Heineken N.V. Annual Report 2021
Introduction | Report of the | Report of the | Financial | Sustainability | Other | Heineken N.V. | 2 | ||
Executive Board | Supervisory Board | Statements | Review | Information | Annual Report 2021 | ||||
In this year's report
Report of the
Executive Board
Chief Executive's Q&A | 3 |
Performance highlights | 5 |
Key figures | 6 |
Our business priorities:
Executive Team | 7 |
Welcome to EverGreen | 8 |
Drive superior growth | 11 |
Fund the growth | 17 |
Raise the bar on sustainability | |
and responsibility | 19 |
Become the best | |
connected brewer | 23 |
Unlock the full potential | |
of our people | 26 |
Regional review: | 29 |
Africa, Middle East & | |
Eastern Europe | 30 |
Americas | 31 |
Asia Pacific | 32 |
Europe | 33 |
Risk Management | 34 |
Financial Review | 40 |
Corporate Governance statement | 44 |
Report of the Supervisory Board
To the Shareholders | 52 |
Remuneration Report | 58 |
Financial
Statements
Contents | 70 |
Consolidated Income Statement | 71 |
Consolidated Statement of Other | |
Comprehensive Income | 71 |
Consolidated Statement | |
of Financial Position | 72 |
Consolidated Statement | |
of Cash Flows | 73 |
Consolidated Statement | |
of Changes in Equity | 74 |
Notes to the Consolidated | |
Financial Statements | 75 |
Heineken N.V. Income Statement | 118 |
Heineken N.V. Balance Sheet | 119 |
Heineken N.V. Shareholders' | |
equity | 120 |
Notes to the Heineken N.V. | |
Financial Statements | 121 |
Sustainability
Review
Raise the bar on sustainability | |
and responsibility | 125 |
Our impact from Barley to Bar | 126 |
Materiality and | |
stakeholder engagement | 127 |
Our Brew a Better World 2030 | |
commitments and progress | |
in 2021 | 129 |
Environmental:
Reach net zero carbon emissions | 132 |
Maximise circularity | 136 |
Towards healthy watersheds | 137 |
Social:
Embrace inclusion and diversity | 139 |
A fair and safe workplace | 140 |
Positive impact in | |
our communities | 142 |
Responsible:
Always a choice | 143 |
Address harmful use | 144 |
Make moderation cool | 145 |
Foundation: Business conduct | 146 |
Foundation: Human rights | 147 |
WEF core metrics and disclosures | 148 |
Environmental data table | 155 |
Other climate-related disclosures | 156 |
Other
Information
Appropriation of Results | 166 |
Independent Auditor's Report | 167 |
Assurance Report of the | |
Independent Auditor | |
(of non-financial indicators) | 172 |
Shareholder Information | 174 |
Bondholder Information | 177 |
Historical Summary | 178 |
Glossary | 180 |
Disclaimer and | |
Reference Information | 181 |
This copy of the annual report of Heineken N.V. for the year 2021 is not in the ESEF-format as specified by the European Commission
in Regulatory Technical Standard on ESEF (Regulation (EU) 2019/815).
The ESEF reporting package is available at: http://www.theheinekencompany.com/ investors/results-reports-webcasts-and- presentations
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Find more information online at:
theHEINEKENcompany.com
Reporting basis and governance | |
of non-financial indicators | 157 |
Download our | Explore our regions | Find out how we |
Annual Report | and brands | Brew a Better World |
Introduction | Report of the | Report of the | Financial | Sustainability | Other | ||
Executive Board | Supervisory Board | Statements | Review | Information | |||
Chief Executive's Q&A |
Heineken N.V. | 3 |
Annual Report 2021 |
Gaining | Q | What are your top reflections as |
CEO of HEINEKEN in 2021? | ||
I am grateful for the resilience and agility of our | ||
people as we continued to navigate through the | ||
crisis, while building the future. There is nothing more | ||
momentum important than the health and safety of our people | ||
with | and I am proud of how our colleagues, customers, | |
and suppliers continued to adapt and support | ||
one another. | ||
EverGreen | step towards recovering our results to pre-pandemic |
Despite the challenges, this year our EverGreen strategy gained momentum and we made a big
levels with the strength of Heineken®, the scaling of new innovations and the significant savings we unlocked by simplifying and right-sizing our cost base. We also launched our new Brew a Better World 2030 commitments and continued to strengthen our footprint with United Breweries Limited (UBL) in India and we announced our intention to acquire control of Distell and Namibia Breweries (NBL) to create a regional beverage champion for Southern Africa.
This year, I was also delighted to welcome Harold van den Broek to the Executive Board and James Thompson to the Executive Team. Our top team now represents six nationalities and an incredible mix of knowledge from both inside and outside of HEINEKEN.
Our best days are ahead of us as we continue to deliver superior and balanced growth with beer and beyond.
