BrandArena: Heineken to increase marketing spend in 2014

Wednesday 12 February 2014

Heineken to increase marketing spend in 2014

Heineken announced its plans to 'slightly increase' its marketing and sells spending as a percentage of revenue in 2014 (2013: 12.6%).

Despite challenging beer market conditions in several key markets last year, Heineken continued to invest in its premium brand portfolio and strengthening its market positions. This was supported by higher commercial investments to enhance brand equity and drive effective execution in the marketplace.

In 2014, Heineken expects a gradual recovery in the global economy to underpin improved trading conditions in several of its key markets. The company's marketing drive will be focused on premium brand development, ongoing innovation and “higher planned commercial investments”.

The move attempts to soften the blow of lower consumption in Europe with the brewer blaming the region for total revenue rising by just 1.3 per cent year-on-year to €21.3bn (£17.6bn) in 2013.

The premium brand expects volume growth in developing markets in Africa Middle East, Asia Pacific and Latin America and lower consumption in Europe. This is expected to lead to an improved organic volume performance trend versus 2013. In addition, revenue management initiatives are again expected to drive higher revenue per hectolitre, albeit at a more modest level compared with 2013.

In a statement by the company, Jean-Fran├žois van Boxmeer, Chairman of the Executive Board and CEO, said: "2013 was a challenging year as slower economic growth in a number of key markets and adverse regulatory developments impacted performance. However, we increased investments in our premium brand portfolio and innovation. This helped to drive higher revenue per hectolitre and market share gains in a number of important markets.

"Our volume performance improved in the second half of the year in Western Europe and Africa Middle East. TCM2 generated €300 million of cost savings, driving higher operating margins. Whilst the performance of developing markets was not as strong as expected, they now account for nearly half of group revenues and remain strong platforms for long-term growth. We will continue to invest in and focus on the execution of our strategic priorities to drive future growth."

Overall, this is expected to result in organic revenue growth in 2014. Emerging markets currencies remain volatile however, and based on current spot rates, this is expected to have an adverse impact on reported revenues.

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