winning in premium - heineken n.v

Jan Derck van Karnebeek

WINNING IN PREMIUMby integrating Marketing and Sales

Chief Commercial Officer

What’s Brewing Seminar, August 27, 2015

1

Jan Derck van Karnebeek

2015 Chief Commercial Officer

2013 Regional President Central and Eastern Europe and Chief Sales Officer

2011 Regional President Central and Eastern Europe

1991 Started with HEINEKEN, various senior commercial and general management positions across different OpCos

2

Europe Europe

NORTH AMERICA

NORTH AMERICA

LATAM

LATAM

ASIA PACIFIC

ASIA PACIFICAFRICA & ME

AFRICA & ME

2014** 2020F

Advantage of focusing on Premium

Source: Canadean, **based on 2014 estimates. *PS – Premium Segment. Premium Beer (Lager) >= 115 price index

..and growing across all regions

PS* CAGR 2.8%

4.3%

4.3%

2.8%

0.5%

5.2%

PS* CAGR

At a more attractive price point..

Price Index

Discount

Mainstream

Premium

Superpremium

<90

>=90-114

>=115-149

>=150

3

HEINEKEN has a proven Track Record in Premium

Source: Canadean as at 24.08.15, Premium Beer >= 115 price index

The most premium Brewer in the world The Brewer with the fastest growth in premium

36%24% 17% 14%

HEINEKEN Competitor A Competitor B Competitor C

% share of PS of total company volume

Premium Other

9.6%

4.6%4.1%

-0.6%HEINEKEN Competitor B Competitor C Competitor A

PS volume growth CAGR 2009-2014

4

HEINEKEN has the optimal footprint to maximise the premium opportunity

Source: Canadean

Strong presence in key Premium markets

Top 10 PS markets:

#1 or #2 in Premium in 5 markets

Within Top 3 in 8 markets

Strong Route to Market in all key markets

HEINEKEN’s broad footprint

Operating Companies

Joint Ventures/ Associates

Export

Licences

70+COUNTRIES

160+BREWERIES

5

A Winning Premium Brand Portfolio

Source: Canadean

Heineken® the leading international Brand

Heineken® In +160 markets

The only truly

international premium

Brand

20-year CAGR c. 5%

5 distinctive International

Cider Brands, covering full

range of premium segments

Desperados Sold in 86 markets

5-year CAGR 15%

In 2014/2015 expanded

in 21 new markets

Global Premium specialty Beer & Cider

Dos Equis #2 Brand by volume in

US portfolio

4-year CAGR of 16% (US)

Price index 147 vs.

Mainstream (US)

Tiger

#5 largest Brand by

volume at 5.8Mhl (2014)

Key driver of Asia Pacific

volume growth

Sold in 50 markets

Regional Premiumpowerbrands

Birra Moretti Le Regionali

Price index 187 vs. core Brand

Local Brands:Premium extensions

Zywiec Variants

Price index 117 vs. core Brand

6

Agenda: The HEINEKEN JourneyWinning in Premium by integrating Marketing and Sales

Past Today Future

Developing world-class Marketing

and Sales functions

One Commercial function integrating

Marketing and Sales

Integrated Commercial function to scale the Premium opportunity

2010-2015 2015 2015-20202010-2015 2015-20202015

7


Past Today Future


and Sales functions


Marketing and Sales


2010-2015 2015 2015-20202010-2015 2015-20202015

8

2010-2015

Development of a stronger Marketing functionDriving powerful marketers and enhancing Brand equity

World class Marketing capabilities driving strong Brand Assets

Global Creative Leadership formally acknowledged

Rapid evolution intodigital leading edge

DIGITAL

Brand Building Framework as a global way of building Brands

6,400 training sessions delivered

Digital media investments more than doubled since 2012

Significant increase in investments with key global partners (Facebook, Google, Twitter, Instagram)

2015: Cannes Lions Creative Marketer of the Year award

41 Lions awards across 7 markets over 3-year period

9

2010-2015

Development of a stronger Sales functionDriving excellence in execution leveraging extensive scale

Executing consistent, repeatable processes globally

Global Sales Capabilitiessetting industry standards

World-class strategic partnerships based on local strenghts

& PEOPLE

Common language and

principles applied across:

23,000-strong Sales Force

70+ markets

1,000,000 outlets

From Europe to global coverage

HEINEKEN rated above industry

average by 80%

10 Sales Capability programs

Sales support systems rolled out

globally

Global Sales Resource Committee

10

2010-2015

Separate functions delivered premium results

Marketing: Stronger Brands + Sales: Excellent Execution

Source: Heineken® Canadean Forecast, HEINEKEN internal volume, year-to-date May 2015; Top Markets defined as Top 30 markets by volume, Nielsen Modern Trade year-to-date August 2014 for innovation

