Welcome Nigeria November 2012 Heineken N.V.
Africa & the Middle East: An emerging opportunity Siep Hiemstra Regional President Africa & Middle East Nigeria November 2012 Heineken N.V.
Agenda Africa & the Middle East: An emerging opportunity 1 Africa: The continent and beverage market 2 HEINEKEN: A unique footprint and brand portfolio 3 Exciting growth potential 4 A passion for the continent 3
Traditional Africa The picture painted is often negative Key highlights: US$2.1 trillion collective GDP Africa GDP per capita higher than India 316 million new cellphones since 2000 60% of the world s uncultivated land 52 cities > 1 million people 20 companies > US$3 billion revenue Beer market 1 114 million hectoliters, IPS 11 million hectoliters 4 Source: McKinsey, Plato, Canadean, IMF GDP nominal US$ IMF GDP nominal in US$ for Africa. GDP AME including M-East $ 4,8 trillion GDP per capita 2011 Africa/ME $1323 vs $1007 in India (Plato constant currency) 1 Including Africa & the Middle East
Emerging Africa An exciting continent in the making Key highlights: US$3.6 trillion collective GDP by 2020 Average annual growth of 6% to 2020 326 million Africans with discretionary income 50% Africans living in cities by 2030 1.1 billion Africans of working age by 2040 Beer market 1 164 million hectoliters, IPS 20 million hectoliters by 2020 5 Source: McKinsey, Plato, Canadean, IMF GDP nominal US$ IMF GDP nominal in US$ for Africa. GDP AME including M-East $ 4,8 trillion GDP per capita 2011 Africa/ME $1323 vs $1007 in India (Plato constant currency) 1 Including Africa & the Middle East
mhl A large and growing beverage market The alcoholic beverage market is still relatively small Africa beverage market (2001-2011) 2001-11 CAGR: Million hectolitres 1600 Alcoholic +4.5% 1400 1200 Non Alcoholic +2.5% 4 7 1000 800 600 400 159 200 0 01 02 03 04 05 06 07 08 09 10 11 Wine Spirits Beer (incl. Sorghum) 6 Source: Canadean February 2012
mhl Branded beer is the fastest growing segment Market categories (mhl) Total 2011: 374 mhl Category growth (mhl and % growth) 2001-11 CAGR +3.3% 400 CAGR: 114 350 300 +6% 215 250 200-3% 45 150 +4% 100 50 Branded Beer Sorghum Beer Carbonates - 01 02 03 04 05 06 07 08 09 10 11 Branded Beer Sorghum Beer Carbonates 7 Source: Canadean Feb. 2012
A predominantly on-premise, lager, returnable bottle market Consumption Price level Economy 3% Other 1% Premium 15% Off-premise 31% On-premise 69% Main- stream 81% Packaging Cans 3% Draft 15% Product type Stout 5% Nab + Lab 4% Bottles 82% Lager 91% 8 Source: Plato World Beer Report August 2012 NAB = Non alcoholic beverages LAB = Low alcoholic beverages
International Premium Segment poised for growth Heineken is the leading IPS brand in AME IPS evolution in AME AME: Heineken volume (mhl) and share of IPS (%) 30% CAGR: +10% 22% 9.0 9.5 10.4 11.1 17% 19% CAGR: +21% 2.7 3.0 6.2 7.5 7.3 2.1 2.3 1.0 1.2 1.5 2005 2006 2007 2008 2009 2010 2011 2005 2006 2007 2008 2009 2010 2011 9 Source: Plato IPS update July 2012
HEINEKEN is a leading player in Africa Competitive landscape Beer volume shares (2011) Beer profit pool share (FY 2010) 6% 13% 35% 26% 23% 74% 23% SAB Miller HEINEKEN Castel/BGI HEINEKEN Diageo Others Others 10 Source: Plato Africa Beer report September 2012, Sanford Bernstein (2010) and HEINEKEN
Agenda Africa & the Middle East: An emerging opportunity 1 Africa: The continent and beverage market 2 HEINEKEN: A unique footprint and brand portfolio 3 Exciting growth potential 4 A passion for the continent 11
Compelling track record We believe in long-term sustainable growth AME: Group Volumes (mhl) AME: EBIT (beia) ( m) CAGR 1 : +21% CAGR 1 : +10% 8.4 7.3 6.6 6.6 4.9 5.3 17.7 18.3 21.6 23.4 25.7 28.8 223 309 453 485 560 570 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010* 2011 Beer volume Soft drinks/ Other 12 Note 1 : Including acquisitions
