Heineken eyes up key categories for future growth: brand Heineken, craft and low/no alcohol

By Rachel Arthur contact

- Last updated on GMT

Pic:Getty/Wallix
Pic:Getty/Wallix
Growth for the core Heineken brand – including performance ‘ahead of expectations’ for new alcohol-free Heineken 0.0 – has helped boost Heineken’s FY2017 results.

Heineken volume grew 4.5%, one of the strongest performances for the brand in recent years, growing in all regions except for Asia Pacific.

Meanwhile, the launch of Heineken 0.0 – a zero alcohol lager with 69 calories per 33cl bottle – has helped grow the brand in European markets.

Heineken released its FY2017 results today, with organic revenue up 5% and revenue per hectolitre up 2.1%.

Consolidated beer volume was up 3% with growth reported across all regions, while operating profit saw organic growth of 9.3% (year ending 31 December 2017).

Key categories: brand Heineken, craft, no alcohol, premium

Jean-François van Boxmeer, CEO, Heineken, warns of continued market volatility and uncertainty but says the company is committed to long-term value creation, top line growth and working on improving operating profit margin.

“In the coming years, we expect this to be driven by Heineken as well as our portfolio of international brands, craft & variety, low & no-alcohol and cider, with a focus on premiumisation, combined with revenue and cost management initiatives,” ​he said.

Heineken volume grew 4.5% globally over the past year, with the brand growing double digit in Brazil, South Africa, Russia, Mexico and Romania.

Launched last year, non-alcoholic Heineken 0.0 is now available in 16 markets and Heineken. Further roll-out of 0.0 is planned for 2018: starting with the North American launch in Canada last month.

The beer is brewed from scratch (rather than removing alcohol from regular 5% Heineken) and has a blue label (the color associated with the alcohol free category).

Eying up a ‘promising’ future for the brand, Heineken says 0.0 is not cannabalizing its other beers but instead opening up new consumption occasions​ such as lunches, post-sport, or when people need to drive.

It says 0.0 delivered ‘ahead of expectations’ in FY2017: and with the growth of the no and low alcohol category it wants to use the brand to lead category developments in markets where non-alcoholic beer is small but has growth potential.  

Meanwhile, craft and variety volumes grew double digit: with Affligem and Mort Subite in France, and Lagunitas in the US and UK, contributing to category growth.

Brazil and further growth plans

Last year Heineken became the second largest brewer in Brazil – which is the third largest beer consumption in the world - with its acquisition of Brasil Kirin.

“The integration of Brasil Kirin has exceeded our expectations and its beer portfolio grew volumes by mid single digit, led by excellent performance of Devassa and Eisenbahn both of which became one million hectolitre brands in 2017,” ​says Heineken.

The company has also continued to expand in key developing markets by increasing production capacity in Mexico, Cambodia, Vietnam, Ethiopia and Haiti; opening a new brewery in Ivory Coast; and starting construction on a new brewery in Mozambique.

Sustainability

Heineken has today pledged to grow its share or renewable thermal energy and electricity in production from 14% to 70% by 2030 under its ‘Drop the C’ program. This implies an 80% reduction target in carbon emissions compared to the 2008 base year.

It notes the targets pose certain challenges: such as implementing the program in some countries in Africa, Asia and Latin America where renewable energy infrastructure is not readily available.

Heineken says this builds on a reduction in carbon emissions of 41% since 2008; and the achievement of its 2020 emission targets in production in 2017.

Currently 29% of Heineken’s global electricity usage is renewable: its Massafra brewery in Italy is one of the largest solar breweries in the world; while its Goss brewery in Austria is carbon neutral.  

Meanwhile, 7% of thermal energy is powered by biomass and biogas: Heineken says that making progress in renewable thermal energy is harder due to the lack of commercial solutions, but points to flagship projects such as use of risk husks from local farms in Vietnam.

"Beyond production, distribution and cooling, we are also going to take a close look at our packaging, because it represents a significant portion of our carbon footprint,” ​said van Boxmeer. “Packaging is an area where reductions will be harder to achieve because we simply cannot do this alone. We invite our business partners and others to work with us to reduce emissions across our business.”

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