Heineken® Growth Accelerated InnovationsEstablishing Cider

Significant expansion into

New Markets beyond

Traditional Cider countries

Identification of key

Must-Win Markets

Portfolio of 5 distinctive

International Cider Brands

Innovation rate step up from

3% in 2010 to 7.7% in 2014

Contribution to Group top line

€1.5bn in 2014

Targeted innovation strategy

Premium segment leadership

with 7.6% share in 2014

Equity score ≥ vs. leading

premium competitor in 70%

of Top Markets

Disproportionate growth

in 2014, +5% vs. last year

11

Heineken® largest Brand in PS Heineken® share of business*** 2014

Heineken® Brand: clear leadership in PS

Source: *Canadean* *ONEquity 2013: Brand equity score is based on average score on most recent quarter for all markets available on ONEquity: Respondents are asked to rate brands on a 1-10 scale, where 1 means 'poor' and 10 means 'outstanding‘** *Based on 2014 consolidated financial results and group beer volume

Strengthening Global Leadership

14%

Beer Volume Revenue OperatingProfit (beia)

Heineken®

Corona

Budweiser

Stella Artois

Carlsberg

Dos Equis

Tiger

6.0

6.2

6.4

6.6

6.8

7.0

7.2

7.4

7.6

0% 5% 10%

Bra

nd

eq

uit

y**

*PS share

12

Shaped Portfolio and Innovation Shaped Key MarketsEstablished Cider

Established the Cider category

* % of consumers drinking alcohol, that do not drink lager

Capturing new Consumers through Cider

COGS

Focus on Traditional Cider markets and expansion to New markets

5 strong distinctive Brands MaximiseOpCo Profitability

51%*26%*

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Innovation a key competitive advantage

* From 1 January 2013, the innovation rate is calculated as revenues generated from innovation introduced in the past 40 quarters for a new category, 20 quarters for a new brand and 12 quarters for all other innovations, excluding packaging renovations divided by total revenue

A sustainable contibutor to Top Line Growth

3.0%

4.1%

5.3% 5.9%

7.7%

2010 2011 2012 2013 2014

2020 Target: 6%

€0.4bn

€1.5bn

2010 2014

40% CAGR

Innovation rate* New pack types Brand extensions

Improving draught offerRadler and alcohol free propositions

Innovation revenue

14


Past Today Future


and Sales functions


Marketing and Sales


2010-2015 2015 2015-20202010-2015 2015-20202015

15

From three separate World-Class Functions…

Developing strong Brands with high preference in

Consumers Consideration Sets

Developing tools and capabilities to make Brands relevant at the Point of Sale: Picture of Success

Developing world-class capability to win at the Point of Sale with

Excellent Outlet Execution

MARKETING TRADE MARKETING SALES

12

3

16

…to integrated functions mirroring Shopper Journey

THESHOPPER

JOURNEY“MY PREFERRED

BRAND”“WITH THE RIGHT

ASSORTMENT”“AVAILABLE

WHERE I NEED IT”

MARKETINGBuild Brands with

highest preference

TRADE MARKETINGCreate outlet-basedPicture of Success

SALESConsistently execute withExcellent Outlet Execution

THE

JOURNEY

Premium Focus

17


Past Today Future


and Sales functions


Marketing and Sales


2010-2015 2015 2015-20202010-2015 2015-20202015

18

2015-2020

Taking the Premium Opportunity to the next Level

Shape the key markets

Develop portfolio and innovation

Integrate Cider into brewery network and Beer Route to Market

Educational - build the category through product story

Capture growth in the Low/No Alcohol category

Satisfy the need for Variety and Craft

Lead in Draught Systems

development

Accelerate market share in emerging markets

Innovate in established markets

Localised Jobs To Be Done

Leverage unique platforms

Strengthen Heineken®

global leadershipKeep world-class pace

with InnovationReaching consumersbeer can’t with Cider

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Heineken® leading in equity and preference against Premium competitors

Source: ONEquity Latest Moving Annual Total vs. Leading Premium Brand

Equity Preference

Stronger or equal in 21of our Top 30 Markets

Stronger or equal in 18of our Top 30 Markets

14

4

12

Stronger

Parity

Weaker

16

5

9

Stronger

Parity

Weaker

20

Converting Heineken® Preference to Market Share is a Growth Opportunity

0

5

10

15

20

25

30

35

0 1 2 3 4 5 6 7 8 9 10

MARKET SHARE

Source: ONEquity 2014 Moving Annual Total Preference/Canadean 2014 Market Share

Premium conversion

Preference

14

4

12

Stronger

Parity

Weaker

Correlation between Preference and Market Share per country

21

Strengthening Heineken® global leadership with the right Focus by Geography

Where the Brand is well established: (>5% Market share)

Convert equity into broader penetration

in emerging economies

Drive innovation & renovation

in developed economies

Where the Brand is new & small:(<5% Market Share)

Build Brand equity

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Fully Leverage Heineken® Competitive Advantages

Integrated global programs based on our unique Brand Platforms

High profile sponsorships to build premium Brand equity

Complemented by relevant local topspins

Occasion-based activations at the Moment of Truth

Enjoy Heineken® Responsibly programSPONSORSHIP

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2015-2020

Maximizing the Cider Opportunity...

