Heineken Nv · EURONEXT:HEIA
Heineken Nv — Heineken Financial Markets Conference 2013
31 slides from Heineken Nv's conference presentation, Dec 5, 2013
Slide 1: Winning in Mexico!
HEINEKEN FINANCIAL MARKETS CONFERENCE 2013 MEXICO CITY Winning in Mexico! MARC BUSAIN Managing Director, Cuauhtémoc Moctezuma Mexico City | December 5-6, 2013 | Heineken NV
Slide 2: Agenda
AGENDA Winning A SUCCESSFUL ACQUISITION in Mexico! OVERVIEW OF MEXICAN BEER MARKET OUR STRATEGY TO WIN 2
Slide 3: Cuauhtémoc Moctezuma: A Rich History in Mexico
CUAUHTÉMOC MOCTEZUMA: A RICH HISTORY IN MEXICO Serving consumer SCYF TEC DE EXPORTS TECATE inspired brands 1918 Foundation of Sociedad MONTERREY 1973 Exported to the LIGHT for over 120 years 1943 1992 Cuauhtémoc y Famosa, the USA since 1973 Leading University Cuauhtémoc Moctezuma pioneer institution
Slide 4: Successful Integration Process
SUCCESSFUL INTEGRATION PROCESS Seamless integration of CULTURAL AWARENESS AS A INTEGRATION FEMSA Cerveza into CRITICAL SUCCESS FACTOR PROCESS PLAN HEINEKEN in 2010 whilst driving ongoing business growth IMPLEMENTED NEW RTM STRUCTURE Heineken® LOCAL PRODUCTION STRONG INVESTMENT BEHIND BRANDS
Slide 5: Strong Delivery of Cost Synergies
STRONG DELIVERY OF COST SYNERGIES Expected cumulative ~€220M OF COST SYNERGIES TO COST SYNERGY 320 cost savings of €320m BE GENERATED BY END 2013 PROGRESSION by end 2016 € MILLION 100 ACHIEVED SAVINGS PRIMARILY FROM SUPPLY CHAIN AND ROUTE 220 TO MARKET RECONFIGURATION 58 CONTRIBUTING ~20% OF H
Slide 6: CM Delivering Impressive Top-Line and Profit Growth
CM DELIVERING IMPRESSIVE TOP-LINE AND PROFIT GROWTH Operating profit REVENUE1 OPERATING PROFIT OPERATING PROFIT (beia) margin 2010-2013F (BEIA)1 2010-2013F (BEIA) MARGIN2 expansion of 520 basis points since €M €M 2010-2013F 2010 CAGR CAGR €M +6% +21% 18.1% 12.9% 2010 2013F 2010 2013F 2010 2013F 1 In
Slide 7: Mexico Is Heineken's Largest Market
MEXICO IS HEINEKEN’S LARGEST MARKET HEINEKEN GROUP HEINEKEN GROUP HEINEKEN GROUP BEER VOLUME1 (2012) REVENUE1 (2012) OPERATING PROFIT (BEIA)1,2 (2012) Mexico Mexico Mexico 14% 11% 11% 1 Group beer volume and financials based on is consolidated business plus attributable share of joint ventures and a
Slide 8: Cuauhtémoc Moctezuma Organization
CUAUHTÉMOC MOCTEZUMA ORGANIZATION Local management team structure 1 MARKETING 2 SALES 3 LOGISTICS LEANDRO JOSEP AND CUSTOMER BERRONE FERRER SERVICE FRANCISCO GARZA CEO MARC BUSAIN 18,000 EMPLOYEES 4 SUPPLY CHAIN 5 HUMAN RESOURCES 6 CORPORATE AFFAIRS JORGE JAVIER ARNULFO 5 EXPATS MEILLÓN CASTAÑO
Slide 9: Agenda
AGENDA Winning A SUCCESSFUL ACQUISITION in Mexico! OVERVIEW OF MEXICAN BEER MARKET OUR STRATEGY TO WIN 9
Slide 10: Welcome to México!
