Dolf van den Brink: I have been looking to visit India many times over the last decade. And I cannot tell you how excited I am from what I am seeing now on the ground here during my visit to Bangalore and Mumbai. This is clearly India’s moment. The reforms, the investments, the raising of standards and consequently growth accelerating across industries and across the economy and for Heineken that makes India one of the biggest if not the biggest opportunity that we see for growth in our global footprint.
How are you looking at tapping into this opportunity because the Indian market is very distinctive in the manner that IMFL formulates almost 70% of the overall market, while beer is much smaller. How do you see this entire market share of beer expanding in India and what is Heineken doing for it?
Dolf van den Brink: We see India and India’s economy at an inflection point but we also see the potential for the beer category at an inflection point. As hundreds of millions of Indian citizens are raising their incomes, they are lifted into the middle class and with that their living standards are going up, but also their habits, their social routines, people want to enjoy life, people want to go out and hang out with friends and that is a traditional occasion where beer has been very strong from a global point of view. So, we really see a lot of future growth in the category, which already is starting to happen as we speak.
But I am also seeing this trend of premium liquor taking off and whether it is through your own brands like Queenfisher, etc, or the other categories that have come up. What else is lined up in terms of the portfolio expansion for the company in India? What more should one watch out for in terms of the new products that are lined up?
Dolf van den Brink: Premiumisation is a global trend and indeed, it is also very relevant in India. Also, we see an acceleration of our premium portfolio, whether it is brand Heineken, our largest global premium brand or more local propositions like Ultra and Ultra Max. There is a lot of growth and we will invest in that growth for the years to come. But also in our footprint, maybe the most important part is the Kingfisher brand, which is of course an iconic brand in India.
When you travel around the world, the most famous Indian brand name is actually Kingfisher. And we also would like to open our global Heineken footprint to sell more Kingfisher to the Indian diaspora and others around the world. And yes, we are extremely proud that Kingfisher is now part of the larger global Heineken brand family and also here in India, we believe the brand has still a lot of future growth ahead of it.
But what about the other brands coming to India, the likes of Tiger, etc? Is that something that is planned into the Indian markets?
Dolf van den Brink: Yes, well, first and foremost it is the Heineken brand which is already available in a couple of Indian states, but it does not have a national footprint yet. We are investing a lot in creating the premium capacity so that we can make the Heineken brand more available. The brand has been available now for a couple of years and we see a lot of future potential there. So, we will keep on looking at international propositions that could be relevant for the Indian consumer. But at the same time, the Indian consumer is also interested in powerful Indian brands that give them a sense of pride, like the Kingfisher brand and some of the other brands in our portfolio.
How well are you decked up against the competition because as you pointed out, it is a growing trend as is localisation.
Dolf van den Brink: We have seen this in other parts of the world. People are innovating and investing in premium brands. As new entrepreneurs come in, it will help to expand the category. We believe it is a very good thing. It shows that the category from a social point of view is becoming more relevant with the Indian consumers. As I said before, the Indian consumer, more affluence, higher disposable income, more urban and with that comes a difference in lifestyle and going out and have these kind of quality beer propositions like Kingfisher, like Max, like Ultra, like Heineken are very relevant.
We welcome the step up in competition because with that comes a step up in innovation which will only help accelerate the category. As the market leader in India with around 50% share, it is very relevant for us to further grow and build the category.Your market share stands at around 50%. Despite the tough competition, do you see more tailwinds for you to increase that market share further? Is there a target you have in mind?
Dolf van den Brink: No, we are more focused on capturing the category growth than per se just driving the market share. That is when it becomes very relevant wen you are in a stagnant market. India is the opposite. As I said earlier, we see this as maybe the biggest growth opportunity globally. We are investing heavily. We have put in more than Rs 8,000 crore over the last few years in our Indian operations. We continue to invest heavily. So, for us, it is all about the category and building a brand portfolio and investing in the capacity from a national point of view to make sure that we shape, lead and participate in that category growth.
A lot of Heineken global brands are also likely to come to India given the premiumisation wave. I understand that most of your dealings in India right now happen through UBL and not directly. If you do bring these global brands like Tigerinto India, will it come through United Breweries or could there be some direct participation into the market as well?
Dolf van den Brink: We are a very proud, majority shareholder in UB, which is a legendary company in India. As Heineken, we really believe beer is a very local industry, a very local business. Across the world, we have these local operations that often have a local public listing like UB being listed on the Mumbai Stock Exchange and we really welcome that.
We think it is good to have deep roots in the local society, to have local investors, local suppliers and through UB we are participating. So, any rollout of our international brand portfolio for sure will go through our UB company. I am stepping away extremely confident and yes, with increased confidence, I would say that when I look at the talent level of our employees, we are hiring from the campuses of the best colleges here in India, the speed at which we are digitising our business, I think some of our other global operations can learn from it.
So, UB is now a very important and relevant part of our global footprint and we will continue to invest. We also really are keen to get some of the Indian talent to come out and work in other businesses we have around the world.
But since you are talking about the partnership with UBL, I do understand that the stake of the global company right now is around 24-24.5%. Are there any plans to increase it or decrease the stake going forward?
Dolf van den Brink: Our share is 61-62%. So, we are the majority owners. But again, we have many important local shareholders who have been with the company for decades and we like it that way. I do not foresee any major changes in that regard. I have a lot of confidence in our UB leadership team. We have some of the best leaders that I have seen running the operation, given how big the opportunity is and the investment levels that we are committing to.
What are your key goals that you are setting for your Indian leadership? What is that you are asking of them going forward?
Dolf van den Brink: It is back to leading in the category growth, make the category more socially relevant, more moderation, more premiumisation and upgrading the experiences.Visiting the big cities in India, one is amazed to see what is happening with beer selling outlets. We are seeing whether they are becoming more premium, more multi-gender. We are also really trying to role model that in the company. Our female colleagues have created the Queenfisher around International Women’s Day and they wanted to have an expression of the famous Kingfisher brand, targeted specifically for female colleagues and consumers. It is all about leaning in and being a progressive, moderate category and leading that through our operations here at UB.
What are the risk factors if any, on the anvil and not just about India, but across the world? Beer as a category saw quite a bit of headwinds in the year gone by. There was a decline in the volume of beer sales as well. What is your own estimate or analysis as to how 2024 is likely to be a different year versus 2023?
Dolf van den Brink: Indeed the last three-four years, particularly with the pandemic and other disruptions, we have had some headwinds. I am proud of the category, but also how Heineken has been weathering those headwinds. We closed last year with good revenue growth, good profit growth. The volume equation was less strong. We really see that coming back this year. We do expect this year to be better from that point of view.
We are investing in our brands and innovations and in expanding our capacity. The world is a more volatile place. It is changing from a geopolitical point of view and some other dimensions as well. We also need to remain resilient and agile. What remains a very important topic is ease of doing business. We are happy that the Indian government is making this a larger priority, very relevant for us as a highly regulated industry. But across the board, I am optimistic about the category globally and particularly here in India.
At the company level, a lot of your peers, the likes of AB InBev, etc, have moved on to whiskey and wine as a category; but you have remained in the beer category. Are you looking at expanding your portfolio beyond beer or that is going to be the mainstay?
Dolf van den Brink: No, well, we are first and foremost a beer company, never say never, but at this moment in the foreseeable future we are big believers in beer. We believe beer is a beverage of moderation. It fits in the way the social norms are evolving in India, the way we want to expand the category and there is still plenty of opportunity to remain fully focused on the beer category itself.
