Heineken NV Company Profile

written for FNV Mondiaal by Food World Research & Consultancy /Paul Elshof
Amsterdam, January/May 2005

Colofon
Heineken NV Company Profile written for FNV Mondiaal by Food World Research & Consultancy / Paul Elshof as part of the FNV Company Monitor Project Edited & published by: Stichting Onderzoek Multinationale Ondernemingen (SOMO) Centre for Research on Multinational Corporations Copyright © 2005 January 2005 (annex 7 May 2005) SOMO, Amsterdam Contact information SOMO Keizersgracht 132 1015 CW Amsterdam Phone: +31 (0)20 6391291 e-mail: info@somo.nl Food World Research & Consultancy Phone: +31 (0)20 6393645 e-mail: foodwrc@xs4all.nl www.companymonitor.org

Heineken NV Company Profile

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Table of contents
1. General characteristics .......................................................................................... 4 1.1. Name of the holding company .................................................................................. 4 1.2. Communication data ................................................................................................. 4 1.3. Ownership structure .................................................................................................. 4 1.4. Composition of the Board.......................................................................................... 5 1.5. Basic financial data : Turnover, profits, financial position ......................................... 5 1.6. Main activities............................................................................................................ 5 1.7. Main competitors ....................................................................................................... 6 1.8. Products and brands ................................................................................................. 6 2. Production and production policies...................................................................... 8 2.1. Geographical distribution of production and employment ......................................... 8 2.2. Sales and production development of Heinekens leading brands ............................ 9 2.3. The policy to capture markets ................................................................................... 10 3. History and strategy ............................................................................................... 11 3.1. A young, but well integrated company ...................................................................... 11 3.2. Strategy..................................................................................................................... 13 3.3. Actual positions in Asia, Latin America and Africa .................................................... 14 3.4. Employment development......................................................................................... 17 3.5. Development of volumes brewed & sold and employment figures .......................... 18 4. Labour relations ...................................................................................................... 19 4.1. Strong trade union presence..................................................................................... 19 4.2. Employee representation at different levels .............................................................. 20 4.3. Labour relations ........................................................................................................ 21 5. HR Management and management styles ............................................................ 23 6. Corporate norms, standards and codes ............................................................... 25 6.1. Sustainable corporate behaviour patterns. ............................................................... 25 6.2. Work in progress ....................................................................................................... 26 6.3. Social-economic rights .............................................................................................. 28 Annex to the Heineken Company Profile ........................................................................... 29 Smaller Board ............................................................................................................ 29 New executive committee.......................................................................................... 30 Heineken Code of Business Conduct........................................................................ 31

Heineken NV Company Profile

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On 31 December 2003 there were 391.87 Heineken NV Company Profile 4 . 1. p. independence and stability of Heineken´s activities. with a nominal price of €2.: +31 20 5239239 Fax.de Carvalho. the third generation owner .979.005 shares in Heineken Holding NV.com (Corporate Communications Department) Email : responsibility@Heineken.0010 share in Heineken NV de facto the Heineken Group.heinekeninternational.2.005 % share in Heineken NV.R.com (Corporate Affairs Department) 1. At that date Heineken was valued at € 11.1.: +31 20 6263503 Website: www.00. Heineken NV is controlled by Heineken Holding NV . General characteristics Name of the holding company Heineken NV 1. L´Arche Holding is a society owned by the Heineken family. C. Heineken Holding NV has no operational activities. but traded at 1 €30. Its one and only aim is to safeguard the long-term continuity. And Heineken Holding NV on its turn is controlled by L`Arche Holding S.8 billion.1.A.19. Ownership structure Shares are traded on the Euronext Stock Exchange Amsterdam. 1 Heineken NV Annual Report 2003. This has long been Freddy Heineken. Mr de Carvalho has a seat in the supervisory Board. L´Arche Holding owns 50.de Carvalho Heineken and her husband M.675 shares. This Holding has a 50. Communication data PO Box 28 1000 AA Amsterdam Netherlands Heineken NV Tweede Weteringplantsoen 21 1017 ZD Amsterdam Netherlands Tel. To sum up: the Heineken family controls with a 25. Also Heineken Holding NV is traded at the Euronext Amsterdam stock exchange.3.. a Swiss company. Since his death in 2003 this ownership belongs to his daughter Mrs.

van Boxmeer is responsible amongst others for Corporate Production.255 8.973 798 795 767 621 516 At the end of 2003 total group equity was € 3. Freddy Heinekens daughter. Heineken has a tradition of being very conservative in financing its business.282 1. Ruys is responsible amongst others for Corporate Affairs. K.125 921 799 Net profit Net profit as % Of shareholders equity 25.90. The lowest level in Heinekens history.4 30. And since May 2004 the Austrian K. 90 Heineken NV Company Profile 5 . 1. since May 2004 5 persons. but the 3 others are quite young: 43 to 50 years. The Supervisory Board has 7 persons. except Mr. the husband of Mrs Carvalho.1 25.482 7. p.56 end 2003. D. He has the British nationality. Liabilities were at their highest level in the history of Heineken NV : € 5. but still high compared with many other companies. commercial affairs . Human Resources & Organisation Development.Büche has been appointed as an extra member of the Board.9 19.1. Heineken Technical Services. The Executive Board consists of 4 persons. with first responsibility for Brau Union .9 25. profits. Composition of the Board Recently. All other members have been elected in the Board in 2001 and 2002. Southern Europe J.6. All have the Dutch nationality except van Boxmeer who is Belgian. Main activities The Heineken Group belongs to the 4 major brewery-companies in the world and has been for a long time one of the most international breweries. until 1999 the ratio group equity to borrowed capital was around 0. Basic financial data : Turnover. all of Dutch nationality. Central and Eastern Europe ( until May 2004). Carvalho. and the Asia/Pacific region.Bolland is responsible for amongst others corporate brands. in the period 2000 to 2003 the composition of the Executive Board has been changed completely.367 million.637 6. financial position2 Net turnover (in mln € ) Operating profit (in mln €) 1. just as Büche.4. North-West Europe and Sub Saharan Africa.222 1. North and South America. member of the Board since 1993 and appointed as chairman in 2002.Büche has been appointed from 1 May 2004 Ruys has 58 years.899 million and provisions amounted to € 1. M. Anuual report 2003. 1.5.7 1999 2000 2001 2002 2003 9. This resulted in a ratio of Group equity to borrowed capital of 0. which means Heineken’s Central and Eastern European activities.Hooft Graafland is Heineken´s Chief Financial Officer. Some others like Interbrew and South African Breweries 2 Heineken NV.631 million.766 5. Chairman of the Executive Board is Tony Ruys. Policy and Control.