WELCOME TO MÉXICO! Attractive growth POPULATION: 115 MILLION prospects for HEINEKEN POSITIVE ECONOMIC OUTLOOK GROWING MIDDLE CLASS 4TH LARGEST BEER PROFIT POOL +1 MILLION NEW CONSUMERS PER YEAR #1 BEER EXPORTER IN THE WORLD 10
Slide 11: A Positive Economic Outlook
A POSITIVE ECONOMIC OUTLOOK An acceleration MEXICO FORMAL in economic growth GDP EMPLOYMENT in Mexico to be underpinned by GROWTH GROWTH 5.2% 5.3% ‘000 Number of new employees structural reforms 4.9% 4.7% 883 911 868 3.9% 3.9% 779 3.5% 699 639 591 393 0.9% 2011 2012 2013F 2014F 2015F 2016F 2017F 201
Slide 12: Dynamic Demographics
DYNAMIC DEMOGRAPHICS By 2017, Mexico will POPULATION POPULATION have >7 million new +18 AND BEER PYRAMID consumers of legal drinking age CONSUMPTION 83 Millions by age bracket 76 70 73 MALE 0.1 90+ 0.1 FEMALE 65 67 80-89 63 0.6 0.7 59 58 60 56 1.5 70-79 1.7 52 2.8 60-69 3.2 4.7 50-59 5.2 6.8 40-49 7
Slide 13: Rising Urbanization & an Emerging Middle Class
RISING URBANIZATION & AN EMERGING MIDDLE CLASS Demographic TIJUANA MEXICO CITY IS THE SECOND and Economic 2m population LARGEST CITY IN THE WESTERN changes signal opportunities HEMISPHERE to develop 11 CITIES WITH >1 MILLION the premium PEOPLE segment MONTERREY 86% URBANIZATION LEVEL 4m popula
Slide 14: Beer Is the Alcoholic Beverage of Choice in Mexico
BEER IS THE ALCOHOLIC BEVERAGE OF CHOICE IN MEXICO Beer represents17% TOTAL BEVERAGE ALCOHOLIC of total beverage CONSUMPTION BEVERAGES consumption and 94% of alcoholic beverage DISTRIBUTION DISTRIBUTION consumption in Mexico 2013F 2013F Non- Beer Spirits Flavoured alcoholic beverages Wines & cider a
Slide 15: Attractive Growth Prospects for Mexican Beer
ATTRACTIVE GROWTH PROSPECTS FOR MEXICAN BEER Mexican beer market €7.5BN BEER INDUSTRY VALUE BEER MARKET projected to grow at PROJECTIONS +2.6% an annualized rate of 2.6% through to 2020 60K DIRECT EMPLOYMENT 82 78 +2.5% 71 75 800K INDIRECT EMPLOYMENT 64 64 67 61 55 4% OF GOVERNMENT TAX INCOM
Slide 16: Agenda
AGENDA Winning A SUCCESSFUL ACQUISITION in Mexico! OVERVIEW OF MEXICAN BEER MARKET OUR STRATEGY TO WIN 16
Slide 17: CM Strategy to Win
CM STRATEGY TO WIN 1 BUILDING 2 CONSOLIDATE OUR 3 LEVERAGE STRATEGIC A WINNING SHARE IN STRONGHOLDS CHANNELS TO DRIVE NATIONAL WHILST ADVANCING IN VOLUME AND VALUE PORTFOLIO SELECTED CHALLENGER MARKETS Capabilities Cost Leadership Culture Sustainability 17
Slide 18: Building a National Winning Portfolio
BUILDING A NATIONAL WINNING PORTFOLIO Consolidating TECATE A LARGE AND GROWING SUPER PREMIUM our mainstream BRAND WITH CLEAR LEADERSHIP offering whilst developing IN LIGHT SEGMENT PREMIUM premium IGNITING ADDITIONAL SOURCES OF GROWTH THROUGH ABOVE MAINSTREAM DOS EQUIS AND INDIO MAINSTREAM STRE
Slide 19: Exciting Potential for Premium Segment in Mexico
EXCITING POTENTIAL FOR PREMIUM SEGMENT IN MEXICO Developing DOUBLED VOLUME IN SUPER PREMIUM % SHARE and winning AND DOUBLE DIGIT GROWTH IN OF UPSCALE in the premium segment ABOVE MAINSTREAM BEER 0 5 10 15 20 25 30 35 40 STRONG INVESTMENT BEHIND France Heineken® DELIVERING SOLID GROWTH FOR LONG T
Slide 20: A Targeted Regional Growth Strategy
A TARGETED REGIONAL GROWTH STRATEGY Growing our MEXICO BEER CM MARKET SHARE market share in MARKET SHARE BY REGION stronghold regions, whilst OTHERS advancing in key challenger cities 1% >65% 35%-65% <35% 41% 58% GRUPO MODELO 20 Source: Canadean Source: Company Information
Slide 21: Winning in Challenger Markets
