WEBVTT - Heineken CEO Talks 2025 Outlook

0:00:02.759 --> 0:00:07.240
<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

0:00:08.080 --> 0:00:10.760
<v Speaker 2>Let's think about the European earning story. We've had numbers

0:00:10.800 --> 0:00:13.560
<v Speaker 2>out from the drinks maker Heineken this morning, a beer

0:00:13.640 --> 0:00:16.360
<v Speaker 2>volumes rising by one point six percent in twenty twenty four.

0:00:16.400 --> 0:00:18.439
<v Speaker 2>That was ahead of the estimate which was one point

0:00:18.440 --> 0:00:20.920
<v Speaker 2>four percent. It seems that premium beer such as Bier

0:00:20.960 --> 0:00:25.040
<v Speaker 2>and Maretti and non alcoholic alternatives are driving the growth.

0:00:25.120 --> 0:00:27.360
<v Speaker 2>Let us talk to Heinek and Seeo dolfand and Brink

0:00:27.360 --> 0:00:29.840
<v Speaker 2>who joins us now and can talk us through some

0:00:30.440 --> 0:00:31.960
<v Speaker 2>of the latest news here.

0:00:32.040 --> 0:00:32.240
<v Speaker 3>Dog.

0:00:32.360 --> 0:00:34.880
<v Speaker 2>Very nice to have you with us. So you've clearly

0:00:34.960 --> 0:00:37.800
<v Speaker 2>done okay from premium beer. Tell us where you're seeing

0:00:37.840 --> 0:00:39.879
<v Speaker 2>the strength in premium beer and why you think you're

0:00:39.880 --> 0:00:41.600
<v Speaker 2>seeing strength in premium beer right now?

0:00:42.200 --> 0:00:45.720
<v Speaker 1>Very good, Thanks, good morning, Thanks for having me across

0:00:45.760 --> 0:00:48.800
<v Speaker 1>the board. We were very happy with our results. Indeed,

0:00:48.920 --> 0:00:51.959
<v Speaker 1>volume growth one point five percent, five percent, revenue, eight

0:00:51.960 --> 0:00:54.880
<v Speaker 1>point three operating profit. That's what we set out to do.

0:00:55.000 --> 0:00:58.320
<v Speaker 1>Are very happy they were able to deliver that. Premium

0:00:58.360 --> 0:01:02.360
<v Speaker 1>indeed continues to be an incredible strength of the company.

0:01:02.720 --> 0:01:06.080
<v Speaker 1>It's an old trend, but that's still very relevant. Over

0:01:06.160 --> 0:01:10.160
<v Speaker 1>the last years, premium has outgrown the category time and

0:01:10.240 --> 0:01:13.440
<v Speaker 1>again we are the leader globally in the premium beer,

0:01:13.520 --> 0:01:16.800
<v Speaker 1>of course, with the Heinike brand, which was even growing

0:01:17.080 --> 0:01:21.400
<v Speaker 1>nine percent. We keep investing disproportionately in our key premium

0:01:21.480 --> 0:01:27.399
<v Speaker 1>propositions Heineken, Boretti, Desperados, Kingfisher, Will Train, India, what have you.

0:01:27.800 --> 0:01:31.760
<v Speaker 1>But indeed also Zero zero very important, up another ten percent.

0:01:32.440 --> 0:01:34.560
<v Speaker 1>We like to say that we're the pioneer. Back in

0:01:34.600 --> 0:01:38.280
<v Speaker 1>twenty seventeen when we globally launched the Heineka Zero zero brand,

0:01:39.280 --> 0:01:43.880
<v Speaker 1>the category was basically dormant, and now it's growing consistently

0:01:43.959 --> 0:01:46.600
<v Speaker 1>double digit year over a year, and we really for

0:01:46.680 --> 0:01:48.320
<v Speaker 1>sure intend to keep it up.

0:01:49.480 --> 0:01:51.480
<v Speaker 2>Okay, do I want to ask you about that growth?