In the European beer market Heineken is the biggest brand measured in volume and value.2 billion in 2003 € 7. edition Hans Böckler Stiftung. p. 1.1 million hectolitre has been consumed worldwide.0 billion was soft drinks. It has a high position in the standard beers. All over the world the Heineken brand is positioned as a premium brand. Third in Europe is the second important brand name of the Heineken Group. apart from the Netherlands where it has been always a high priced standard beer. Apart from its brewery activities Heineken operates some soft drink companies in Europe and Africa and it owns a major maltery in Belgium/Europe. In 2003 about 110 million hectolitres of beer were brewed.9 4 Paul Elshof. but its 4 stronghold is in Europe. € 0. Internationalisierungsstrategien der Braukonzerne in Europa und ihre Auswirkungen. It is represented in all continents.3 billion was beer related turnover. Products and brands As said.7. the big middle segment of the beer market between premium and low priced beers. In Europe Heineken is market leader in its home country.17 Heineken NV Company Profile 6 . and in all countries surrounding the Mediterranean Sea.A. spread over all continents with the exclusion of North America. It operates about 115 breweries in 65 countries. Main competitors Heineken ranks nr 4 in the worldwide brewery-sector when measured on production volumes at the end of 2004. So they developed also in widely spread international brewing companies.6 billion was wine and spirits. p.) acquired more aggressive than Heineken other breweries during the last decade.(S. 1. Amstel. Zukunft der Brauwirtschaft.000 at the end of 2003.8. Heinekens strategy is to be present in each market with a complete portfolio of brands. above all Southern Europe. 3 Total employment was about 60. and in all Central and Eastern European countries excepted Czech Republic and Russia. where it has a 15% marketshare .B. In 2003 a total of 22. 2004. 3 Heineken NV. But during the last two years this ranking changes every half year due to megaacquisitions or mergers. € 1. The major competitors are: InBev Anheuser Busch SAB-Miller Heineken Carlsberg April 2004 merger in of Interbrew (Belgium) and AmBev ( Brasil) USA UK-South Africa-USA Netherlands Denmark 190 mln hl. But the Heineken brand is by far the brand name most spread over the world. 160 mln hl 125 mln hl 110 mln hl 90 mln hl Heineken has an 8% share of the world wide beer market. With a capacity of 250.000 tons this malthouse is one of the biggest and most modern in the world: it supplies about 40 of Heineken´s breweries Of the total turnover of € 9. the Netherlands.from low priced to premium and the brand Heineken also in the premium spot. Annual Report 2003. Heineken has sales activities in 170 countries worldwide. the Heineken brand is the most widely spread beer brand in the world.

The base is mostly a number of local or regional brands. One very interesting element for Heineken was that Al Ahram Beverage has an alcoholfree beer that is well known in Egypt under the brandname Fayrouz. light beers and alcohol free beers.43 Heineken NV Company Profile 7 . Recently Heineken announced that it is considering the option to introduce this beer under its Arabian brand name in Europe as a beer for the moslim population in Europe. 5 idem. The most important brands Heineken owns in the last groups of beers are: Stout Murphy´s Irish Stout White beer Paulaner Alcoholfree Buckler Mixdrink Desperados Strong beers Affligem 5 A new development has been announced recently. Included are special beers. p. In 2002 Heineken acquired Al Ahram Beverage in Egypt. who is not allowed to drink the normal alcoholic beers. who together cover the whole spectrum from low priced beers to premium beers. the national leading brewery with a nearly 100% market control in the Egyptian market.

0 7.8 8.1.0 Western Europe Central/ Eastern Europe N. 2. Spain and Greece.4 `` `` 8. Turnover by volume in mln hl of Heineken Group in national markets according to size Spain Poland Germany France Italy 10.7 15. Annual Report . And this will change the ranking in this list.8 8. And since 2000 Heineken first of all aimed to acquire leading positions in the two major national markets in Europe.4 7. Italy.6 20.8 million hl 9.9 109. The full consolidation of this volume will lift the total volume in Europe with an extra 9 million hl. the Austrian brewery company acquired by Heineken in 2003 from 1 Oct.8 9. But over the years more than half of the total beer volume was always produced in Europe.6 The great importance of Southern and Eastern European markets becomes clear when the Heineken 7 sales volumes in national markets are shown .6 12.5 7.3 2.5 6 Africa & Middle East 8.) Geographical distribution of Heineken´s beer production ( in mln hectolitres) Total volume 1999 2000 2001 2002 2003 90. p. p. They include the sales figures of Brau Union AG. In the 90-ies the emphasis was shifted to Eastern Europe and Asia. This continent was considered by Heineken as its home market.1 108.0 `` `` 7.1 1.17-46 idem .7 Asia/ Pacific 7.4 `` `´ 6.0 3.9 10. 27 Heineken NV Company Profile 8 .6 7. Total turnover of Brau Union amounted in 2002 to 13 million hl.2 44. In the period between 1970 and 1990 the emphasis was laid upon acquisitions to gain strong positions in France. 7 6 Heineken NV. Already in the 50-ies of last century Heineken owned breweries in other continents and it had established itself as the most important import premium beer in the USA. what delivered very attractive profits. America 6. The consequence of this acquisition policy is visible in a regional break down of production based on volumes ( hectolitres of beer produced.9 105.0 8.4 12. Germany and Russia.3 million hl ´´ ´´ ´´ ´´ ´´ ´´ ´´ ´´ A restriction on these figures has to be made.2.4 42.4 3. And its acquisition policy was aimed at building commanding positions in a number of national markets. Production and production policies Geographical distribution of production and employment Heineken started its process of internationalisation long before the other brewery companies. first of all in Southern Europe. and S.0 `` `´ Netherlands Greece Russia Slovakia Bulgaria 6.2 9. 2003.9 97.

8 ´´ ´´ 10. in 2004 local production started in China and Indonesia. Anuual Report 2003.6 ´´ ´´ 22. In 2003 local production of the Heineken brand has been started in Russia at the subsidiary Bravo International. Netherlands) 18.9 % Development of Heineken sales9 20.271 8 11.0 ´´ ´´ For these two brands guidelines and standards for brand style. 8 Heineken NV. 19 Heineken NV Company Profile 9 . brand value and development are set and maintained at central corporate level. Both brands are international brands and the marketing policy for these brands is made at corporate level.024 North and South America Central/Eastern Europe 15.791 Asia/Pacific The total employment figure end 2003 was 61.Geographical distribution of employment at the end of 2003 Netherlands 5.3 % Amstel 10. Sales and production development of Heinekens leading brands The Heineken brand is the best sold premium beer internationally. 16 10 idem.941 5.2. p.1 % Other brands 69.526 Africa/Middle East Western Europe ( excl.4 ´´ ´´ 22.435 4.8 ´´ ´´ 11.9 ´´ ´´ 22. It is a cornerstone of Heinekens policy to develop local or national breweries in such a way that they can start as soon as possible also the production of the Heineken brand according to the standards set at corporate level. In these markets Heineken wants to grow the share of its major brand in the premium segment. Central support and benchmarking programmes are used to improve local marketing. in the same rhythm as the whole beer market is slowly going down.1 ´´ ´´ 1999 2000 2001 2002 2003 Development of Amstel sales10 10.824 2.4 mln hl 21. The only market where the Heineken brand is sold as a standard brand is the home market in the Netherlands. sales and distribution policies. p. The second important brand name within the Heineken Group is Amstel. 23 9 idem.5 mln hl 10. In 2003 the place of these two brands in Heineken´s brand portfolio was: Heineken 20. In this market sales of Heineken are going down. It saves the company a lot of money in terms of import duties and transport.8 ´´ ´´ 10. p.