Dolf van den Brink
Chairman Executive Board and CEO
Q | Key highlights of 2021's business |
performance? |
We delivered a strong performance in 2021, taking a big step towards restoring our revenue, operating profit and margin to pre-pandemic levels and going beyond in places. We saw a strong recovery in Europe, in our Africa, Middle East & Eastern Europe region and the Americas which was partially offset by the lingering impact of the pandemic in Asia Pacific. The Heineken® brand continued its strong momentum. Our innovations in premium, low- and no- alcohol and beyond beer categories were well received by consumers and are scaling fast. We accelerated the roll-out of our B2B platforms. Our cost programme delivered significant savings this year, putting us well on track to reach our target of €2 billion in savings
by 2023.
Q | How is the company transforming |
with EverGreen as the North Star? |
EverGreen is a multiyear strategy to future-proof our business and adapt in a fast-changing world.
It builds on our long-term strengths whilst embracing transformation across multiple dimensions.
Building upon the momentum of the last 18 months, we are accelerating progress on our five strategic pillars: delivering superior and balanced growth
by increasing consumer and customer centricity; funding our growth through continuous productivity improvements and cultivating a cost-conscious culture; becoming the best-connected brewer by digitising our business end-to-end; stepping up in sustainability and responsibility via our Brew a Better World programme; and unlocking the full potential of our people by investing in talent and capabilities.
Our Dream is to: Shape the future of beer and beyond to win the hearts of consumers. We are entering an incredible next era of innovation and expansion in the beer industry. Our best days are ahead of us as we continue to deliver superior and balanced growth with beer and beyond. New flavours, styles and trends are helping us reimagine and revitalise beer, bringing the joy of true togetherness to consumers across the world.
Q | How do you stay obsessively |
customer and consumer focused? |
After a long history as successful brand builders, we are now focused on increasing our customer and consumer-centricity. We are focused on revitalising and renewing core beer while continuously innovating and exploring beyond beer. We are also investing
in consumer and customer-rooted innovation while boosting digitisation on the path to becoming the best-connected brewer.
Starting with our flagship brand, we continue to bring brand Heineken® to more consumers around the world while fuelling interest in the zero-alcohol space with Heineken® 0.0, which continues to grow double- digits. Our newest offering, Heineken® Silver, offers consumers lower bitterness and is off to a strong start with significant expansion planned in 2022. We are staying relevant with younger generations with brands that embody authenticity, diversity and a strong desire for connection like Birra Moretti across Europe, Ichnusa in Italy and El Águila in Spain. As health and wellbeing remains a priority for consumers, we are expanding our lower-calorie,lower-alcohol and non-alcoholic beer with Desperados Virgin Mojito and Lagunitas non-alcoholic IPA. We are stretching beer with low bitterness ranges like Tiger Crystal in Brazil and Bintang Crystal in Indonesia. We are intentionally expanding beyond beer launching Pure Piraña in the Hard Seltzer category last year, and Dos Equis Ranch Water in the U.S. and Amstel Ultra Seltzer in Mexico this year.
Introduction | Report of the | Report of the | Financial | Sustainability | Other | Heineken N.V. | 4 | ||
Executive Board | Supervisory Board | Statements | Review | Information | Annual Report 2021 | ||||
Chief Executive's Q&A
We accelerated deployment of our business-to- business digital platforms which captured €2.8 billion in digital sales value in 2021. We have connected close to 370,000 active customers through our traditional channels, a threefold increase from last year.
Q | What is your approach to long-term |
value creation? |
At HEINEKEN, we are a growth company first and foremost, and have a long history of delivering superior growth. We are also a company rooted in family, one that thinks in generations to serve the needs of all stakeholders. EverGreen heralds the shift from superior growth to superior and balanced growth. We aim to get the balance right between short-term delivery and long-term sustainability, between top-line growth and overall stakeholder value creation. Our renewed value creation model, the Green Diamond, encapsulates our balanced ambition and includes drivers on Growth, Profitability, Capital efficiency and Sustainability & Responsibility. Balance means succeeding in all four quadrants of the Green Diamond.
Q | You set ambitious targets |
with your Brew a Better | |
World 2030 commitments. | |
How will you reach them? |
Our sustainability strategy has deep roots in our company; our first environmental report was published in 1994. This year we raised the bar on our environmental, social sustainability and responsible consumption aspirations with our refreshed Brew a Better World 2030 commitments. We set a Science- Based Target to operate in a net zero value chain by 2040, 10 years before the Paris Agreement deadline. We think holistically about our ecosystem and strive to work in close collaboration with partners and suppliers to achieve our scope 3 emissions targets.
We made a commitment to increase the percentage of women in senior management to 30% by 2025 and 40% by 2030 on the path to gender balance. We committed 10% of all Heineken® media spend to advance responsible consumption campaigns to achieve the ambition of reaching one billion people with moderation messaging every year.
We signed up for the World Economic Forum (WEF) Stakeholder Capitalism Metrics in Q1 2021 and are also reporting via Task Force on Climate-related Financial Disclosures (TCFD) for the first time in this annual report.
Q | How did acquisitions complement |
HEINEKEN's growth strategy in | |
2021? |
We made two meaningful announcements in 2021 that served to strengthen and expand our footprint. In July, we became the majority owner of UBL in India. UBL has built its position as the undisputed market leader in India with a strong network of breweries across the country and a fantastic portfolio led by
its iconic Kingfisher brand family. We are honoured to build on this legacy and look forward to working with our new colleagues to continue to win in the market, delight consumers and customers and unlock future growth.
