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Heineken

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Group Memebers <ul><li>Neil Yadav </li></ul><ul><li>Richard Farrugia </li></ul><ul><li>Benjamin Chua </li></ul><ul><li>Michael Bestari </li></ul><ul><li>Divyesh Poojary </li></ul><ul><li>Charles Yulius </li></ul><ul><li>Fany </li></ul>

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Introduction <ul><li>One of the oldest internationally recognized beer in world. </li></ul><ul><li>Valued in 2009, as the second most recognized beer in world. </li></ul><ul><li>Started and founded in 1873 by the Heineken family and run directly till 2002. </li></ul><ul><li>Currently the management and company is directed by Mr. Jean. Boxmeer. </li></ul>

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Introduction <ul><li>Heineken has 170 subsidiary brands of Beer operating in over 150 countries around world. </li></ul><ul><li>The overall beer industry is highly competitive due to the presence of large brewery companies and acquisition of smaller player. </li></ul><ul><li>Heineken controls 8% of the global market share of Beer industry world wide. </li></ul><ul><li>The major TOP THREE players in beer industry are A-B Inbev, Sab miller and Heineken. </li></ul>

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Heineken International Group and product structure <ul><li>Heineken and Amstel are principal brands of Heinken International. Group brews and sells more than 200 premium international, regional, local and speciality beers and ciders. </li></ul><ul><li>Two traditional Beer are produced by group :- </li></ul><ul><li>Heineken Tarwebok / Special dark. Sold only in Netherlands and U.S.A </li></ul><ul><li>Heineken Oud Bruin </li></ul><ul><li>Heineken Main Products Portfolio:- </li></ul>Amstel Primus Birra Moretti Sagres Cruzcampo Strongbow Bulmer Newcastle Brown Ale Kingfisher Tiger Fosters Heineken

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Question 1> What strategy does Heineken follow in the global beer market ? <ul><li>Heineken follows the FIT2FIGHT strategy </li></ul><ul><li>Heineken main strategy is for merger and acquisition of the local and recognized brands of the niche markets. </li></ul><ul><li>Heineken understands the importance of these strategic companies placed in the pockets of world whereby directly they gain the local market share. </li></ul><ul><li>Since 2008, Heineken has been implementing Cost cutting measures for its operations as well as management. </li></ul>

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Major Joint Ventures and Associates <ul><li>Major Joint Ventures:- </li></ul><ul><li>Asia pacific Breweries ( Singapore ) </li></ul><ul><li>United breweries limited ( India ) </li></ul><ul><li>Compania Cervecerias Unidas S.A ( Chile ) </li></ul><ul><li>Brau Holding International & Co ( Germany ) </li></ul><ul><li>Brassiere du Congo ( Congo ) </li></ul><ul><li>Major Associates :- </li></ul><ul><li>Cervecerias Costa Rica ( Costa Rica ) </li></ul><ul><li>Brassiere Nationale d`Haiti S.A ( Haiti ) </li></ul><ul><li>JSC Fe Efes Karaganda ( Kazakhstan ) </li></ul>

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Question 2> Financial position of Heineken? 2009 2008 2007 2006 Return On Equity 20.2% 7.3% 14.1% 21% Profit Margin 7.77% 2.42% 6.42% 10.24% Return On Assets 5.66% 1.69% 6.75% 9.31% Total Debt Ratio 0.72 times 0.77 times 0.52 times 0.58 times Total Asset Turnover 0.73 times 0.70 times 1.05 times 0.91 times

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Profitability Ratios

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Efficiency Ratios

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Question 3> What is the structure of the global Beer industry? <ul><li>Beer market has been growing steadily with highest growth expected from the premium beer market with expectation of it to reach $230 billion by 2012 compared to market in 2004 valued at $125 billion. </li></ul><ul><li>Heineken is 3 rd most recognized and valued beer company in world after A-B Inbev and SAB Miller </li></ul>

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Comparison of Market leaders

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Question 4-What changes has Heineken made that will help it deal with its challenges? <ul><li>Heineken was operated traditionally by the controlling family through the years. To change the culture they hired an outsider to lead the company. </li></ul><ul><li>Earlier due to a larger management board and structure, more time was wasted for Decision Making, whereas now they have cut down the board from 5 to 3 executives. </li></ul><ul><li>Majority of customer base for Heineken was above 40 year old. Thus through new advertisement targeting younger population and also including non alcoholic fruit flavoured drinks they have gained significant market in middle-east Muslim world. </li></ul>

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Summary <ul><li>Major source of revenue comes from their subsidiaries. </li></ul><ul><li>With the growing premium beer market in world Heineken has seen the increase in sales however, their performance dropped. </li></ul><ul><li>Changes their strategy to adapt to changes in the external environment. </li></ul><ul><li>To be more competitive, Heineken has sped up the decision-making process. </li></ul>

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Purify the Water and stored in large tanks Lightly heated and roasted barley used Mixing barley in water for 7 days which transforms into malt to form mash Starch from mash brewed to fermentable sugar to form wort which added with hops gives bitter taste Wort cooled in fermentation tank and mixed with Heineken A yeast and is matured for 4-6 weeks Beer is filtered for impurities & pasteurized for packaging in cans and bottles to be distributed around world PURIFY WATER PROCESS BARLEY ADD THE HOPS FERMENTATION FILTER AND PACKAGING 1 2 3 4 5 Heineken Production Process

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QUESTION & ANSWERS <ul><li>Thank You </li></ul>

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SWOT Analysis Strengths 1.Strong Brand name. 2.Expertise In quality Beer production. 3. Strong Distribution Network <ul><li>Weakness </li></ul><ul><li>Lower Profit Margins due to Increase in Raw materials and Petrol prices around world. </li></ul><ul><li>Opportunities </li></ul><ul><li>Capitalize on the growing Asia market & middle east. </li></ul><ul><li>Diversify into less calorie and more flavour Beers. </li></ul><ul><li>Bring Special Beers in market for women </li></ul><ul><li>Threats </li></ul><ul><li>Competitors doing bigger M & A deals poses as a strong threat to Heineken. </li></ul>

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BCG Matrix Evaluation for Heineken Market Share in 5 Continents http://www.heinekeninternational.com/FAQ_Question18.aspx Star Asia Pacific Dogs America http://online.wsj.com/article/SB10001424052748703573604574491202399103112.html Question Mark Africa Cash Cows Europe