p.c. France. Zukunft der Brauwirtschaft. it can build a platform that enables it to introduce its international brands such as Heineken.9% participation. This policy of acquiring breweries that together cover a certain regional area or create the possibilities for nationwide distribution is a policy that implies a string of acquisitions over a number of years and consequently later on a long process of integration. The policy to capture markets Heineken basic policy is to try to acquire through a string of acquisitions a major share of a national market. In the two major European national markets. Germany and Russia. restructuring and consolidation of production in a smaller number of brewery sites. 11 Paul Elshof. BBI is operating in Bayern and during the last two years it acquired a few extra breweries in Southern Germany. where these breweries have very strong positions in regional markets. Heineken is just starting to build a 11 strong presence . o.3. In those countries where Heineken has a long history. Amstel or the international specialities such as the white beer Paulaner or the abbey beer Afflighem.Petersburg. In Germany it started in 2001 a joint venture with the Schorghuber group: Bayerische Brauholding International in which Heineken has a 49. By building a network of breweries that covers a national area and give it a lot of scale in distribution. It acquired in 2002 first Bravo International in St.2. leaving the Northern part to Carlsberg (after its acquisition of Holsten in Hamburg) and the central part of Germany to Interbrew. It tries to take over local or national breweries with strong national standard brands and at best some speciality brands. To reach this position Heineken works along two lines: the acquisition of a number of breweries who together give a good coverage of a national or regional market the acquisition of beer & soft drink wholesalers. In Russia Heinekens follows a similar policy. Poland and Italy. it constructed this kind of distribution platforms: the Netherlands.26-27 Heineken NV Company Profile 10 . to create a strong distribution platform to boast all brands owned by the company. These regions show the fastest rise of beer consumption per capita. It seems as if Heineken contends itself to become one of the strongest groups in the Southern and Western part of Germany. And in 2004 it took over 3 breweries in the Ural region of Russia.

More acquisitions followed. In 1975 this site started production and it made possible the closure of two sites. 2 in Amsterdam and 1 in Rotterdam. the Rotterdam and former Amstel-site in Amsterdam. The origins of this brewery go back to 1592. one of the other leading Dutch 12 brewery companies. 12 Barbara Smit. This combination had 60% of the Dutch beer market. the Elzas region. still one of the biggest in the world. History and strategy A young. The history of the Heineken Company goes back to 1864. This offensive in Europe started in 1972. 13 from New York to Singapore. slightly later in Italy and Spain. . when Gerard Adriaan Heineken bought an existing brewery. 166 Heineken NV Company Profile 11 . He presided the company until 1989. p. In the sector there are many breweries with more than 300 years of history. named ´De Hooyberg´ in Amsterdam.1. The production of this site was in 2002 about 10 million hectolitre and it is the major productionsite that exports Heineken beer to the USA. but well integrated company Compared with many other brewery companies Heineken has a short tradition. Around 1990 Heineken controlled the market already in many markets or had at least strong nr. These were the starting steps of Heineken in the offensive strategy to make Europe a kind of home market for the Heineken company such as Anheuser Busch. He started the expansion overseas in the 1920-ies with exports to the USA. 1996 . When in 1968 Allied Breweries (UK) took over the Oranjeboom Brewery in Breda ( the southern part of the Netherlands) . It started the construction of a greenfield brewery in Zoeterwoude at the beginning of the 70-ies. and less expensive than other drinks like wine. more than 20 years before the other breweries who dominate the worldwide sector such as Interbrew . which was mostly contaminated. which made Heineken a predecessor in the industry. een leven in de brouwerij. Nijmegen . first in France. It prevented by being very early that Carlsberg or BSN ( Kronenbourg) or eventually Stella Artois ( later Interbrew) would acquire major positions all over Europe. 56 vv 13 ibid. saw the USA as its home market. SUN. In 1972 Heineken had only a market share of 3% in Europe whereas the Heineken brand was sold worldwide. After the acquisition of Amstel Heineken had 3 brewery sites in the Netherlands. 2 positions. p.3. South African Breweries and Scottish & Newcastle started their internationalisation. From 1864 onwards started the growth of the Heineken Company in three generations of the Heineken family into one of the world leaders in the branch. At the end of the 1940-ies the third generation took over in the person of Freddy Heineken. Heineken immediately acted to acquire Amstel. During his presidency the company developed the international production infrastructure. In 1972 Heineken acquired a first French brewery in the Straatsburg. Heineken. 3. The danger of a foreign domination of the Dutch beer market was prevented. Far East and Caribbean. The successor to Gerard was Henry Heineken. the world brewery leader. Beer has been for a number of centuries the preferred drink in Western Europe: purer than drinking water.

Hungary. The major step came in 2003 when Heineken acquired the Austrian market leader Brau Union AG. Interbrew has Beck’s as its international premium beer: in 2003 about 3 million hl was sold worldwide. in Latin America. which had expanded in the years before in surrounding Eastern European countries. marketing methods and styles. a figure that will grow to 20% when it continues to expand its positions in Germany and Russia. marketing strategies. Before the biggest one had been the acquisition of Cruzcampo in 2000 in Spain to consolidate Heineken leadings position in that country: the price than was about Fl. This process started with first acquisitions in Hungary (1991 and 1994). Over the years it could develop a policy of Heinekenisation of all its operations. And SAB promotes its Czech beer Pillsner Urquell as its international premium beer.34-35 Heineken NV Company Profile 12 . The years ahead will see the unfolding of Heinekens presence in Asia/Pacific. about € 450 million. In Central and Eastern Europe Heineken acquired between 1991 and 2003 a market share of 27%. p. One of the preconditions to make this possible is to prefer a string of acquisitions of medium sized companies that can be integrated into this Heineken culture in a relatively short time compared to the take over of or merger with big companies that would make this process uncertain.In 2004 Heineken has a European market share of about 15%. Slovakia. The long international presence makes that Heineken has internally a well developed policy of standardized rules and procedures. The acquisition of Brau Union AG in 2003 was the biggest one in Heineken’s history: about €1 billion was paid. Poland and Bulgaria (both 1994). and vice versa. Africa. In these regions Heineken will try to expand its positions in the coming decade. 1 billion. Bulgaria. The second reason is the ownership structure. This is partially compensated by growth in Central and Eastern Europe. in Russia and in Germany.q.005 % in Heineken Holding which owns 50. o. Latin America and Africa. Rumania. standards of production/productivity. Compared with other major consolidators in the sector such as Interbrew and South African Breweries Heineken is rather conservative and cautious in financial terms. at least in Western Europe. Macedonia. Brau Union was strong. The consequence of both elements is that Heineken developed over the decades into a well integrated company with clear strategies regarding production policies and brand c. The factual control of the company by the Heineken family (although now under the name Carvalho) with a minimal majority (50.. This has two major reasons. mainly China.005% in Heineken NV) and the wish to keep that control makes it impossible to make much bigger acquisitions without watering down this control. This relates to styles of reporting. The combination led to a situation where the enlarged Heineken is market leader in 8 of the 13 countries involved: in Poland.c. But the background in Europe is one of gradual declines of beer consumption. The consolidation of its position as market leader in Europe will imply that Heineken has to build a stronger position in the future in Germany and also in the UK. and Albania. In general growth based on rising consumption levels of beer is mainly expected in Asia. 14 14 Paul Elshof. And while it could support over many decades its major brands Heineken and Amstel it has a strong advantage compared to Interbrew and South African Breweries who have to grow their brands worldwide from a much lower base. The acquisition of Brau Union created a perfect fit in Eastern Europe: where Heineken was weak. It just jumped the 1 million hl export threshold in 2003. Austria.

