Heineken says M&A in the region is "settled"

Heineken says M&A in the region is "settled"

Heineken aims to turn volume gains in Central & Eastern Europe into value growth as increasingly affluent consumers chase their “five-minute luxury”.

In a presentation in London today (25 March), Heineken's head of operations in Central & Eastern European said the brewer has started pushing through price increases across the region, including three price hikes in Russia since November. “The volume is there and we need to roll up our sleeves and get focused on the value,” Jan Derck van Karnebeek said.

Value is a top priority for Heineken, van Karnebeek added, because M&A activity in the region is “settled” and is unlikely to add to future profits.

In his presentation on the Central & Eastern European region, Van Karnebeek highlighted a growing middle class with disposable incomes that is rising faster than in Western Europe. He said that, while these consumers may shun buying “big ticket” items, they still have enough cash in their pocket to afford a “five-minute luxury”, such as a can or bottle of Heineken.

“There is rising income in the region,” he said. “I was in Ekaterinburg (Russia's fourth biggest city) the other week and I was amazed by how much money people had there.”

Van Karnebeek also said that people in CEE's fast-developing economies are keen to spend money on brand Heineken for its social value.

“The appeal of Heineken cuts across the whole geography of Central & Eastern Europe,” he said. “In the Balkans, sitting on a terrace with a can of Heineken is very attractive. If you go east into Russia, to be able to show your emerging middle class success (by drinking Heineken) is something that has huge drive and potential.”

Heineken aims to drive value growth with new innovations, and by controlling costs and leveraging its broad portfolio, Van Karnebeek said. It will also push brand Heineken, which Van Karnebeek said is “underweight” in the region, contributing 5% to total volumes compared to a group average of 13%.

To read just-drinks' interview earlier this month with Heineken's GM for Ethiopia, Johan Doyer, click here.