A long-standing presence and extensive geographic footprint in Africa 57 plants in 20 countries Legenda Operations Consolidated Joint Ventures/Participations Export Production Footprint Consolidated Joint Venture/Participations Broad production footprint 20 countries 32 breweries (consolidated) 13 breweries (participations/jv s ) 3 soft drink plants 3 malteries 2 packaging plants (1 glass, 1 plastic) 2 wineries 1 distillery 1 extract plant Export to virtually all countries A long history, some landmarks 1900 HEINEKEN imported its first beer 1923 DRC the first brewery 1946 Entering Nigeria 2003 Entering Egypt 2007 South Africa greenfield brewery 2011 Acquisition SONA Group Nigeria 2011 Acquisition Harar and Bedele Ethiopia 2012 HEINEKEN East Africa Import Company 13
Regional blockbuster brands Primus Star Gulder Mützig Maltina Turbo King 4.8 mhl 4.3 mhl 2.8 mhl 1.6 mhl 1.7 mhl 1.0 mhl C O U N T R I E S DRC Rwanda Congo Burundi C O U N T R I E S Nigeria Ghana Sierra Leone C O U N T R I E S Nigeria Ghana C O U N T R I E S DRC Rwanda Congo Cameroon Burundi C O U N T R I E S Nigeria DRC Congo Sierra Leone C O U N T R I E S Nigeria Congo DRC Rwanda P R O D U CT Lager P R O D U CT Lager P R O D U CT Lager P R O D U CT Lager P R O D U CT Malt P R O D U CT Dark Ale CAGR 2009-11 8% 2% 5% 8% 13% 15% 14 Source: HEINEKEN 2011
Primus 4 th largest brand in Africa with significant growth potential 15
Amstel: A truly Pan-African brand Amstel 3.0 mhl C O U N T R I E S Nigeria Burundi Rwanda Egypt Algeria Lebanon South Africa Emirates Cameroon Jordan Namibia 16 Source: HEINEKEN - 2011
Amstel: The Boxer movie 17
Heineken : Premium everywhere Heineken 3.0 mhl C O U N T R I E S Virtually all 18 Source: HEINEKEN 2011
Strong market positions in many key countries across Africa Democratic Republic of Congo #1 position / 59% market share 0.1k US$ GDP per capita / 3.8% growth 77% population younger than 30 years 4.6 beer market size (mhl) Egypt #1 1.6k 61% 1.2 position / 97% market share US$ GDP per capita / 2.5% growth population younger than 30 years beer market size (mhl) 6% 11-20E beer market growth p.a. 5% 11-20E beer market growth p.a. 7 litres per capita 1.5 litres per capita Republic of Congo Rwanda #1 position / 95% market share #1 position / 92% market share 1.5k US$ GDP per capita / 1.7% growth 0.4k US$ GDP per capita / 3.7% growth 68% population younger than 30 years 72% population younger than 30 years 1.9 beer market size (mhl) 1.2 beer market size (mhl) 5% 11-20E beer market growth p.a. 5% 11-20E beer market growth p.a. 45 litres per capita 12 litres per capita South Africa Burundi #2 position / 14% off-premise share #1 position / 99% market share 6.0k US$ GDP per capita / 3.7% growth 0.1k US$ GDP per capita / 1.9% growth 59% population younger than 30 years 70% population younger than 30 years 30 beer market size (mhl) 1.7 beer market size (mhl) 1.7% 11-20E beer market growth p.a. 6% 11-20E beer market growth p.a. 59 litres per capita 20 litres per capita 19 Source: Plato (May 2012), Global Insight, Euromonitor, CIA World Factbook and HEINEKEN Note: Real GDP per capita growth 2011-2020E. Beer market data based on 2011F as per Plato US$ value in 2011
JJ 2001 DJ 2002 JJ 2002 DJ 2003 JJ 2003 DJ 2004 AS 2004 FM 2005 AS 2005 FM 2006 AS 2006 FM 2007 AS 2007 FM 2008 AS 2008 AM 2009 ON 2009 AM 2010 ON 2010 AM 2011 ON 2011 AM 2012 1.4 4.9 13.7 Successfully building brands in South Africa Brandhouse consistently gaining share in the off-premise channel Brandhouse: Off-premise market share evolution (%) 16 14 Preparation for introduction of 66cl Amstel bottle (vs. 75 cl) Brandhouse: Premium beer portfolio: 12 10 Amstel included in Brandhouse portfolio 8 6 4 2 0 20 Source: AC Nielsen