0:01:51.680 --> 0:01:56.040
<v Speaker 2>I mean, how big can that category gets? As in

0:01:56.120 --> 0:02:00.440
<v Speaker 2>witness changes in society perhaps and gen z maybe consuming

0:02:00.480 --> 0:02:03.520
<v Speaker 2>alcohol in a way that's different to older generations. How

0:02:03.560 --> 0:02:04.840
<v Speaker 2>big does that category grow?

0:02:05.760 --> 0:02:08.520
<v Speaker 1>We believe that over time this really will become a

0:02:08.560 --> 0:02:11.079
<v Speaker 1>meaningful part of the market, and you already can see.

0:02:11.120 --> 0:02:15.040
<v Speaker 1>I think globally it's still barely one percent of global beer.

0:02:15.480 --> 0:02:19.560
<v Speaker 1>In Key Europe it's already on average around five percent,

0:02:19.800 --> 0:02:22.079
<v Speaker 1>and in key markets like Spain and the Lenlands is

0:02:22.120 --> 0:02:26.119
<v Speaker 1>already ten percent. I saw recent numbers that, for example,

0:02:26.280 --> 0:02:28.560
<v Speaker 1>in the food channel in the US, it's already four

0:02:28.600 --> 0:02:31.720
<v Speaker 1>percent of revenue, so it is really scaling and if

0:02:31.760 --> 0:02:34.440
<v Speaker 1>we keep this double digit growth up here over year,

0:02:34.919 --> 0:02:37.800
<v Speaker 1>we do believe it will become a very significant segment

0:02:37.960 --> 0:02:40.840
<v Speaker 1>of the total beer markets going forward. And again we

0:02:40.880 --> 0:02:45.000
<v Speaker 1>are the global market leader. We calculated that since we

0:02:45.080 --> 0:02:48.720
<v Speaker 1>launched Tiny zero zero, we've captured around forty percent four

0:02:48.800 --> 0:02:52.639
<v Speaker 1>zero of the total growth of the zero zero segments globally,

0:02:53.040 --> 0:02:55.480
<v Speaker 1>and we will keep investing, like what we're doing with

0:02:55.560 --> 0:02:59.639
<v Speaker 1>the Formula one sponsorship, which is fully dedicated against Tindy zero.

0:02:59.480 --> 0:03:01.680
<v Speaker 4>Zero off it's creedy in London. I want to ask

0:03:01.720 --> 0:03:04.760
<v Speaker 4>a little bit about your consumer spending story here in

0:03:04.800 --> 0:03:06.760
<v Speaker 4>the States. We are seeing a little bit of a slowdown,

0:03:06.760 --> 0:03:09.960
<v Speaker 4>most recently in earnings in the likes of McDonald's for example,

0:03:09.960 --> 0:03:12.359
<v Speaker 4>which I can appreciate it's a very different product offering

0:03:12.480 --> 0:03:14.720
<v Speaker 4>than yours. But the way that you are seeing some

0:03:14.720 --> 0:03:16.959
<v Speaker 4>of these American companies deal with it is an increase

0:03:17.280 --> 0:03:20.440
<v Speaker 4>in prices to offset the increase or the decrease or

0:03:20.440 --> 0:03:23.600
<v Speaker 4>even the stagnation in volumes. Is that something that you're

0:03:23.680 --> 0:03:26.640
<v Speaker 4>looking to impose when it comes to maybe offsetting that

0:03:26.760 --> 0:03:27.880
<v Speaker 4>slow down in the States.

0:03:28.760 --> 0:03:32.200
<v Speaker 1>No, so first, the stage is a relative moderate size

0:03:32.280 --> 0:03:36.720
<v Speaker 1>the market. First, what's really important is our diversified geographical footprint.