The headoffice of Brau Union in Linz. This step was made in a period that Heineken got a lot of criticism from the financial press and analysts. Strategy Heineken’s strategy is well defined in its Annual Report on 2003 at page 2: “The goal is at all times to defend and strengthen its leading global market position and preserve its independence”. The aim was clearly set: Heineken wants to be one of the 3 major brewing companies. For the first time a central department for acquisitions was formed.2. with Heineken as the leading international premium beer maintain strong local market positions. The restructuring got the name: Taking Heineken to the next level. could also be read as ‘preservation of the family control of this company’. National boundaries are made subordinate on the new defined boundaries of operating companies. To strategy to obtain this goal is: “Achieve levels of sales and profitability which make it one of world’s largest and financially best-performing brewing groups maintain a strong portfolio of beer brands.3. Probably this decision has helped Heineken to get the cooperation of Brau Union management and of the owner families to obtain full control of Brau Union. The other part of the restructuring program is the decentralisation into the operational companies of a number of responsibilities. a good sales mix and an efficient cost structure by combining the sale and distribution of the international Heineken premium brand with that of strong local brands fullfill its corporate social responsibility. Heineken integrated its substantial existing interests in Central and Eastern Europe into the existing Brau Union structure. social and environmental issues”. The crucial issue in this program was the aim to make the company more entrepreneurial by changing the structure of the corporate centre. Heineken NV Company Profile 13 . Heineken seemed to them to much in the defensive. One of their central aims. Austria. preservation of its independence. In 2002 Heineken started a restructuring program at its corporate centre that had implications on all levels in the company. It lacked the aggressivity that was necessary to maintain its place in the topleague. has been defined as the head office of all Heineken’s activities in Central and Eastern Europe. Compared with Interbrew and SAB. particularly with regard to policy on alcohol abuse. A new phenomenon has been the way Brau Union has been integrated in last years. The start with this new acquisition department can help to combine both elements: continue the permanent expansion in such a way that the control of the Heineken family will stay intact. The new configuration will make for example in Europe forms of international restructuring easier. bringing down the operational responsibility on a number of issues. Not in setting the standards but in the implementation of centrally defined standards in regional or local policies. The structure of the company has been designed in a new way: a new configuration of operating companies has been designed. while maintaining centrally set policies and standards.

in China. in Kazakhstan. Heineken followed the last years a double strategy in terms of regional presence: it wanted above all to maintain and expand its market leadership in Europe and at the same time it sought to acquire important positions in growth market in the other continents. we see in most cases that after a couple of years (sometimes decades) this interest is expanded into a majority interest of let’s say 60 or 70%. by offering the other one a licence to sell and sometimes to produce and sell Heineken beers. also there consolidation will follow.Büche. p. in Poland. In those cases family owners sell their share-packages to Heineken. The Annual Reports shows where Heineken has its production operations. Heineken has been for decades the most international brewer. When the start is a minority interest. Here are listed the participations according to the data in the 15 Annual Report 2003 15 Heineken NV Annual Report 2003. has been appointed member of the Executive Board of Heineken from 1 May 2004. The different levels of participation are always mentioned. When string positions have been build in national markets. 3. In the coming years there will be a gradual shift of emphasis into a policy whereby in Europe most energy will be spend on consolidation of the position and operations ( against the background of stable or stagnating consumption patters) whereas the emphasis in the other continents will be on further expansion.3. And then Heineken offers the remaining shareholders to buy also the rest in order to acquire 100% full control and have the opportunity to integrate the company completely into the Heineken structure. In general one could say that Heineken operates in various ways to penetrate markets. This pattern has been executed many times: amongst others in France. a position that has been overtaken recently by Inbev ( the company merged out of Interbrew from Belgium and Ambev from Brazil) and SABMiller ( the combination of South African Breweries and Miller from the USA).The CEO of Brau Union.93-95 Heineken NV Company Profile 14 . This could be a matter of decades. And sometimes Heineken starts with an alliance with another brewing company. It makes sense to see where Heineken stands now. in Israel. mr. K. In many cases it prefers (or is sometimes just allowed) to acquire a minority interest in a company: mostly about 20%. Actual positions in Asia. Sometimes it starts with 100% acquisitions. Latin America and Africa As has been said.

1% Heken. Bavaria. Rosario Heineken. Ponta Grossa. Maltina Amstel. Primus Amstel. Mützig. Primus. Kaiser.3% Cervecerias BaruPanama 74. Imperial. Coral.8% Cerveceria Costa Rica 25% Cerveceria Nacional Dominicana 9. Porter. Xingu Chile Costa Rica Dominican Republic Haiti Jamaica Martinique Neth.5% Desnoes & Geddes 15. Red Stripe.7% Surinaamse Brouwerij 76. Cristal. Malta Pama. Kisangani.2 % Cervejarias Kaiser Brasil SA 20 % Location Brands Argentina Salta . Summer. Schneider. Yaounde Moundou Brazzaville. Maltina. Cordoba. Araraguara. Mützig Gala. Douala. Bukavu. Santa Cerva. Guinness Parbo Africa / Middle East Country Name of the company and level of participation Nocal 27.David Vieux Fort Paramaribo Heineken. Temuco.8% Brasseries du Logone 100% Brasseries du Congo 50% Bralima 93% Location Brands Angola Angola Burundi Cameroon Chad Congo Luanda Dondo Bujumbara.5% Windward & Leeward Brewery 72. Guinness. Manaus. Vitamalt Heineken. Kinshasa. Budweiser.3% Brasseries du Cameroun 8.3% Brasserie Nationale d´Haiti 22. Soberana. Queimados.6 % Commonwealth Brewery 53. Kalik. Gravatal. Ngok. Guinness. Christal.1% Antilliaanse Brouwerij 56. Pacatuba. Mbandaka. Maltina. Preto. Rock Ice Heineken. Santa fe Bahamas Brazil Nassau Feira de Santana. Jacarei. Chari. Bavaria. Piton. Turboking Democratic Republic of Congo Boma. Dragon Stout. Primus. Guinness.Salta. Santa Fe. Antofagasta San Jose Santo Domingo Port-au-Prince Kingston Lamentin Willemstad Panama City. Cuiaba. Lucia Surinam Companias Cervecerias Unidas SA 30. Pilsen. Pointe Noire Nocal EKA Amstel. Gitega Bafoussam. Presidente Prestige. Malta Amstel. Garoua.Latin America Country Name of the company and level of participation Companias Cervecerias Unidas Argentina SA (CCU) 24. Guinness Lorraine. Antilles Panama St. Guinness Heineken. Malta Heineken.5% Brasserie Lorraine 83.1% EKA 45. Mützig. Turboking Amstel. Ribeira Stiago. Lubumbashi Heineken NV Company Profile 15 . Guinness. Amstel Bright. Escudo Heineken.8% Brarudi 59.