Partnership with The Coca-Cola Company Strong soft drink performance Partnership with The Coca-Cola Company Sales volume Coke portfolio (in million unit cases) CAGR: +8.7% 03 04 05 06 07 08 09 10 11 21
Agenda Africa & the Middle East: An emerging opportunity 1 Africa: The continent and beverage market 2 HEINEKEN: A unique footprint and brand portfolio 3 Exciting growth potential 4 A passion for the continent 22
2011 2012F 2013F 2014F 2015F 2016F 2017F 2018F 2019F 2020F Beer market outlook AME: Forecast beer volume evolution (mhl) 180 160 CAGR 4.1% Market size will increase almost 50% in 10 years Africa as a proportion of the world beer market will increase to 7% by 2020 Beer is the beverage of choice for Africans 140 120 100 80 60 40 20 0 23 Source: Plato July 2012
Africa s growth is well spread Strong GDP growth and high beer volume forecast across markets GDP (US$m) 2010-17F CAGR 6% Africa & ME Beer Volume (mhl) 2010-17F CAGR 4% Africa & ME 5000 9% Tanzania 160 6% Tanzania 4500 4000 8% 10% Kenya Ghana 140 4% 6% Kenya Ghana 3500 3000 8% 6% 8% Ethiopia Tunisia Angola 120 100 8% 3% 5% Ethiopia Tunisia Angola 2500 7% Morocco 80 3% Morocco 2000 1500 1000 500 5% 9% 5% 6% 6% Algeria Nigeria RSA Egypt Other 60 40 20 2% 6% 2% 3% 5% Algeria Nigeria RSA Egypt Other 0 0 10 11F 12F 13F 14F 15F 16F 17F 10 11F 12F 13F 14F 15F 16F 17F 24 Source: IMF, world economic outlook database GDP in Purchasing Power Parity international $ Plato world beer outlook
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Share of Africa beer market volume (%) mhl Trading up from home brews to branded beer Shift from local spirits and sorghum to mainstream and premium beer Premiumisation Burundi case study 4000 Branded Beers 3500 3000 2500 2000 1500 1000 Home Brews 500 0 Time Home brews Branded beer 25 Source: Company estimates
Seize the opportunity Invest ahead of the curve Capital Expenditure (including joint ventures) ( m) 400 368 350 300 314 342 300 250 200 173 150 100 110 96 50-2005 2006 2007 2008 2009 2010 2011 26 1 Total Capex (including JVs)
Agenda Africa & the Middle East: An emerging opportunity 1 Africa: The continent and beverage market 2 HEINEKEN: A unique footprint and brand portfolio 3 Exciting growth potential 4 A passion for the continent 27
Developing local people to senior management Talent development Africa employees: ~1 out of 4 HEINEKEN employees ( 000) International Graduate Programme 15.8 16.0 18.6 Leadership for Change in Africa Africa Management Trainee Programme 2009 2010 2011 Personal Development Plans Africa Leadership Development Programme Africa Talent Exchange Programme 28
Developing strong leadership in AME YouTube movie 29
Brewing a Better Future We are committed to responsible growth Local sourcing projects: Local sourcing 60% ambition (48% so far) 120,000 farmers + dependents Improve livelihoods rural households Improve productivity and yield Reduce carbon footprint Secure sustainable supply Health care 18,600 employees and dependents General health care HIV voluntary testing and treatment 26 clinics/ 13 doctors & 80 nurses HEINEKEN Africa Foundation Health clinic in Burundi Malaria project in Nigeria Part of the African conversation World Economic Forum Clinton Initiative Private Investors for Africa 30
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An introduction to Nigeria HEINEKEN operates in Nigeria through two companies Nigerian Breweries (NBL) Second largest publicly listed company on the Nigerian Stock Exchange Consolidated Breweries (CBL) PLC Not listed Company SHAREHOLDER STRUCTURE SHAREHOLDER STRUCTURE HEINEKEN Free Float HEINEKEN Privately held 54.1% NBL 45.9% 53.4% CBL 46.6% Main market focus: Mainstream & Premium Segment Main market focus: Savings segment 32
Questions Nigeria November 2012 Heineken N.V.