0:03:37.360 --> 0:03:41.280
<v Speaker 1>We're operating in seventy operating companies across for regions. We

0:03:41.320 --> 0:03:44.040
<v Speaker 1>saw growth in all of them in the aggregate, so

0:03:44.240 --> 0:03:48.320
<v Speaker 1>very pleased to see. On the pricing, for example, in Europe,

0:03:48.600 --> 0:03:51.320
<v Speaker 1>after a lot of input calls, drift and pricing in

0:03:51.320 --> 0:03:54.320
<v Speaker 1>the last years, we made indeed deliberate choice to be

0:03:54.440 --> 0:03:57.320
<v Speaker 1>motivated in our pricing last year to really allow the

0:03:57.360 --> 0:03:59.840
<v Speaker 1>consumer to catch up, and we did see that with

0:04:00.120 --> 0:04:04.240
<v Speaker 1>beer returning to growth in our core European market. So

0:04:04.560 --> 0:04:06.640
<v Speaker 1>that's at least how we want to go about it.

0:04:07.080 --> 0:04:11.000
<v Speaker 1>Overall total portfolio, we always aim for balanced growth, meaning

0:04:11.040 --> 0:04:14.760
<v Speaker 1>both volume growth and having good price mixed growth, as

0:04:14.800 --> 0:04:16.400
<v Speaker 1>we were able to deliver for last year.

0:04:16.600 --> 0:04:18.800
<v Speaker 4>Welldo if you talk about that diversification story. I'm looking

0:04:18.800 --> 0:04:22.000
<v Speaker 4>at the volumes number here, sales coming from Brazil, Mexico, India.

0:04:22.160 --> 0:04:24.360
<v Speaker 4>Let's talk about another major em marketing that of course

0:04:24.400 --> 0:04:26.840
<v Speaker 4>is China, where the consumer has been at the core

0:04:26.880 --> 0:04:29.239
<v Speaker 4>of the concern what are you seeing there? You seeing

0:04:29.600 --> 0:04:32.320
<v Speaker 4>promise in that part of the world. Is some of

0:04:32.320 --> 0:04:35.960
<v Speaker 4>the fiscal stimulus coming through from the Chinese government actually

0:04:36.000 --> 0:04:38.599
<v Speaker 4>showing up in consumption? What does that look like for you?

0:04:39.240 --> 0:04:42.320
<v Speaker 1>Yeah, we really focus on the part of the market

0:04:42.320 --> 0:04:45.080
<v Speaker 1>where the growth is, which is in premium, and we're

0:04:45.120 --> 0:04:48.480
<v Speaker 1>fully focused on the Heinek brand. Heineke Brands was up

0:04:48.480 --> 0:04:52.279
<v Speaker 1>double digits again last year in the key Chinese markets.

0:04:52.400 --> 0:04:55.520
<v Speaker 1>We now also see good growth on the Amstoll brand,

0:04:56.000 --> 0:04:59.599
<v Speaker 1>So we really focus on premium in the Chinese market.

0:04:59.640 --> 0:05:02.280
<v Speaker 1>That's not everywhere the case. In a lot of our

0:05:02.360 --> 0:05:06.280
<v Speaker 1>larger operating companies, we play both in mainstream as well

0:05:06.279 --> 0:05:09.039
<v Speaker 1>as premium, and by the way, and this is the

0:05:09.080 --> 0:05:11.640
<v Speaker 1>first time in a couple of years time that globally

0:05:11.720 --> 0:05:14.599
<v Speaker 1>we did see mainstream positive at around one point seven

0:05:14.640 --> 0:05:17.919
<v Speaker 1>percent and premium around five So we feel we're in

0:05:17.920 --> 0:05:19.480
<v Speaker 1>a good place from that point of view.

0:05:20.520 --> 0:05:24.080
<v Speaker 3>Good morning's guy, Let's talk at inflation. How much inflation

0:05:24.440 --> 0:05:28.120
<v Speaker 3>do you think the consumer will take? How much of

0:05:28.160 --> 0:05:32.240
<v Speaker 3>a price maker can you still be in this current environment?

0:05:33.040 --> 0:05:35.640
<v Speaker 1>Yeah, again, I think we need to be balanced that

0:05:35.800 --> 0:05:39.320
<v Speaker 1>the consumers had to take a lot of pricing over

0:05:39.400 --> 0:05:42.640
<v Speaker 1>last years. For example, the energy shock in Europe in

0:05:42.680 --> 0:05:45.920
<v Speaker 1>our core European markets has really led to very fast

0:05:45.960 --> 0:05:50.120
<v Speaker 1>price growth in the recent past. That's why again we

0:05:50.240 --> 0:05:54.719
<v Speaker 1>deliberately kept our pricing moderate to allow the consumer to

0:05:54.839 --> 0:05:57.520
<v Speaker 1>catch up. You do look at it market by market.