WINNING IN CHALLENGER MARKETS Sustainable market CM CHALLENGER STRONG share gains in MARKETS OUTPERFORMANCE IN challenger markets through a strong CHALLENGER MARKETS brand portfolio, Volume CAGR (2011-2013F) quality penetration and a passionate +2.7x 6.2% team 2.3% Challenger Markets Total Domestic
Slide 22: A Segmented Channel Approach
A SEGMENTED CHANNEL APPROACH Leveraging CM CHANNEL SPLIT capabilities in (2012 VOLUME) Deliver growth and strategic channels value from CM’s to drive volume SIX beer oriented and value growth retail stores Develop quality numerical distribution in the traditional off-trade Win in mixed accounts Capt
Slide 23: Strong Strategic Partnerships
STRONG STRATEGIC PARTNERSHIPS Strategic alignment OXXO STORES GROWTH BENEFITTING FROM OXXO with OXXO enabling (NO. OF OUTLETS) EXPANSION IN CHALLENGER brand penetration and growth as retail 10,568 MARKETS chain expands 9,543 nationally 8,400 BUILDING BRANDS 7,374 6,374 DEVELOP PREMIUM SEGMENT
Slide 24: SIX: Our Beer Oriented Retail Business
SIX: OUR BEER ORIENTED RETAIL BUSINESS Beer oriented stores SIX 30-50 SQUARE METERS OFF-PREMISE OUTLETS differentiated by service and a fun CM DETERMINES LOCATION AND FORMAT shopping environment BEER IS DESTINATION CATEGORY LAND IS LEASED; ENTREPRENEURS MANAGE THE STORE INCENTIVIZED BY COMMI
Slide 25: SIX Is a Highly Profitable Retail Business Model
SIX IS A HIGHLY PROFITABLE RETAIL BUSINESS MODEL SIX: NUMBER A UNIQUE PLATFORM OF OUTLETS TO DEVELOP THE BEER 11,289 CATEGORY 10,225 9,289 9,270 25% OF OUTLETS ARE LOCATED IN CENTER AND WEST MEXICO IN 2013, OTHER KEY CATEGORIES ALSO CONTRIBUTED TO INCREASED PROFITABILITY 2010 2011 2012 2013F 2
Slide 26: Federal Trade Commission Agreements
FEDERAL TRADE COMMISSION AGREEMENTS We are committed KEY HOW CUSTOMER to full compliance COMMITMENTS AGREEMENTS WORK of the resolution 1 Open exclusive on-premise accounts Written agreements in on- or off-premise to local microbrewers clients for exclusive sale of beer 2 Use a new format of exclus
Slide 27: Best in Class Supply Chain
BEST IN CLASS SUPPLY CHAIN World Class MANUFACTURING PRODUCTIVITY Brewery Footprint FOOTPRINT IMPROVEMENT OF TECATE 42% SINCE 2010 (hl/fte) 15,000 NAVOJOA MONTERREY +42% 10,545 GUADALAJARA ORIZABA TOLUCA 2010 2013F 27
Slide 28: Improvement Across Key Performance Indicators
IMPROVEMENT ACROSS KEY PERFORMANCE INDICATORS Excellence in Supply OPI1 WATER THERMAL ENERGY Chain management PACKAGING CONSUMPTION CONSUMPTION delivering value (%) (Hl of water /hl produced) (Mj/ hl produced) 76 3.73 84 +4.3% -4.8% -10.7% 72.9 3.55 75 2010 2013F 2010 2013F 2010 2013F 28 1 OPI = Ove
Slide 29: Sustainability Agenda
SUSTAINABILITY AGENDA On our way to becoming Mexico’s most admired company COMMUNITY ENVIRONMENT CO2 RESPONSIBLE Educational Source water EMISSIONS CONSUMPTION Programs and Protection 8% reduction Designated partnership in CO2 emissions Driver positively Water stewardship for progr
Slide 30: People and Culture
PEOPLE AND CULTURE Winning through CULTURE people in a high ALIGNING OUR ORGANIZATION TO BUSINESS performance organization PRIORITIES MARKET FOCUS HEAD-OFFICE AND SALES PROGRAMS A GREAT PLACE TO WORK TOP TIER CLIMATE SURVEY RESULTS IN ALL OF HEINEKEN GLOBAL TALENT DEVELOPMENT 30 MEXICAN EMPL
Slide 31: Summary
SUMMARY Key Takeaways GROWTH IN MEXICAN ECONOMY AND POSITIVE SOCIODEMOGRAPHIC TRENDS TO UNDERPIN BEER MARKET GROWTH CM IS DRIVING SIGNIFICANT PROFIT AND MARGIN GROWTH WITH FURTHER UPSIDE POTENTIAL A CLEAR BRAND PORTFOLIO STRATEGY FOCUSED ON CONSOLIDATING MAINSTREAM WHILST DEVELOPING PREMIUM FO
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