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Global Consumer Conference

Morgan Stanley

New York

Global Consumer Conference

Morgan Stanley

New York3 November 2004

Jean Francois van Boxmeer, Member Executive Board

3 November 2004

Jean Francois van Boxmeer, Member Executive Board

Heineken Holding NVHeineken Holding NV



3

AgendaAgenda

• Heineken in the World Beer Market

• Heineken’s Strategy

• Building Winning Brand Portfolios

• Summary



Heineken

in the

World Beer Market

Heineken

in the

World Beer Market




5

Heineken at a GlanceHeineken at a Glance

The leading brewer in Europe

One of the top-brewers in the world by volume with 115 mm Hls (2003FY plusacquisitions in 2004)

Strong brand portfolio with Heineken, the world’s leading international premium

beer brand(1),

and Amstel, sitting in a portfolio of of superior local andinternational premium brands,

Balanced global exposure: A position in stable/low risk core markets inWestern Europe and North America is combined with strong and expandingpositions in high growth potential developing regions like South East Asia andAfrica

Present in over 170 countries, employs over 60,000 people

2003 group net sales of €9.3B, EBITDA of €1.9B and EBIT of €1.4B

Excellent top line, cash flow growth and strong acquisition and integration trackrecord(1) As defined by volumes sold outside home market



6

Beer volume by brand H1 2004Beer volume by brand H1 2004

21%

10%

69%

Heineken

Amstel

Local Brands

Total volume: 54.4 m hl



World Beer MarketWorld Beer Market

Western Europe

21%

Africa and

Middle East

5%

Asia Pacific

28%

USA/Canada

18%

World Beer ConsumptionWorld Beer Consumption in 2003:in 2003:1,471 m Hls1,471 m Hls

172453

57148

1,775

1,471

(-3)

Total

Global2003

Asia/

Pacific

C&E

Europe

Latin

America

Africa

ME

North

America

Western

Europe

Total

Global

2010

m

Hls

Source: Canadean

CAGR 03-10: 4% 4% 3% 4% 1% 0% 2%

Continuation of solid

growth in

international

premium beers in all

regions

Expected Volume GrowthExpected Volume Growth2003-2003-20102010

Eastern +

Central Europe

13%

South America

+ Caribbean

15%



Profit Pool of the WorldProfit Pool of the WorldBeer MarketBeer Market

Source: Heineken, estimates from investment banks

MatureMatureMarketsMarkets

66%66%

30%

13%

4%7%

3%

4%

7%

18%

7%

2%

2%2%1%

EmergingEmergingMarketsMarkets

34%34%

USA

Japan

Germany

UK

France

Spain

Italy

Other developed markets

China

Russia

Brazil

Mexico

Other developing markets



Heineken’s StrategyHeineken’s Strategy




The Heineken Business modelThe Heineken Business model

Organic Growth

Top-line growth

• Building winning brand portfolios, focus on our flagshipHeineken

•Innovation

• Sales and marketing excellence

• Distribution power

Efficiency & Cost reduction

• Continued cost focus in all business areas

Cash Generation

• Robust cash management

• Focus on markets they can win

Business

Development

• Acquisitions

• Partnerships

• Distribution



Acquisitions & PartnershipsAcquisitions & Partnershipsin 2003/2004in 2003/2004

Acquisitions:

BBAG - Central Europe

CCU - Chile/Argentina

Karlovacka - Croatia

Namibian Breweries - Namibia

Kingway Brewery - China

Shikhan Brewery - Russia

Volga Brewery - Russia

Dominion Breweries - New Zealand

Sobol Brewery - Russia

Fürstenbergische Brauerei - Germany

Partnerships:

FEMSA - United States

Lion Nathan - Australia

Diageo/Namibian Breweries - Southern Africa



Building Winning Brand PortfoliosBuilding Winning Brand Portfolios




Building winning brand portfoliosBuilding winning brand portfolios

Organic Growth

Top-line growth

• Building winning brand portfolios, focus on our flagship Heineken

• Innovation

• Sales and marketing excellence

• Distribution power

Cost reduction

• Continued cost focus in all business areas

Cash Generation

• Robust cash management

Business

Development

• Acquisitions

• Partnerships

Focus on developingmarkets & the

premium segment



OptimizingOptimizing

Existing PortfoliosExisting Portfolios

OptimizingOptimizing

Existing PortfoliosExisting Portfolios

Key Themes for Heineken

Implement InnovationImplement Innovation

Measuring Portfolio PerformanceMeasuring Portfolio Performance

We have identified 3 focus areas for We have identified 3 focus areas for Heineken in portfolio managementHeineken in portfolio management



Building Winning Portfolios! via a combination of

Portfoliorationalization

Portfolioenhancement

&

A key programme for the companyA key programme for the company

With the appropriate level of resource allocation



The Heineken Seven-step PortfolioThe Heineken Seven-step PortfolioReviewReview

Corporate Headoffice Input

Amstel andAmstel and

HeinekenHeinekenbrand rolesbrand roles

InnovationInnovation

strategystrategy

IdentifiedIdentifiedPortfolio IssuePortfolio Issue

11

Diagnostic

3 weeks

OpportunityOpportunityIdentificationIdentification

BrandBrand

PortfolioPortfolio

AnalysisAnalysis33

22

Analysis

2 – 4 months

MatchMatch

OpportunitiesOpportunitieswith Brandswith Brands

OptimiseOptimise

ResourceResourceAllocationAllocation

StrategicStrategic

Brand RoleBrand RoleChoicesChoices

44 55 66

Strategy

1 month

Local Imple-Local Imple-mentationmentation

77

Action



Typical Question:Typical Question: What are the portfolio issues which are hindering theWhat are the portfolio issues which are hindering thegrowth of our Opco?growth of our Opco?

Typical Question:Typical Question: What are the portfolio issues which are hindering theWhat are the portfolio issues which are hindering thegrowth of our Opco?growth of our Opco?

Identified PortfolioIdentified Portfolio

IssuesIssues

Identified PortfolioIdentified Portfolio

IssuesIssues

Innovation

Strategy

Innovation

Strategy

Resource

Allocation

Strategy

Resource

Allocation

Strategy

Implementation

Plan

Implementation

Plan

Prioritized Market

Opportunities

Prioritized Market

Opportunities

Summarized

Portfolio

Assessment

Summarized

Portfolio

Assessment

Brand role

classification

Brand role

classification

Key Output

We face differing portfolio issues byWe face differing portfolio issues bymarketmarket

Formulate clearer brand roles within the portfolio:

– Competing and colluding brands within CCU’spremium segment

– Opportunity for “Refreshing” beer in Standard

Segment

Protect the market from an attack by AMBEV/Brahma

Increase per capita consumption

Example: Chile Review, 2004



Typical Question:Typical Question: How should we segment the market to uncover allHow should we segment the market to uncover allopportunities?opportunities?

Typical Question:Typical Question: How should we segment the market to uncover allHow should we segment the market to uncover allopportunities?opportunities?

Integrated segmentation enables us toIntegrated segmentation enables us toidentify market opportunitiesidentify market opportunities

Identified Portfolio

Issues


Issues

Innovation

Strategy

Innovation

Strategy

Resource

Allocation

Strategy

Resource

Allocation

Strategy

Implementation

Plan

Implementation

Plan

Prioritized MarketPrioritized Market

OpportunitiesOpportunities



Summarized

Portfolio

Assessment

Summarized

Portfolio

Assessment

Brand role

classification

Brand role

classification

Key Output

Outlet

Purchase

Outlet

Purchase

Where?

Product, Pack-Product, Pack-

type, Pricetype, Price

Product, Pack-Product, Pack-

type, Pricetype, Price

What?

ConsumptionConsumption

OccasionOccasion

ConsumptionConsumption

OccasionOccasion

When?

Demographic,

Socio-economic

Demographic,

Socio-economic

Who?

NeedstateNeedstateNeedstateNeedstate

Why?