5% Location Brands Cambodia China China China Indonesia Japan Malaysia Phnom Penh Shanghai Haikou Shenzhen Tangerang.3% DB Breweries 32. Star. Aoke Kingway Bintang. DB Draft. Timaru Heineken. Ibadan. Enugu. Otahuhu. Badr.8% Almaza 67% Brasseries du Maroc 2. Baron´s. Malt Star Amstel Amstel. Durban .8% General Investment 10. Gulder. Swakopmund Aba. Sakara. Guinness Heineken. Primus. Gold Star. ABC Golden Lager Heineken. Mangatainoka. Legend. Laziza Heineken Windhoek. Maltina.5% Nigerian Breweries 54. Amstel. Guinness Heineken. Almaza. 974 Amstel.9% Ghana Breweries 75. Maltina Amstel Reunion Rwanda Sierra Leone South Africa Asia/Pacific Country Name of the company and level of participation Cambodia Brewery 33.9% Hainan Asia Pacific 42. Accra Israel Tempo Beer Industries 17.2% Guangdong Brewery 21% Multi Bintang Indonesia 84. ´´33´´Export. Star. Maccabee. Kilkenny Number One. ABC Stout Tiger. Kigali Freetown Cape Town.7% Grande Brasserie de Nouvelle Caledonie 87. Birell. Anchor Ice. Anchor. Murphy´s IrishStout.8% Brasserie du Bourbon 85. Guinness.Egypt Ghana Al Ahram Beverages Company 99. Lagos Jjebu Ode. Fayrouz.2% Namibia Breweries 14. Gulder.2% Consolidated Breweries 24. Mützig. Anchor.5% SAB-Miller (licence) Netanya Jordan Lebanon Morocco Namibia Nigeria Zerka Beirut Casablanca. Kaduna. Export Gold.6% El Obour.6% Bralirwa Sierra Leone Brewery 42. Stella. Sharka. Star. Fes. Havannah New Caledonia Noumea New Zealand Greymouth. Hi-malt Bourbon. Guinness. Owe Omamma Saint Denis Gisenyi. Tanger Windhoek. ABC Stout. Gold Crown. Monteith´s Heineken NV Company Profile 16 . Export Dry. Johannesburg Heineken. Reeb Tiger.7% Shanghai Asia Pacific 40. Sampang Agung Tokyo Kuala Lumpur Tiger. Nesher. Buckler Heineken. Dynamalt. Tui.5% Kirin (licence) Guinness Anchor Berhad 10. Meister Amstel Malta. Guinness Amstel Malta. Tiger. ABC Golden Bubra. Gianaris Kumasi.

named Asia Pacific Breweries.3% Hatay Brewery 42.2% Brasserie de Tahiti (licence) Thai Asia Pacific Brewery 14. Bivina Heineken. About 10 years ago it even pooled its interests with Guinness in Malaysia. Employment development It is interesting to see how volumes and employment numbers developed over the years. Baron´s Heineken Heineken Heineken. In many regions Heineken builded over the decades very strong regional brands: In Western Africa with Star and Gulder.4.Papua New Guinea Singapore Tahiti Thailand Vietnam Vietnam SP Brewery 31. This joint venture is Heinekens vehicle to expand in the Asia Pacific region. Tiger.Heineken sold its Kuala Lumpur brewery to Guinness. Niugini Ice Heineken. Eventually these minority interests can be enlarged to majority participations.9% Asia Pacific Breweries 42. in the Asia Pacific with Tiger and Anchor. although Heineken had a 20% participation and expected to expand it further. In 2002 Heineken was surprised when Quilmes. 21 January 2005 Heineken NV Company Profile 17 . while it owned already a brewery in Singapore. South Pacific Export Lager. ABC Stout. Heineken delivers the technical and brewing expertise and secures in this way the possibility to (let) brew its own brands in order to avoid import taxes.8% Vietnam Brewery 25.Petersburg Bravo brewery for the 16 Russian market. Anchor. When consumption levels rise in the future these brands can become very important also in terms of volumes. Anchor Draft From this impressing list a few important issues become clear: most participations are minority participations. In South Africa it made in 2003 one step furhter: together with Diageo ( the owner of Guinness) it bought Namibian Breweries to brew its own beers and compete with SAB Miller in South Africa. Lae Singapore Papeete Bangkok Ho Chi Minh City Hatay SP Lager. South African Breweries-Miller in South Africa. In January 2005 it announced that ot would start the production of Guinness in the St. the leading brewery company in Argentina and some surrounding countries.2% Port Moresby. Tiger. In the Asia Pacific region Heineken has a long time partnership with Frazer and Neave. In some cases Heineken licences important competitors to brew its beers ( Heineken and Amstel) : Kirin in Japan. But recently Heineken decided to take the commercialisation in its own hands by starting sales offices. was sold to Ambev. In many countries Heineken has a close alliance with Guinness/Diageo. But this works not always. 16 Financieel Dagblad. Tiger. 3.

but this masks the fact that over the years there is a shift in the balance of numbers of employees employed in production and those employed in marketing.9 97.733 37.9 109 Total employment Average figures for the years 31. In most developing countries this tendancy doesn´t necessarily lead to lower employment levels. 17 Heineken NV Annual Reports Heineken NV Company Profile 18 . sales and other indirect positions. But when more breweries in the same country are under Heinekens control the policy will be to consolidate production in a smaller number of breweryplants.511 36. Investments in modern brewing technologies always imply higher output per worker.3. This policy is most clear in Europe where the consolidation takes place against a background of stable or declining consumption.8 83.237 61.421 33.1 90.857 40. Development of volumes brewed & sold and employment figures17 Volumes brewed & sold In mln hectoliters 71 73.025 48. while rising consumption and volumes probably lead to an expansion of the number of shifts to work.682 32. This is a general trend in the brewery industry. brewery operations in all countries are everywhere gradually brought to standards required by Heineken in a double sense: as far as product quality is concerned and also regarding productivity.9 105. Backed by Heineken Technical Services. the corporate engineering department.271 Year 1996 1997 1998 1999 2000 2001 2002 2003 Both figures are rising continuously. In most other regions this policy will become more clear cut in the nearby future.1 108.5.

such as is the case for the German operations.700 work in corporate departments such as head office.4. In a later chapter more will be said about this Sustainability Report and Heineken’s policy regarding sustainability. Not yet included are also the figures on Brau Union. This is a historical phenomenon: the brewery industry is very old. In the late middle ages the brewery guilds belonged to the most important guilds in many cities. 18 Koers op Duurzaam . and about 90% of the employees in the clerical staff. The average level of membership of all employees worldwide is 38%. Of the 3. Labour relations Strong trade union presence Heineken has just as is the case in most other brewing companies a workforce that can be characterized as highly loyal to the company and at the same time with a high level of trade union membership.47. The self confidence of the brewers could be combined with the big numbers of the unskilled or lower skilled workers at the bottling lines and in expedition and distribution to create strong trade unions. has strong traditions and is in a certain sense quite conservative. Of this group about 3. In its home country. While the product is very visible and beer has a conno-tation of enjoying a good atmosphere amongst friends.986 employees who are Heineken employees and doesn’t count the employees who work at minority shareholdings. p. where 2.525 employees worked in 2003 for Heineken. See for example the beautiful building of the brewery guild at the Central Market in Brussels. the Netherlands. The brewery sites also have a long tradition of trade union membership. In different regions different levels of union membership exist: Europe North / South America Africa/Middle East Asia/Pacific 40% 60% 37% 13% This figure relates to the 51. marketing and export departments. 100% of all employees in production and distribution are union member. In its first Report on Sustainability “Path to Sustainability” 2002-2003. HTS ( Heineken Technical Services: the central engineering department). This is due to the fact that brewing has been a craft for many centuries. Sept.1. Heineken gives a figure on the 18 level of unionisation in its operations. all employees in production and the lower ranks in clerical staff. Heineken. about 5. In Austria for example. In both cases the levels of unionisation will be high. This group is 80% unionized. 4. Duurzaamheidsverslag 2002-2003.800 working for the Dutch market most work under conditions governed by a Collective Agreement. working in such a company creates proud and loyalty with its employees. Heineken NV Company Profile 19 . 2004.618 employees were employed by Brau Union.800 work in the subsidiaries for the Dutch market and about 1.

