEKEN Asia Pacific Delivering strong growth momentum Frans Eusman Regional President Asia Pacific Ho Chi Minh City, Vietnam | May 11-12, 2016 | Heineken NV Agenda HEINEKEN Asia Pacific — delivering strong growth momentum Asia Pacific: Important region for HEINEKEN Asia Pacific: Attractive and growing markets HEINEKEN’s brand priorities in Asia Pacific HEINEKEN ideally positioned to capture opportunities 1 Integration of Asia Pacific Breweries in 2012 paved the way for strong growth Connect APB & Stabilise base Build a winning Achieve potential Support mindset HEINEKEN business team synergies shift Strong business performance Increasing significance Establishing a diversified Delivering Strong Growth of Asia Pacific to footprint in Asia Pacific HEINEKEN’s business 2 The region is delivering strong top and bottom line growth… Solid volume growth Sustained revenue growth m € mhl 20.3 2,483 18.7 18.0 2,037 2,088 Revenue, Revenue, Volume, Volume, 2013 2014 2015 2013 2014 2015 Strong profit momentum1 Above average operating profit margin (beia) n m € ) ), 735 beia beia 28.3% 566 582 2015 ( 2015 16.5% EBIT ( EBIT Operating profit margi profit Operating 2013 2014 2015 HEINEKEN Asia HEINEKEN N.V. 1 EBIT (beia) includes HEINEKEN‘s share of net profit of joint ventures and associates Pacific 3 Source: HEINEKEN annual report 2013, 2014, 2015 …And increasing importance to HEINEKEN group The Asia Pacific region’s contribution to HEINEKEN’s operating profit (beia) is growing ASIA PACIFIC 18% 21% WE 27% Europe 35% AMEE AME CEE 17% 21% 10% Americas Americas 24% 27% Consolidated Operating profit (beia) 2013 Consolidated Operating profit (beia) 2015 4 Source: HEINEKEN annual report 2013, 2015 Agenda HEINEKEN Asia Pacific — delivering strong growth momentum Asia Pacific: Important region for HEINEKEN Asia Pacific: Attractive and growing markets HEINEKEN’s brand priorities in Asia Pacific HEINEKEN ideally positioned to capture opportunities 5 Strong fundamentals underpin future growth potential Large young population Growing urbanization Increasing affluence % Population under the age of 35 (2015) % Urban population % of world middle class population 74% 73%73% 24% 36% 60% 58% 54% 55% 22% 40% 36% 54% 28% EU Asia Pacific1 1 EU Asia Pacific 2009 2020 2010 2015 2020 Asia Pacific Europe Rest of the world Source: Canadean Source: Canadean Source: OECD Development centre, working paper no. 285 1 Asia Pacific average includes only Australia, New Zealand, South Korea, Japan, Vietnam, Laos, Cambodia, 6 Thailand, Myanmar, Singapore, Malaysia, Indonesia, Philippines, China, Taiwan, India and Papua New Guinea Significant headroom to grow per capita consumption Per Capita Beer Consumption 2015 (litres per annum) 74.3 66.8 EU average 69.9 48.9 45.0 41.4 41.4 40.0 38.6 27.0 23.2 Asia Pacific 20.9 average 29.4 11.3 10.9 5.8 2.0 0.7 Australia New South Japan Vietnam Laos China Cambodia Thailand Taiwan Singapore Myanmar Papua Malaysia India Indonesia Zealand Korea New Guinea 1Asia Pacific average includes only countries listed above. 7 Source: Canadean Combined with a compelling premium segment opportunity Premium segment growth in Asia Pacific Premium segment share low in large markets, significantly higher than the rest of world offering significant upside for growth EU Premium segment volume CAGR (2011-15) Premium segment share of total beer market (by volume, 2015) 50% average 8.7% 32% 35% 33% 29% Asia Pacific 25% 22% 21% Average 16% 18% 3.5% 14% 13% 10% 9% 8% 5% 3% 0% Laos India China Japan World Asia Pacific Taiwan Vietnam Thailand Australia Malaysia Myanmar Indonesia Singapore Cambodia South Korea South New Zealand New Legend Guinea New Papua HEINEKEN broad market leadership HEINEKEN market presence Premium segment follows Canadean standard defnition of above 115 price index vs mainstream brand Asia Pacific average includes only countries listed above. 8 Source: Canadean, Company data Agenda HEINEKEN Asia Pacific — delivering strong growth momentum Asia Pacific: Important region for HEINEKEN Asia Pacific: Attractive and growing markets HEINEKEN’s brand priorities in Asia Pacific HEINEKEN ideally positioned to capture opportunities 9 Win in Premium, led by Heineken® Leverage Heineken® global platforms & make them locally relevant in Asia Pacific Execute Heineken® global and regional platforms at scale . 