0:05:57.920 --> 0:06:01.480
<v Speaker 1>For example, in key African markets where you have hyperinflation,

0:06:02.000 --> 0:06:04.080
<v Speaker 1>you really need to make sure that your price for

0:06:04.560 --> 0:06:09.520
<v Speaker 1>the inflation because otherwise the profitability erodes extremely quickly. So

0:06:09.920 --> 0:06:13.120
<v Speaker 1>it is market by market. But we are happy with

0:06:13.200 --> 0:06:16.080
<v Speaker 1>how we were able to navigate that last year, allowing

0:06:16.160 --> 0:06:17.800
<v Speaker 1>consumers to catch up.

0:06:18.400 --> 0:06:23.520
<v Speaker 3>How much input inflation are you anticipating going forward. You've

0:06:23.520 --> 0:06:27.360
<v Speaker 3>got aluminium and steel talents now becoming a reality that's

0:06:27.360 --> 0:06:30.960
<v Speaker 3>going to affect presumably what happens with the cans. Energy

0:06:31.080 --> 0:06:33.880
<v Speaker 3>is also something of a crisis here in Europe as well.

0:06:33.920 --> 0:06:37.599
<v Speaker 3>We're talking about European industry maybe needing to be helped

0:06:37.640 --> 0:06:41.200
<v Speaker 3>by the European Commission with price caps. How much energy

0:06:41.240 --> 0:06:44.120
<v Speaker 3>costs inflation are you talking about? How much materials cost

0:06:44.160 --> 0:06:47.240
<v Speaker 3>inflation are you thinking about as you plan for the

0:06:47.279 --> 0:06:48.040
<v Speaker 3>rest of this year.

0:06:48.800 --> 0:06:52.800
<v Speaker 1>Yeah, we guide on that in our outlook statements, so

0:06:52.839 --> 0:06:56.560
<v Speaker 1>we're guiding mid single digits input cost inflation for this year,

0:06:56.839 --> 0:06:59.880
<v Speaker 1>but actually that's driven by some of these high inflation

0:07:00.000 --> 0:07:03.440
<v Speaker 1>countries in Africa. If you isolate for them, we expect

0:07:03.440 --> 0:07:07.120
<v Speaker 1>low single digits input cause inflation, which is pretty moderate,

0:07:07.160 --> 0:07:09.280
<v Speaker 1>and that has to do that. We are already almost

0:07:09.279 --> 0:07:13.040
<v Speaker 1>fully hatched for the year for twenty twenty five.

0:07:13.520 --> 0:07:15.800
<v Speaker 2>Can I ask you, Adolph, about something that's happening in

0:07:15.840 --> 0:07:19.840
<v Speaker 2>another sector that many analysts are thinking about how it

0:07:19.880 --> 0:07:23.000
<v Speaker 2>will affect your sector. I'm thinking here about glp ones,

0:07:23.040 --> 0:07:27.360
<v Speaker 2>that class of drug that helps people to lose weight,

0:07:27.880 --> 0:07:30.080
<v Speaker 2>and there have been a number of consumer facing businesses

0:07:30.160 --> 0:07:32.560
<v Speaker 2>that have made statements about how they expect this to

0:07:32.720 --> 0:07:35.160
<v Speaker 2>maybe way on demand or at least impact or they're

0:07:35.160 --> 0:07:37.560
<v Speaker 2>studying it. Are you doing work on what you think

0:07:37.560 --> 0:07:40.280
<v Speaker 2>the impact of why the use of this kind of

0:07:40.320 --> 0:07:42.920
<v Speaker 2>medication will be on businesses such as yours?