This is the case in most Western European countries and in some Eastern European. Employees expressed clearly their position: there is only one way to negotiate a EWC. In many European countries workers representation is regulated by national laws. p. Seats in most works councils are occupied by trade union members and in many countries works councils and unions coordinate their positions and policies. Carlslberg and Scottish & Newcastle has been compared. but also while some senior managers wanted to bypass the trade unions in these negotiations. Heineken says also that it wants to endorse alls its employees to make themselves represented by works 19 councils and trade unions . p. 101 vv. The way this European Works Council was founded is a good illustration of how labour relations normally work.Whereas the strong presence of unions is already a wide spread reality in the company. The group was coordinated by the full time union officer of FNV Bondgenoten. In the period 1992-1996 Heineken union members from various EU countries could meet regularly on an international level. The Heineken one clearly stands out because of its stronger agreement and greater continuity. where Heineken’s head office is located. The high level of unionisation made this attempt to a failure. They are: two 3 day meetings per year one extra 2 day meeting a year for training the works council members 19 Ibid. In the period 1996 until the end of 1997 the negotiations were effectively coordinated by FNV Bondgenoten.2. o. the Dutch trade union. Employee representation at different levels This strong level of union membership of course influences also the way employee represen-tation functions at subsidiary level. This group of about 20-25 employee representatives met each year to exchange information on national developments within Heineken and to prepare the negotiations with Heineken management on the coming European Works Council. On an international level Heineken has since 1997 a European Works council (EWC). that is with the unions. . A few elements make this Agreement a strong one compared to many others. This union coordinated at behalf of EFFAT. the European trade union secretariat for the Food and Agricultural Workers unions. They considered the necessary start of the negotiations for a EWC as the moment to structure this body without the involvement of the unions.c. 4. The way the EWC’s function within Heineken. Several times in 1995 and 1995 this group offered to Heineken management to start negotiations. 47 20 Paul Elshof . In those countries where no works councils exist trade union bodies are the employee representative bodies that negotiate and discuss with management. Heineken NV Company Profile 20 . Interbrew. while Heineken wanted to start negotiations only when legislation on European level and its implementation in national laws was finished (the last happened only in 1996). These meetings were made possible through a programme funded by the European Parliament to prepare the implementation of international information and consultation practices within multinational companies in the EU. the most important trade union in the Netherlands. The content of and provisions in the EWC Agreement indicate 20 the strength of the unions within the company. In vain.

Hungary and Slovakia. the European trade secretariat for the union from the food and agriculture sectors.3. sometimes by the union bodies. as is the case for headquarters. In the European Works Council 28 representatives from 14 countries participate and one quality seat is reserved for the FNV Bondgenoten trade union officer who coordinates at behalf of EFFAT. They are all trade union members. technical departments as Heineken technical Services and sometimes also for the export offices and distribution activities. These 28 members represent the employee structures in the respective countries. where employee representatives discuss all relevant matters. whereas the works councils have the lead as far as it regards the information on the daily Heineken NV Company Profile 21 . Also here exists a Central Works Council that meets once a month and 4 times per year with management. If we take the two countries that could be considered since recently as the two home markets of Heineken. social plans/redundancy packages in times of restructuring are typically the task of the unions. The normal pattern in these two countries is that each brewery plant has its own works council. Rights and tasks are regulated by law. and 4 times a year they meet with local management. This brings a total of at least 12 meetings a year. working times. In Austria 8 local works councils meet also at least once per month. The three brewery sites have a Groups Works Council consisting of members elected out of the works councils of the 3 brewery sites. there is a structure that could serve as a possible structure for more countries where Heineken operates several breweries. In the Netherlands 10 works councils exist at local level. the Netherlands and Austria. The Central Works Council has the same pattern of meetings. with members elected by the 10 local works councils. In both countries these councils coordinate closely with the unions. mostly elected by the works council structures. The negotiations on labour conditions. In both countries national laws exist for many decades on employee representation by works councils. 4. pension provisions. the Group Council meets 4 times a year on its own and 4 times with management.the participation from the beginning of representatives from Eastern European countries although they were at that time aspirant members of the EU. This was the case for Poland. In both countries these works councils have regular meetings with their management. The two meetings per year rotate always in a fixed pattern: the spring meeting always in Amsterdam to enable Board members to participate when Annual results and future plans are presented and discussed. And on national level a Central Works Council exists. Labour relations At national level Heineken has in a few countries an elaborate structure of labour relations. The autumn meeting always rorating at different locations in Europe to enable local employee representatives and national management to participate and raise in this way the awareness of an international perspective by all. At least 6 times a year they meet with the respective management representatives. All local councils have at least 6 internal meetings a year. Unions and works councils have their division of tasks and responsibilities.

The national studies that will be carried out in the context of the Monitor project will maybe shed another light on this issue. In this report Heineken says : `` Heineken promotes that employees are represented by works councils or trade unions. In the Netherlands the unions organized their first strike since a very long time in 1990. and they are the bodies to negotiate with management the detailed implementation of conditions negotiated by the unions. In 1990 Heineken started a process to restructure its operations in the Netherlands announcing job losses for 700 employees. And recently it was again extended for 2 years (2003-2004) with some minor changes in the content. When a couple of years later a wide-ranging modernisation process was announced this resulted in the negotiation of an social agreement to deal with the social consequences of this process. While the whole process of modernization took more time the agreement was first extended for a secind periode of 4 years: 1998-2002. But it seems that sometimes this relation has to be tested. If Heineken NV Company Profile 22 . The highest levels are in Europe and Latin America. investments. Quite soon Heineken management withdrew its plans and had to prepare new plans that had a complete different content. The unions had shown their strong position and that made it necessary for heineken to negotiate changes. In general the works councils and unions in these countries regard the relation they have with management as good. The main elemnts were: No redundancies as a result of this process and the investments involved The modernized organisation will be manned with existing employees: they have the right of precedence before new employees are hired. Background was the first experience of Heineken with a declining market share and declining volumes. Heineken guarantees the freedom of trade unions and offers employees the right to be represented by these unions as parners in the negotiations on labour conditions. As far is known there have rarely been labour conflicts in Heineken operations in other parts of the world.business development. Heineken annnounced in its first report ´´Path to Sustainability`` that at average the level of unionization in Heineken worldwide is 38%. The workers and their unions were furious that a high number of them were victimized for waht was considered to be the result of short sighted manamenet policies in the years before: the arrogance of a marketleader for many years. Before there never was a need to start an open conflict. But this could also be an opinion based on lack of communication or of not informing unions in the Netherlands when conflictsd took place. Connected with this a high priority on training and further education of all employees Those workers who loose their actual jobs are replaced to other jobs and receive the training they need No outsourcing of activities to third parties to keep jobs in house for redeployment of workers When needed already outsourced work will be taken back to organize sufficient jobs for all actualy employed workers. This agreement should cover the period 1994-1998. As has been said earlier. and the lowest ones in Asia/Pacific.