Typical Question:Typical Question: How interesting are the emerging growthHow interesting are the emerging growthopportunities?opportunities?

Typical Question:Typical Question: How interesting are the emerging growthHow interesting are the emerging growthopportunities?opportunities?

This helps us predict and evaluateThis helps us predict and evaluateemerging opportunitiesemerging opportunities


Issues


Issues

Innovation

Strategy

Innovation

Strategy

Resource

Allocation

Strategy

Resource

Allocation

Strategy

Implementation

Plan

Implementation

Plan





Summarized

Portfolio

Assessment

Summarized

PortfolioAssessment

Brand role

classification

Brand role

classification

Key Output

3,9% 4,0% 4,2% 3,9% 4,2% 3,6% 4,0% 4,0% 4,0% 4,0%

13,9%18,6% 19,2%

24,8%28,4%

36,6%40,0% 38,6% 36,0% 33,0%

51,9%

49,5% 49,6%46,0%

43,1%

37,5%35,0% 37,2% 40,8% 42,8%

21,5%19,2% 18,5% 16,6% 15,2% 12,9% 11,8% 11,0% 10,5% 10,0%

7,3% 7,3% 7,2% 6,9% 6,3% 6,2% 6,0% 6,0% 6,5% 7,0%

2001 2002 1st

HY

2002

2nd HY

2003 1st

HY

2003

2nd HY

2004

YTD

2004

LE

Fc 2005 Fc 2006 Fc 2007

Specialities

Internat.Superpremium

InternationalPremium

NationalMainstream

National Economy

Non Alcoholic Beer

Volume Shares (%) in AC Nielsen Off-Trade

Example: Hungary



Typical Question:Typical Question: How healthy is our portfolio?How healthy is our portfolio?Typical Question:Typical Question: How healthy is our portfolio?How healthy is our portfolio?

We systematically evaluate the relevanceWe systematically evaluate the relevanceand health of our existing portfolioand health of our existing portfolio


Issues


Issues

Innovation

Strategy

Innovation

Strategy

Resource

Allocation

Strategy

Resource

Allocation

Strategy

Implementation

Plan

Implementation

Plan

Prioritized Market

Opportunities

Prioritized Market

Opportunities

SummarizedSummarized

PortfolioPortfolio

AssessmentAssessment

SummarizedSummarized

PortfolioPortfolio

AssessmentAssessment

Brand role

classification

Brand role

classification

Key Output

BrandsVolume/profits

Metrics

Investment

Analysis

Pricing

Analysis

Brand EquityEvaluation

EvaluationStrengthof brand anddifferentiation

Cristal

Escudo

Heineken

Lemon

Stones

Austral

Royal Guard

Budweiser

Royal Light

Paulaner

Dorada

Kunstmann

Example: Chile Brand Portfolio Analysis Summary

f



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Typical Question:Typical Question: What are the key market opportunities which willWhat are the key market opportunities which willdrive our innovation strategy?drive our innovation strategy?

Typical Question:Typical Question: What are the key market opportunities which willWhat are the key market opportunities which willdrive our innovation strategy?drive our innovation strategy?

We have identifyied 4 major consumer We have identifyied 4 major consumer trends which drive our innovation strategytrends which drive our innovation strategy


Issues


Issues


StrategyStrategy


StrategyStrategy

Resource

Allocation

Strategy

Resource

Allocation

Strategy

Implementation

Plan

Implementation

Plan

Prioritized Market

Opportunities

Prioritized Market

Opportunities

Summarized

Portfolio

Assessment

Summarized

PortfolioAssessment

Brand role

classification

Brand role

classification

Key Output

Source: Censydiam desk research , Greece, Chile, Spain, Netherlands

Introverted Pleasure

& Functional

Satisfaction

Yourself to

Empower or

Distinguish

Fitting in

to Enjoy

or Relax

Extroverted

Pleasure Kicks and

Variety

Enjoyablehealth

Status &Prestige

Accessible

pleasure

B e e r

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Morgan Stanley Conference VOOR VERZENDING Deel 1.0_tcm4-12855