Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Let's think about the European earning story. We've had numbers
Speaker 2: out from the drinks maker Heineken this morning, a beer
Speaker 2: volumes rising by one point six percent in twenty twenty four.
Speaker 2: That was ahead of the estimate which was one point
Speaker 2: four percent. It seems that premium beer such as Bier
Speaker 2: and Maretti and non alcoholic alternatives are driving the growth.
Speaker 2: Let us talk to Heinek and Seeo dolfand and Brink
Speaker 2: who joins us now and can talk us through some
Speaker 2: of the latest news here.
Speaker 3: Dog.
Speaker 2: Very nice to have you with us. So you've clearly
Speaker 2: done okay from premium beer. Tell us where you're seeing
Speaker 2: the strength in premium beer and why you think you're
Speaker 2: seeing strength in premium beer right now?
Speaker 1: Very good, Thanks, good morning, Thanks for having me across
Speaker 1: the board. We were very happy with our results. Indeed,
Speaker 1: volume growth one point five percent, five percent, revenue, eight
Speaker 1: point three operating profit. That's what we set out to do.
Speaker 1: Are very happy they were able to deliver that. Premium
Speaker 1: indeed continues to be an incredible strength of the company.
Speaker 1: It's an old trend, but that's still very relevant. Over
Speaker 1: the last years, premium has outgrown the category time and
Speaker 1: again we are the leader globally in the premium beer,
Speaker 1: of course, with the Heinike brand, which was even growing
Speaker 1: nine percent. We keep investing disproportionately in our key premium
Speaker 1: propositions Heineken, Boretti, Desperados, Kingfisher, Will Train, India, what have you.
Speaker 1: But indeed also Zero zero very important, up another ten percent.
Speaker 1: We like to say that we're the pioneer. Back in
Speaker 1: twenty seventeen when we globally launched the Heineka Zero zero brand,
Speaker 1: the category was basically dormant, and now it's growing consistently
Speaker 1: double digit year over a year, and we really for
Speaker 1: sure intend to keep it up.
Speaker 2: Okay, do I want to ask you about that growth?
Speaker 2: I mean, how big can that category gets? As in
Speaker 2: witness changes in society perhaps and gen z maybe consuming
Speaker 2: alcohol in a way that's different to older generations. How
Speaker 2: big does that category grow?
Speaker 1: We believe that over time this really will become a
Speaker 1: meaningful part of the market, and you already can see.
Speaker 1: I think globally it's still barely one percent of global beer.
Speaker 1: In Key Europe it's already on average around five percent,
Speaker 1: and in key markets like Spain and the Lenlands is
Speaker 1: already ten percent. I saw recent numbers that, for example,
Speaker 1: in the food channel in the US, it's already four
Speaker 1: percent of revenue, so it is really scaling and if
Speaker 1: we keep this double digit growth up here over year,
Speaker 1: we do believe it will become a very significant segment
Speaker 1: of the total beer markets going forward. And again we
Speaker 1: are the global market leader. We calculated that since we
Speaker 1: launched Tiny zero zero, we've captured around forty percent four
Speaker 1: zero of the total growth of the zero zero segments globally,
Speaker 1: and we will keep investing, like what we're doing with
Speaker 1: the Formula one sponsorship, which is fully dedicated against Tindy zero.
Speaker 4: Zero off it's creedy in London. I want to ask
Speaker 4: a little bit about your consumer spending story here in
Speaker 4: the States. We are seeing a little bit of a slowdown,
Speaker 4: most recently in earnings in the likes of McDonald's for example,
Speaker 4: which I can appreciate it's a very different product offering
Speaker 4: than yours. But the way that you are seeing some
Speaker 4: of these American companies deal with it is an increase
Speaker 4: in prices to offset the increase or the decrease or
Speaker 4: even the stagnation in volumes. Is that something that you're
Speaker 4: looking to impose when it comes to maybe offsetting that
Speaker 4: slow down in the States.
Speaker 1: No, so first, the stage is a relative moderate size
Speaker 1: the market. First, what's really important is our diversified geographical footprint.
Speaker 1: We're operating in seventy operating companies across for regions. We
Speaker 1: saw growth in all of them in the aggregate, so
Speaker 1: very pleased to see. On the pricing, for example, in Europe,
Speaker 1: after a lot of input calls, drift and pricing in
Speaker 1: the last years, we made indeed deliberate choice to be
Speaker 1: motivated in our pricing last year to really allow the
Speaker 1: consumer to catch up, and we did see that with
Speaker 1: beer returning to growth in our core European market. So
Speaker 1: that's at least how we want to go about it.
Speaker 1: Overall total portfolio, we always aim for balanced growth, meaning
Speaker 1: both volume growth and having good price mixed growth, as
Speaker 1: we were able to deliver for last year.
Speaker 4: Welldo if you talk about that diversification story. I'm looking
Speaker 4: at the volumes number here, sales coming from Brazil, Mexico, India.
Speaker 4: Let's talk about another major em marketing that of course
Speaker 4: is China, where the consumer has been at the core
Speaker 4: of the concern what are you seeing there? You seeing
Speaker 4: promise in that part of the world. Is some of
Speaker 4: the fiscal stimulus coming through from the Chinese government actually
Speaker 4: showing up in consumption? What does that look like for you?
Speaker 1: Yeah, we really focus on the part of the market
Speaker 1: where the growth is, which is in premium, and we're
Speaker 1: fully focused on the Heinek brand. Heineke Brands was up
Speaker 1: double digits again last year in the key Chinese markets.