In 1994 Heinekens Corporate Department ´Production and Policy Control´ conducted an internal benchmarking study to measure and compare production. It meant the introduction of new technologies. bottling. This internal benchamrking study was followed by an external benchmarking study in 1995 whereby about 40 brewery sites worldwide were compaed with heinekens operations.47 Heineken NV Company Profile 23 . Several causes played a role. packaging and wharehousing. It was made available to all senior managers and gave them an idea where there sites stood compared with other Heineken breweries and with competitors. p. more computer controlled processes in brewing. This happened in any case in most European countries. Those workers that had difficulties in acquiring the new skills were reemployed on the bottling lines and in the wharehousing or expedition departments. The specific conditions and modalities were negotiated with the trade unions and works councils. In the early 1990-ies Heineken started a project to modernize its operations and their attitude to employees. This meant that a high number of employees had to be higher skilled and prepared to new functions and contents of old functions and new tasks. But also in these departments started the process of the introdution of more computerized operations some years later. a higher level of automation. These studies were collected in a handbook: ´Competitor best Practices` and was edited in july 1995. The consequence was the development of a training program for all workers. Brewers had to be trained to operate the brewing houses from central control rooms by computers. Management teams were invited to come forward with plans to improve their operations. It was partly due to a generational change in management. is quite different per region. The most important cause was the policy to make the brewery-operations more efficient. production costs and productivity in all of its fully owned brewery sites. And in most European countries the highest priority was laid upon training of employees and the introduction of the team-concept. 21 ´´Path to sustainability``2002-2003 . traditions and cultural 21 habits play a big role`` 5. And the start was made by a complete automation of the breweryhouses. But since 1990 this pattern is changing. A lot of manual labour that had been executed for decades under difficult work conditions was automated. Local conditions. HR Management and management styles Heineken has been for a long time a company with a quite hierarchical structure and this heirarchical attitude was translated also in the way relations with employees were conducted.employees make use of this right. The most important lessons Heineken drew from these studies that a higher level of efficiency in a more competitive market place could be best gained by changing the ways operations were organized and not necessarily by more investments in machinery.

The aim was to develop a kind of sustainable cost leadership. New kinds of tensions between managers and operators or teams could well play a role in the coming years and a new type of negotiations will probably be necessary to find a new equilibrium in the power positions between managment and employees.It meant that a lot of tasks and responsibilities were shifted from different managament levels to teams of operators. a say in the preparation of targets for the coming years. that had to be prepared for these tasks. as compared to for example SAB or Interbrew. Heineken NV Company Profile 24 . first of all the teamleaders. This is due to the fact that the growth of Heineken by acquisitions has been done in smaller and better manageable steps. money and time has been spend on these training projects. And gradually these benchmarking operations were transformed in operational methods to give local management and teams. as compared with competitors in the sector. ´Future vision´ was the name given to the operational translation into setting targets for the coming years. Compared with most other brewery companies Heineken is advanced in rolling out this methodology over all its sites. who expanded by much bigger acquisitions or mergers. From 1997 onwards a lot of energy. The numbers of employees in production . But those who stay will have higher qualifications and will undoubtedly have a strong say in how daily operations are planned and executed. wharehousing and distribution will go down. This process is an ongoing process and undoutedly brewerysites all over the world have been starting with this process in one kind or another. This policy supposes a modernization of the relations between management and employees: the old hierarchical patterns are counterproductive when the daily operations are controlles and planned by higher skilled employees than has been the case during the last decades.

From the beginning the Heineken approach was slightly different from the one of most other companies. These reasons led to the appointment of a senior manager who started the preparations of a structured apporach to CSR issues. Heineken adopted the approach of centrally formulated guidelines and codes. On all other aspects it started a process. whereby all operating companies were invited to write down their already existing policies or to formulate their own policies. Corporate norms. After lengthy discussions 12 maimn issues were selected: these were explored on their potential of implementation by conducting extensive depth interviews in 4 countries : Ghana. The criticism was that this adevrtising campaign didn´t show a fair and realsitic picture of social reality. standards and codes Sustainable corporate behaviour patterns. Heineken has about 10 years history in the development of a kind of corporate social responsibility approach.6. The results were publiziced and distributed internally to raise the overall awareness of the issues involved. At the end of this process a Senior Management Committee was set up to start a structured approach: this group had members with complete different backgrounds. On aspects where clear risks existed that they could have international ramifications.Mark van Rijn. Poland. but the process. The results were publicized and reported back to the countrymanagers involved. Rwanda and Indonesia. Deliberate the approach was chosen to see CSR as a process. Out of the range or 12 the most relevant issues were selected to start work upon. 22 This part of the report is based on an interview with Mr. Each operating company received back the own reports but also those from all other opreating companies: in fact this was a kind of informal benchmarking operation. It made Heineken retreat from its plans. In 1995 it was critiziced while it started a marketing campaign in which mostly negroes were figuring on the poctures used. Internally CSR got the name of Corporate Stakeholder Responsiveness. he main reasons to start with a structured approach were twofold: in 1994 / 1995 Heineken got a lot of criticism while it started to invest in a greenfield brewery site in Birma/Myanmar. Not the endresult was the miost important issue. Managers from these countries who would operate as project managers for this process received a training at the Corporate center in the Netherlands. His task is amongst others to relate on this issue with stakeholders.22 6. one of the three senior managers at Corporate headquarters. responsible for CSR. They could be different in each country.1. Heineken NV Company Profile 25 .

This stage is clearly directed at the improvement of the performance of operating companies. 6. It is considered as a 0-report. Heineken Corporate Affairs. Finetuning of the approach is formulated over there. For each issue an appropriate approach is discussed. In this platform are represented all Company Directors and the Managing Directors of big operating companies and of the big regions. And at the same time the management group responsible for CSR issues was transformed from the Department of Corporate Relations to Corporate Affairs as part of a restructuring of Heineken Headquarters. The department Corporate Affairs was direct accountable to the president of the Board. Work in progress 23 The first task set was the edition of the report ´´Path to Sustainability`` . This so called 0-report gives the state of affairs in Heineken at the beginning of 2004. mainly issued to create transparancy on the actual existing patterns in Heineken. It contains 3 main chapters: one on economic sustainability one on ecological sustainability one on social sustainability In the last part some annexes are included: one indicates for each operating company in the world on which of these three aspects reports are made. A CSR advisory Board was installed with membership of 2 big operating companies and the staff of the department. In this report the improvements made have to be shown. This created a higher sense of urgency in Heineken headquarters. Another apporach was chosen. 23 The full name is: ´´Path to sustainability 2002-2003. This report was edited and distributed in 2004. This advisory Board discusses 2 times per year with a broader Platform the issues at stake. Three main issues were selected for a start: Policy on alcohol use and abuse Integrity Supply chain responsibility Also in 2002 a policy was formulated at central level to prevent corruption practices.2. At the same time Heineken was removed from the international Jones index because it stayed behind other companies in this respect.But in 2002 it became clear that this approach didn´t deliver what was expected: the process went too slow. Heineken NV Company Profile 26 . September 2004. It is planned to edit a second edition in spring 2005.

