Heineken seeks marketing "efficiencies"
Posted by Turgut Ziyal on Thursday, October 29, 2009
Under: beverages
AMSTERDAM: Heineken, Europe's biggest brewer, plans to continue "investing in its key brands" in an effort to drive growth, but is also hoping to achieve greater marketing "efficiencies" as part of its broader cost-cutting programme.
During the last quarter, the world's third-biggest beer manufacturer saw its revenues fall from €4.24 billion to €4.07bn ($6.2bn; £3.8bn) on an annual basis, with organic volumes down by 4.7%.
More specifically, like-for-like volumes declined by 4.6% in Europe, with Central and Eastern Europe off by 12%, and the Americas by 9.7%, while Africa and the Middle East were up by 10%, and Asia Pacific by 0.2%.
According to the company, a combination of the recession and the fact consumers are "trading down to low-margin private label beers" exerted pressure on its sales in the Americas, Asia and Europe.
However, it added that its Total Cost Management initiative had delivered a "reduction in personnel, energy and water expenses and efficiencies in marketing," with these cutbacks among the "key drivers" behind its comparatively strong results.
Its eponymous beer brand also performed ahead of the rest of its portfolio, with volumes down by only 4% in the period from July to September, compared with an overall decline of just over 5%.
Rene Hooft Graafland, Heineken's chief financial officer, said that as far as the company's core strategy is concerned, "the premiumisation trend continues."
With regard to future growth, he added that "we are not specifically looking at mature markets or developing markets," but will take a balanced approach going forward.
The Dutch firm is thought to be interested in making a bid for Femsa, a major brewer in Mexico, but is said to be facing competition from SABMiller.
In terms of possible acquisitions, Hooft Graaflandsaid said Heineken judges all opportunities "on value and whether we can gain a number one or number two position."
Kris Kippers, an analyst at Petercam, said "the focus on premium beer is a good strategy in the long term, but in this environment it is hurting."
He also suggested that Heineken has "been missing some emerging markets" to date, a trend it should endeavour to rectify as it seeks to compete with larger rivals like Anheuser-Busch InBev.
source: wall street journal
During the last quarter, the world's third-biggest beer manufacturer saw its revenues fall from €4.24 billion to €4.07bn ($6.2bn; £3.8bn) on an annual basis, with organic volumes down by 4.7%.
More specifically, like-for-like volumes declined by 4.6% in Europe, with Central and Eastern Europe off by 12%, and the Americas by 9.7%, while Africa and the Middle East were up by 10%, and Asia Pacific by 0.2%.
According to the company, a combination of the recession and the fact consumers are "trading down to low-margin private label beers" exerted pressure on its sales in the Americas, Asia and Europe.
However, it added that its Total Cost Management initiative had delivered a "reduction in personnel, energy and water expenses and efficiencies in marketing," with these cutbacks among the "key drivers" behind its comparatively strong results.
Its eponymous beer brand also performed ahead of the rest of its portfolio, with volumes down by only 4% in the period from July to September, compared with an overall decline of just over 5%.
Rene Hooft Graafland, Heineken's chief financial officer, said that as far as the company's core strategy is concerned, "the premiumisation trend continues."
With regard to future growth, he added that "we are not specifically looking at mature markets or developing markets," but will take a balanced approach going forward.
The Dutch firm is thought to be interested in making a bid for Femsa, a major brewer in Mexico, but is said to be facing competition from SABMiller.
In terms of possible acquisitions, Hooft Graaflandsaid said Heineken judges all opportunities "on value and whether we can gain a number one or number two position."
Kris Kippers, an analyst at Petercam, said "the focus on premium beer is a good strategy in the long term, but in this environment it is hurting."
He also suggested that Heineken has "been missing some emerging markets" to date, a trend it should endeavour to rectify as it seeks to compete with larger rivals like Anheuser-Busch InBev.
source: wall street journal
In : beverages
Tags: heineken beer
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