HEINEKEN SEES HIGHER PROFITS, WIDER PENETRATION
Dutch brewer Heineken NV said it hoped
to maintain for a number of years a similar earnings growth to
the 7.5 pct increase in net profit achieved in 1986, despite
continuing investments in a reorganization program and efforts
to extend world penetration.
    Heineken last month reported a 1986 net profit of 285 mln
guilders, after 265 mln in 1985.
    Chairman Freddie Heineken said the company, Europe's
leading beer producer with six pct of market share in 1986,
said sales increased by 6.3 pct to 42.1 mln hectoliters.
    The volume increase was due mainly to a rise in the U.S.,
Where the brand Amstel Lite saw great demand, and in Europe,
where sales accounted for 25.5 pct of the total.
    Turnover, despite losses in guilder terms due to weaker
foreign currencies, rose by 4.4 pct, to 6.7 billion guilders.
    Further consolidation of foreign companies, including the
increase of its stake in leading Spanish brewery <El Aguila
S.A.> to 51.2 pct, new ventures and modernization, particularly
in French and Spanish interests, eroded profit margins. The
company still planned to invest 700 mln guilders this year in
restructuring and marketing, Heineken said.
    Heineken's Spanish activities should start yielding profit
next year, Heineken said, adding that its French operations had
already turned to profit after vast rationalization last year.
    Vice Chairman Gerard van Schaik said the decision by the
European Court of Justice in Luxembourg to allow foreign beer
into the closed West German market -- Europe's biggest beer
market -- offered interesting possibilities for Heineken. "We
have the beer, but distribution and sales is the important
point," van Schaik said, adding that since the ruling Heineken
had been inundated by German traders seeking joint ventures.
    "The question is not if we want to penetrate the German
market, but how we are to do it," van Schaik said, adding that
while the widely traveled Germans seemed to be developing a
taste for foreign beer, the internal structure was very
regionalized.
     Heineken board member Hans Coebergh, responsible for
African operations, said he saw Africa as one of the most
important beer growth markets in the long term.
     He said the company, present in Africa since 1932 and with
majority stakes in six breweries and interests in 25, was
hampered by the lack of hard currencies there.
    Africa, where beer consumption averages only nine liters
per head per year and sales are limited by import restrictions
and currency risks, nonetheless accounted for 6.5 pct of total
1986 sales.
    On-site production is rendered expensive by the high price
of imports of essential ingredients. But Heineken scientists
have been looking at other possibilities.
    To balance the costs of imported malt, Heinken launched on
the Nigerian market a new beer made of 50 pct sorghum, which
had sold successfully, Coebergh said.
    Heineken is urging farmers to grow the traditional raw
materials, but Coebergh noted that banana and palm beer were
popular in Rwanda . "This is a possibility, but we could not
possibly achieve the Heineken flavor," Coebergh said.
    Chairman Heineken said the company's seven year efforts to
penetrate the Soviet market had finally resulted this week in a
contract that relaxed some of the restrictions they faced.
    But again, a lack of hard currencies limited Heineken's
market potential. Heineken now has seven bars in Moscow that
are enjoying good sales, but the bars only accept western
money.
 Reuter