Speaker 1: We now also see good growth on the Amstoll brand,
Speaker 1: So we really focus on premium in the Chinese market.
Speaker 1: That's not everywhere the case. In a lot of our
Speaker 1: larger operating companies, we play both in mainstream as well
Speaker 1: as premium, and by the way, and this is the
Speaker 1: first time in a couple of years time that globally
Speaker 1: we did see mainstream positive at around one point seven
Speaker 1: percent and premium around five So we feel we're in
Speaker 1: a good place from that point of view.
Speaker 3: Good morning's guy, Let's talk at inflation. How much inflation
Speaker 3: do you think the consumer will take? How much of
Speaker 3: a price maker can you still be in this current environment?
Speaker 1: Yeah, again, I think we need to be balanced that
Speaker 1: the consumers had to take a lot of pricing over
Speaker 1: last years. For example, the energy shock in Europe in
Speaker 1: our core European markets has really led to very fast
Speaker 1: price growth in the recent past. That's why again we
Speaker 1: deliberately kept our pricing moderate to allow the consumer to
Speaker 1: catch up. You do look at it market by market.
Speaker 1: For example, in key African markets where you have hyperinflation,
Speaker 1: you really need to make sure that your price for
Speaker 1: the inflation because otherwise the profitability erodes extremely quickly. So
Speaker 1: it is market by market. But we are happy with
Speaker 1: how we were able to navigate that last year, allowing
Speaker 1: consumers to catch up.
Speaker 3: How much input inflation are you anticipating going forward. You've
Speaker 3: got aluminium and steel talents now becoming a reality that's
Speaker 3: going to affect presumably what happens with the cans. Energy
Speaker 3: is also something of a crisis here in Europe as well.
Speaker 3: We're talking about European industry maybe needing to be helped
Speaker 3: by the European Commission with price caps. How much energy
Speaker 3: costs inflation are you talking about? How much materials cost
Speaker 3: inflation are you thinking about as you plan for the
Speaker 3: rest of this year.
Speaker 1: Yeah, we guide on that in our outlook statements, so
Speaker 1: we're guiding mid single digits input cost inflation for this year,
Speaker 1: but actually that's driven by some of these high inflation
Speaker 1: countries in Africa. If you isolate for them, we expect
Speaker 1: low single digits input cause inflation, which is pretty moderate,
Speaker 1: and that has to do that. We are already almost
Speaker 1: fully hatched for the year for twenty twenty five.
Speaker 2: Can I ask you, Adolph, about something that's happening in
Speaker 2: another sector that many analysts are thinking about how it
Speaker 2: will affect your sector. I'm thinking here about glp ones,
Speaker 2: that class of drug that helps people to lose weight,
Speaker 2: and there have been a number of consumer facing businesses
Speaker 2: that have made statements about how they expect this to
Speaker 2: maybe way on demand or at least impact or they're
Speaker 2: studying it. Are you doing work on what you think
Speaker 2: the impact of why the use of this kind of
Speaker 2: medication will be on businesses such as yours?
Speaker 1: Yeah, no, certainly something that we should follow closely. Right now,
Speaker 1: it's predominantly a US North American phenomenon. The correlation between
Speaker 1: the medicine and food consumption has been more established then
Speaker 1: it has been on al cool, So there's it's premature
Speaker 1: to draw any major conclusions on it. And in the aggregate,
Speaker 1: I would worry right now more about keeping our pricing moderate.
Speaker 1: Worries about consumer sentiment is higher on our list than
Speaker 1: GP one. And again, the strength of our global footprint,
Speaker 1: having all those big operations across Southeast Asia, India, Africa,
Speaker 1: Latin America really makes that. Yeah, we have a diverse
Speaker 1: five portfolio. Also mitigating of any impact that might come
Speaker 1: forward in the future.
Speaker 4: Doll The final question on the buybacks piece of the equation,
Speaker 4: and in your earning exampmen, you're talking about one and
Speaker 4: a half billion euro share Bible program over the next
Speaker 4: two years, and this was widely expected by the analyst community.
Speaker 4: But talk to us about the sustainability of that at
Speaker 4: a time when we are dealing with that geopolitical volatility
Speaker 4: as well. How long can you keep that buyback plan up?
Speaker 1: Now, what's very important we are for many years had
Speaker 1: a very clear hierarchy of capital allocation priorities first or
Speaker 1: foremost investing in organic growth, and again we're doing that.
Speaker 1: We increase our marketing selling expenses at double the rates
Speaker 1: of the revenue growth with three hundred million increase digital technology.
Speaker 1: Right now, we're building three new greenfield breweries in high
Speaker 1: growth markets in Mexico, Brazil, Dubai, so that's always our
Speaker 1: first priority. Inorganic opportunities we'll always pursue if that makes sense,
Speaker 1: like what we did in India with the acquisition of
Speaker 1: ubl or Distel more recently in South Africa. But we
Speaker 1: are deleveraging very quickly. We generated more than three billion
Speaker 1: in cash flow last year. Our leverage dropped to two
Speaker 1: point two which is now below our optimal capital structure,
Speaker 1: which gave us to confidence to decide and commit to
Speaker 1: this share by back of one point five billion over
Speaker 1: the next two years.
Speaker 3: Credit ketch up. Really appreciate your time this morning, A
Speaker 3: real appreciate a Honeken's CEO, Dolf van den Brink