0:07:43.360 --> 0:07:47.800
<v Speaker 1>Yeah, no, certainly something that we should follow closely. Right now,

0:07:47.840 --> 0:07:55.760
<v Speaker 1>it's predominantly a US North American phenomenon. The correlation between

0:07:55.800 --> 0:08:00.240
<v Speaker 1>the medicine and food consumption has been more established then

0:08:00.280 --> 0:08:03.680
<v Speaker 1>it has been on al cool, So there's it's premature

0:08:03.720 --> 0:08:07.440
<v Speaker 1>to draw any major conclusions on it. And in the aggregate,

0:08:07.600 --> 0:08:11.480
<v Speaker 1>I would worry right now more about keeping our pricing moderate.

0:08:12.360 --> 0:08:18.160
<v Speaker 1>Worries about consumer sentiment is higher on our list than

0:08:18.240 --> 0:08:22.200
<v Speaker 1>GP one. And again, the strength of our global footprint,

0:08:22.320 --> 0:08:27.000
<v Speaker 1>having all those big operations across Southeast Asia, India, Africa,

0:08:27.320 --> 0:08:30.960
<v Speaker 1>Latin America really makes that. Yeah, we have a diverse

0:08:31.120 --> 0:08:34.760
<v Speaker 1>five portfolio. Also mitigating of any impact that might come

0:08:34.800 --> 0:08:35.720
<v Speaker 1>forward in the future.

0:08:36.320 --> 0:08:39.559
<v Speaker 4>Doll The final question on the buybacks piece of the equation,

0:08:39.679 --> 0:08:41.480
<v Speaker 4>and in your earning exampmen, you're talking about one and

0:08:41.480 --> 0:08:44.920
<v Speaker 4>a half billion euro share Bible program over the next

0:08:44.960 --> 0:08:48.280
<v Speaker 4>two years, and this was widely expected by the analyst community.

0:08:48.320 --> 0:08:50.040
<v Speaker 4>But talk to us about the sustainability of that at

0:08:50.080 --> 0:08:52.960
<v Speaker 4>a time when we are dealing with that geopolitical volatility

0:08:53.000 --> 0:08:56.920
<v Speaker 4>as well. How long can you keep that buyback plan up?

0:08:57.600 --> 0:09:00.280
<v Speaker 1>Now, what's very important we are for many years had

0:09:00.320 --> 0:09:04.439
<v Speaker 1>a very clear hierarchy of capital allocation priorities first or

0:09:04.480 --> 0:09:07.760
<v Speaker 1>foremost investing in organic growth, and again we're doing that.

0:09:07.840 --> 0:09:10.920
<v Speaker 1>We increase our marketing selling expenses at double the rates

0:09:11.000 --> 0:09:15.240
<v Speaker 1>of the revenue growth with three hundred million increase digital technology.

0:09:15.400 --> 0:09:18.920
<v Speaker 1>Right now, we're building three new greenfield breweries in high

0:09:18.920 --> 0:09:22.680
<v Speaker 1>growth markets in Mexico, Brazil, Dubai, so that's always our

0:09:22.720 --> 0:09:28.520
<v Speaker 1>first priority. Inorganic opportunities we'll always pursue if that makes sense,

0:09:28.640 --> 0:09:30.760
<v Speaker 1>like what we did in India with the acquisition of

0:09:30.880 --> 0:09:34.520
<v Speaker 1>ubl or Distel more recently in South Africa. But we

0:09:34.600 --> 0:09:38.200
<v Speaker 1>are deleveraging very quickly. We generated more than three billion

0:09:38.280 --> 0:09:41.560
<v Speaker 1>in cash flow last year. Our leverage dropped to two

0:09:41.559 --> 0:09:45.680
<v Speaker 1>point two which is now below our optimal capital structure,

0:09:45.960 --> 0:09:49.280
<v Speaker 1>which gave us to confidence to decide and commit to

0:09:49.320 --> 0:09:51.920
<v Speaker 1>this share by back of one point five billion over

0:09:51.960 --> 0:09:52.840
<v Speaker 1>the next two years.

0:09:53.240 --> 0:09:55.520
<v Speaker 3>Credit ketch up. Really appreciate your time this morning, A

0:09:55.520 --> 0:09:59.280
<v Speaker 3>real appreciate a Honeken's CEO, Dolf van den Brink