In November, we announced our intent to acquire control of Distell and NBL. Distell is a highly regarded, resilient business with leading brands, a talented workforce and a strong track record of innovation and growth in Africa. With NBL, there are exciting opportunities to expand premium beer and cider in Namibia and grow the iconic Windhoek brand beyond its home market. We are very excited to bring together three strong businesses to create a regional beverage champion, perfectly positioned to capture significant growth opportunities in Southern Africa. If regulatory approvals are successfully obtained, this transaction is likely to complete in Q3 of 2022.
Q | How does culture renew itself in a |
157-year-old company? |
We are incredibly proud of our culture and people are at the heart of our business. Our family roots are special to our company and foster a strong sense of belonging. Our culture is no-nonsense, pragmatic, deliver-the-goods, walk the talk - and we like to have fun along the way. On the flip side, we have an opportunity to become more externally focussed, more customer-centric, more courageous and bold in the moves we are making and faster in pursuing opportunities.
During the last year, we worked with colleagues across the whole business to refresh our Values and articulate our Purpose: We brew the joy of true togetherness to inspire a better world. We ignite the moments that bring us together, create bonds and make memories that are unforgettable. We hope we can make the world just a little better… one day, one beer, one cheers at a time. Our company values have also been refreshed, and they represent what we stand for. They are passion for consumers and customers, courage to dream and pioneer, care for people and planet, and enjoyment of life.
Q | What has been your biggest |
learning this year? |
My learning this year was about the importance of balance. It is key to both keep a positive, optimistic spirit yet be realistic and face the brutal facts.
Move with agility and speed yet take enough time to reflect.
Realise it is a marathon yet create small milestones to celebrate along the way. Most importantly: balance 'caring and daring'. We have a very ambitious daring agenda, but we need to take care of
and each other. I am very grateful to all our people HEINEKEN for their ongoing commitment, care, and passion and am proud of all that we achieved together in 2021.
Q | What is the outlook for HEINEKEN |
with EverGreen? |
We launched our EverGreen strategy in February
2021 to future-proof our business and deliver superior, balanced growth for sustainable, long-term value creation. It requires us to constantly navigate the long-term transformation with the short-term financial delivery under fast-changing external circumstances. We are encouraged by the progress made, witnessed by the strong performance of our business in 2021 and how EverGreen is taking shape.
For 2022 our plans assume revenues in Asia Pacific to progressively bounce back during the year, yet full recovery of the on- trade in Europe may take longer. Reflecting our confidence in the long-term, we intend to reverse the cost mitigation actions undertaken in 2021 and to further step up our investments in brand support and our digital and sustainability initiatives. This investment will be partially offset
by further delivery of gross savings from our productivity programme.
Overall, we expect a stable to modest sequential improvement in operating profit margin (beia) in 2022. Whilst continuing to target 17% operating margin (beia) in 2023 and operating leverage beyond, there is increased uncertainty given current and evolving economic and input cost circumstances. Therefore, we will update the 2023 guidance later in the year.
Wishing you all the joy of true togetherness in 2022!
Report of the | Report of the | Financial | Sustainability | Other | Heineken N.V. | 5 | ||||
Introduction | Executive Board | Supervisory Board | Statements | Review | Information | Annual Report 2021 | ||||
Performance highlights
- strong set of results
Volumes | Consolidated beer | Heineken® |
in millions of hectolitres | in millions of hectolitres | |
231.2mhl | 48.8mhl |
2017: | 2018: | 2019: | 2020: | 2021: | 2017: | 2018: | 2019: | 2020: | 2021: |
218.0 | 233.8 | 241.4 | 221.6 | 231.2 | 36.0 | 38.7 | 41.8 | 41.8 | 48.8 |
Financial performance
1 Restated for IAS37
Net revenue (beia)
in millions of €
€21,901m
22,471 | 23,894 | |||
21,629 | 21,901 | |||
19,724 | ||||
2017 | 2018 | 2019 | 2020 | 2021 |
Operating profit (beia)
in millions of €
€3,414m
3,759 | 3,808 | 4,020 | ||
3,414 | ||||
2,421 | ||||
2017 | 20181 | 2019 | 2020 | 2021 |
Operating profit (beia) margin
in percentages | ||||
15.6% | ||||
17.4 | 16.9 | 16.8 | ||
15.6 | ||||
12.3 | ||||
2017 | 20181 | 2019 | 2020 | 2021 |
Net profit (beia)
in millions of €
€2,041m
2,385 | 2,517 | |||
2,247 | ||||
2,041 | ||||
1,154 | ||||
2017 | 20181 | 2019 | 2020 | 2021 |
Sustainability | Carbon emissions |
highlights | 16% |
reduction of absolute | |
carbon emissions in | |
our production |
Gender balance
25%
of our senior management positions were held by women
Water balancing
32%
of our production sites in water-stressed areas are fully water balanced
Consumers reached
1.2bn
with our responsible consumption campaigns
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Heineken NV published this content on 25 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 February 2022 17:16:01 UTC.