Source: Canadean October 2014

Fastest growing category Sustained Innovation

Focus on Quality Designed for Relevance

MOST AWARDED CIDER

2%

5%

1%

Beer Cider Wine

CAGR 2010-2013

3%

6%

2%

Beer Cider Wine

CAGR 2014-2019

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...and leveraging Scale and System Strength

Revenue/hl

We have made Cider more accessible…

...and still more attractive than beer…

2014 2015

Cider Consumer price

Beer Cider

…with more cost effective use of our breweries

COGS

Cider COGS

25

Strengthening and expandingour leadership in Innovation

Satisfying the

need for Craft

& Variety

Seizing the

low/no alcohol

opportunity

Leading

in Draught

Systems

Maximising absorption capacity through global-local collaboration

Accelerating the clock speed of Innovation to tap into new sources of growth

26

2015-2020

Innovation: addressing Moderation

Consumer Opportunity Growth DriversBusiness Opportunity

Increasing moderation theme

Consumer pull for adult refreshing alternative to Carbonated Soft Drinks

Demand for natural authentic product

Potential for new consumers beyond traditional beer drinkers

Best tasting products

A portfolio approach: Brand, pack type and price to serve the right Point of Sale

Striking the balance between functional and emotional benefit in communication

No longer a niche opportunity

Average rev/hl for low/no alcohol significantly higher than beer average

Existing breweries can be used to produce low/no alcohol product

Limited additional CAPEX needs

27

Birra Moretti RadlerVideo

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2015-2020

Strategic Programs to Maximise Growth

Digital Transformation

Creative Leadership

Excellent Outlet Execution

Use creative technology

to unlock shopper opportunities

throughout the Path to Purchase

Implement perfect execution

of the in-outlet programs

Take the lead in shaping the

creative norms to create impact

and drive leadership

… TO MAXIMISE OUR SHARE IN PREMIUM

29

HEINEKEN leading edge in digital transformationServing consumers and shoppers throughout their journey

Customer

Reaching the right consumers, with the right content,

in the right context

Supporting shoppers and partnering customers to take the shopping

experience to the next level

Storytelling Precision

Marketing

Internet

of Things

Supported by DIGITAL PARTNERS to step up digital strategy

Indirect

B2C

Direct

B2C

B2B

Doubling Media spend on digital by 2020 +1 Billion € via E-Business by 2020

Consumer

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Excellent Outlet ExecutionA global framework to win at the “Moment of Truth”, everyday, everywhere

1. Leadership

2. Alignment

3. 100% data

4. Focus & Simplicity

5. Sell Out

6. Step by Step

7. Empowerment

8. Accountability

23,000-strong Sales Force aligned under one program

Rolled out globally across all markets

Covering Traditional, On, Modern and Wholesale trade channels

Based on 8 Execution Principles Full Coverage for Impact

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Creative Leadership to win the battle for attentionMaking an Impact, Holding Attention, Closing the Purchase

The Creative Ladder

Step change the creative ambition of

strategic Brands

Embed creative principles in the company culture

Leverage recognition to attract talent

Trigger debate to raise the bar on

creativity

The Four Creative Principles The Creative Council The Marketer of the Year

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Setting the standard in Brand Building

Innovative Aspirational ResponsibleMINI JAMES BOND THE HERO

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HEINEKEN ideally placed to maximise the Premium opportunity, with strong proven track record and broad Premium Brand Portfolio

Separation of Marketing and Sales through 2010-2015 strengthened the functions and delivered results

2015 the right time to integrate Marketing and Sales units as one Commercial function. This will enable HEINEKEN to take the Premium opportunity to the next level, thereby:

Extending the Premium Brand Portfolio, led by Heineken®

Fully capturing the Cider opportunity

Maximising innovation opportunities

Utilising key digital, outlet execution, and creative strengths to further drive Brand Equity

WINNING IN PREMIUMSummary

What’s Brewing Seminar, August 27, 2015

WINNING IN PREMIUM by integrating Marketing and Sales

Q&AJan Derck van Karnebeek

winning in premium - heineken n.v

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