On economic sustainability: the implementation of a systematic approach for stakeholder management the implementation and publication of the heineken Code of Business Conduct. In the Sustainability Report 2002-2003 Heineken commits itself to a number of issues in the two years 24 ahead. This company will audit the actual performance in all operations of Heineken in the world. for the suppliers at which Heinekens buys ingredients and raw materials.Heinekens policy is to have its practices audited by external auditors. The Corporate CSR department has internally set a code that by the end of 2005 all companies have to qualify for a 40-60% daily operating pattern according to the codes and rules developed. First versions of two codes are now tried in practice: a purchasers code. pages 14 and 15 Heineken NV Company Profile 27 . The company chosen is KPMG. The first report gives already a lot of figures on most of these issues. But also this company is in the beginning of a learning process. It will be clear that on all these aspects the coming report ( Spring 2005) will deliver the results and identify new targets. meant for the purchasing staff of Heineken. On ecological sustainability: a reduction in the use of water in the brewing process by a reduction in the numbner of brewerysites that use more than the standard 7 hectoliters of water per hectoliter brewed beer a reduction in the number of sites that drain away water untreated at the end of 2012 the construction of waste water treatment installations in Africa has to be finished the recycling of rest products has to be improved in 2010 energy-use will be reduced with 15% as compared to the level of 2002 the specific CO2 emission will be reduced to 11. and a suppliers code. We´ll start a systematic and strutural approach for supply chain responsibility In new operating companies ( those who are recently acquired and whi will be acquired in the coming years) we´ll raise the awareness and information on Heinekens alcohol use and abuse policy.2 kilogram per hectoliter beer in 2006 the reporting of CO2emiisiomns will be improved On social sustainability: Heineken will improve the involvement and commitment of employees with the Company The frequency of work related accidents will be brought back to 2.c. An important issue that is now tackled is the supply chain resposibility.2 per 100 full time jobs in 2006 The seriousness of accidents will be brought back by 2006 to 40 sick leave days per 100 full time jobs The policy on ´´beer promotion girls´´ will be implemented worldwide in all operations who are controlled by Heineken ( more than 50% owned). The choice for an external auditor is made to stimulate a quality jump in the way companies treat the issues involved. 24 O. Also the auditing practices are work in progress.

a training center mostly meant for different layers of management. Food World Research & Consultancy Paul Elshof January 2005 Heineken NV Company Profile 28 .Last but not leat should be mentioned the systematic approach of Heineken on preventive and curative health care in those countries where the public policies on health care are insufficient. gender. Heineken has defined 6 priorities: workers representation: representation by unions or works councils is stimulated diversity : diversity by nationality. NGO´s who fight child labour are supported safety and health: first priorities are the reduction of work related accidents and the information and training of employees in this matter to prevent accidents training and education: Heineken has its own Heineken University.3. In 2003 more than 1. where Heineken is heavily involved in HIV/Aids related health care projects in Sub Saharan Africa.2 Heinekens communication data. The Sustainability Report can be downloaded by using Heinekens website: see chapter 1.500 employees participated in courses. 6. ethnicity and skills is considered vital and will be promoted sexual intimidation: central policies will be formulated that have to transformed by the local companies in local policies child labour : in 2003 a central policy has been formulated in draft and sicussed with the European Works Council. The whole CSR approach is clearly a work in progress and can be follwed in a transparant way.. Social-economic rights In the broad field of human rights. Most of all this is the case in Africa. related to social-economic issues.

The existing Board of 5 persons will be reduced to 3 persons: the 3 other Board members. at Board level. The two oldest members will leave this year: the CEO Thony Ruys ( 57 years old) and Karl Buche ( 58 years old). all Central European countries and Russia) The America’s ( North. Poland and Italy and has been responsible during the last years for Heinekens expansion in Russia. Rene Hooft Graafland will stay as CFO. 2005. Both are leaving the company a few years earlier than would be normally the case. the Chief Financial officer. after finishing the Company Profile in Jan. Normally managers within Heineken retire at 60. central and South America) Africa and the Middle East Asia and Pacific Heineken NV Company Profile 29 .all in their fourties.Annex to the Heineken Company Profile This annex has been written in May 2005 because of the far reaching changes that took place in Heineken during the last months. The old centralised structure in which different regional organisations reported to different members of the Board will be replaced by a structure in which the 5 managers of the newly formed regions act more independently and report all to Marc Bolland. Greece. This reduction in the number of Board members goes together with some other important changes: A smaller number of managers at toplevels. His whole work life he worked at Heineken. A change in the regional structures: the formation of 5 regional structures These changes are meant to make the decision making process in the company a lot faster and probably more aggressive. As such the structure will be in line with the way others major breweries have structured their Board. amongst others as general manager in Congo. Chief Operational Officer to whom all regional managers will report in the future. The 5 newly formed regions are: Western Europe Central and Eastern Europe ( including Germany. Smaller Board Central in these changes is the radical restructuring at the top. This will be the stepping stone for more changes deep down in the organisation. The new CEO will be Jean Francois van Boxmeer ( 43 years old). He will be the first non-Dutch person to preside Heineken. Austria. as a result of a study that was done the last months in order to design a structure that would simplify the top structure of the company. In the beginning of April 2005 Heineken announced a drastic reshuffling of the Board. Marc Bolland will become the new COO.

A probability could be to form a kind of joint venture and to bring in the Latin American activities of Heineken ( Chile. Some analyst reports are already mentioning a potential number of 10 factory closures in the coming years. The old headquarters of Brau Union in Wien/Austria will function as the headquarters for the Central and Eastern European region. This prevents the possibility to finance athis acquisition that will run in the billions of Euros or Dollars with the release of new shares. one of the biggest stand alone breweries operating in Latin America. Brazil and Central America ). One of the recent appointments has been the appointment of Nico Nussmeier as the new general manager for the newly formed Central and Eastern European region. because of its ownership structure and the policy. Out of fear to loss market share to competitors as Anheuser Busch or SAB Miller Heineken didn’t dare to raise the price of Heineken beer. fell down from Euro 357 million to Euro 119 million because of the exchange rate change between the two currencies. This took place although volumes sold have been growing continuously during these years. where in general beer consumption is slowly going down. To brew the beer in the USA Heineken would have to brew the beer over there in 3 locations. Better capacity utilization and shifts of production will make it possible to close several of the 31 now existing brewery-sites in Western Europe. all exported from the Heineken brewery at Zoeterwoude in the Netherlands. say. destroying in this way the efficiencies it had build in Zoeterwoude. whereby Heineken Holding wants to secure its majority position in the shareholding structure. Nussmeier has been the last years the general manager of the Heineken activities in Poland. Furthermore. from New York to California. But there is a lot of scepticism at the possibility for Heineken to acquire this brewery. it is still cheaper to ship beer from Rotterdam to California than. Heineken is in serious discussion with Bavaria the Colombia. Consequence of the changed exchange rate between US dollar and Euro Between 2002 and 2005 Heinekens annual operating profit from the US sales. since Interbrew took over Ambev from Brazil.New executive committee The 3 Board members will form together with the 5 new region managers and 5 staff managers an Executive committee of 13 members. The money saved by these closures will be spend to expand in Eastern Europe and in Asia an maybe to make a big step forwards in Latin America. as was said by Thony Ruys. This committee will be in the future the most important decision making body in the company. Some former managers and acting managers reported in the press that one of the first steps will be to look for cost reduction opportunities in Western Europe. Information related to the new structure. Heineken NV Company Profile 30 .

The new structure will facilitate this operation.pdf Heineken NV Company Profile 31 . Heineken has now a solid nr.5% in 2005 to over 89 million hectoliters. Recent acquisition in Russia In the beginning of May Heineken announced the acquisition of the Patra brewery in Jekaterinburg. the biggest city in the Ural region of Russia. Heineken Code of Business Conduct See for Heineken Code of Business Conduct: http://www.heinekeninternational. The acquisition lifts Heinekens total market share in Russia to 8.com/content/live/files/downloads/CorporateResponsibility/Code%20o f%20Business%20Conduct. This makes that management will look more aggressively for cost reductions in other regions. 3 position in the Russian market and more acquisitions will follow.3%. More international coordination and product reshuffling will be a consequence. Heineken expects the Russian beer market to grow with 5.The strength of the Euro to the dollar eats away a big part of Heineken profits. In a couple of years Russian beer consumption will have surpassed total beer consumption in Germany. still the number one beer market in Europe. This brewery has a 20% market share in this city and a 1% market share on the national market.