7th consecutive global partnership with “James Bond” activated by 19 markets in Asia Pacific . Champions League Trophy Tour in South East Asia: Vietnam, Laos, Myanmar & Indonesia with excellent results . Heineken® Green Room Regional Music platform developed in Asia Pacific 10 Win in Premium, led by Heineken® Accelerate innovation to attract new consumers & open up new occasions Innovation is a priority for the Heineken® brand globally and in Asia Pacific . Launched the SUB in China - Premiumise “At home” beer occasions and open up a new ecommerce route to market . Heineken® Light launched in Taiwan & New Zealand - Attract new consumers and make Heineken® relevant in new occasions 11 Win in Premium, led by Heineken® Grow Heineken® penetration by maximising brand presence in key markets Heineken® has a strong brand presence across the Asia Pacific region . Continue to focus on Route to Market, Channel Strategy and ensuring excellent outlet execution . Pack and price strategy by channel will continue to drive growth opportunities for the brand in key markets 12 Tiger: The iconic Asian beer brand Brewed with pride since Beer with bite 1932 World Award winning with a variety of Acclaimed Beer external awards Win in Establish tiger as the leading Premium Asian beer in the world 13 Tiger: The entrepreneurial spirit • Tiger embodies the entrepreneurial spirit that makes Asia cool today • Asia is no longer the factory of the world. Asia is a center of innovation, technology and creativity • Young millennials globally aspire to the dynamism of modern Asia 14 Strong in its heartland and also standing out internationally Tiger Beer Volume Growth (YoY) Top 10 International beer brands* 24% Rank Brand Growth+ 1 Heineken® 3% 10% 2 Budweiser 3% 3 Corona 5% 4 Carlsberg 3% 5 Tuborg 7% 6 Stella Artois 1% 7 Guinness -3% 8 Amstel 2% 9 Tiger 24% 10 Modelo 19% 2013 2014 2015 *International volume = global volume – home market volume. + Growth = Volume growth, YoY from 2014 to 2015 Source: Canadean, Company data 15 Tiger extends portfolio as complementary to Heineken® Modern Premium Recruiting Young Millennials . Typical Price Index below 140* . Younger consumer group than Heineken® . Affordable premium yet highly aspirational . Value and purpose over price and status . Own brand identity, no longer just a . Authenticity over pretentiousness stepping stone Unique Brand Positioning Expanding Footprint . Born in Singapore, raised on the . International potential (UK, US, streets of Asia Russia, Australia & New Zealand) . Uncage your Tiger . Opportunity to appeal in craft bars in the West * Excludes Singapore (home-market) and Malaysia 16 Tiger brand further excites consumers through innovation Reinforcing Asian origin . Tiger Black . Amber lager brewed with black rice . Tiger Crystal . Classic light lager brewed at -1°C . Tiger White . Asia’s wheat beer — launched in Malaysia . COASTER — the world’s first crowd sourced movie made from beer coasters 17 Agenda HEINEKEN Asia Pacific — delivering strong growth momentum Asia Pacific: Important region for HEINEKEN Asia Pacific: Attractive and growing markets HEINEKEN’s brand priorities in Asia Pacific HEINEKEN ideally positioned to capture opportunities 18 HEINEKEN has a unique footprint in the region Best placed to access regional growth opportunities Mongolia #2 HEINEKEN HAS LEADERSHIP IN THE 1 LARGEST NUMBER OF MARKETS Laos #2 Number of #1 and #2 market positions in Asia-Pacific ChinaChina #2 (by volume) #2 in Super Premium Thailand #1 in Super Premium HEINEKEN 15 Taiwan #2 Carlsberg 7 India #1 Vietnam #2 Kirin 5 Sri Lanka #2 Cambodia #2 Papua New Guinea #1 Malaysia #1 SABMiller 2 Solomon Islands #1 Singapore #1 ABInbev 2 New Caledonia #1 Indonesia #1 Timor-Leste #1 45 Breweries New Zealand #2 HEINEKEN Lion Australia 8,900 Employees #2 in Super Premium Over 50 Brands Legend 1 Broad market leadership, #1 & #2 positions only Premium and Super Premium segment classification as defined by Canadean HEINEKEN broad market leadership 19 Source: Canadean, Company data HEINEKEN market presence Winning brand portfolio, well positioned to capture premium opportunity Premium is driving profitability HEINEKEN Asia Pacific: Group beer volume and EBIT (beia) by segment (2015) China Vietnam Singapore Indonesia Cambodia India Malaysia 1 39% Premium 62% 61% Mainstream 38% Volume EBIT (beia) Mainstream Premium 20 Source: HEINEKEN annual report (2015), Company data Key markets: compare & contrast 3 breweries 21 own breweries 8 contract breweries CHINA: premium focus INDIA: investing to drive higher profitability for the long-term Market characteristics Market characteristics . Beer PCC is 40L . Beer PCC is slightly below 2L . 2015 beer market size 550mhl . 2015 beer market size 26mhl . Premium segment (6% of market) and . Strict regulations on the production, transportation, super premium segment (3% of the market) distribution, promotion, pricing and sale of alcohol HEINEKEN position and strategy HEINEKEN position and strategy . #1 market position . #2 position in the super premium segment . HEINEKEN’s stake in UBL 43% . Strongholds in coastal areas and in major cities . Leading