This Chinese New Year we are entering the Year of the Tiger, so we are going under the bonnet of the world’s leading brewer and Tiger Beer producer, Heineken.
Heineken is a position we hold across a number of our portfolios, selling over 300 beers across 190 countries. It is a position we don’t only hold for its diverse and global brands of beers, but also for its exposure to the fast-growing, Asia-Pacific region. APAC is home to more than 4.5 billion people (c.60% of the global population), spread across 11 time zones and more than 3,500 languages. The region is the single largest contributor of the world’s total GDP, 35%, and in spite of a longer coronavirus tail than its western peers is forecasted to rebound strongly in 2022 and 2023.
Heineken started its operations in the Asia Pacific region in 1931, establishing a joint venture to build a brewery in Singapore which became the birthplace of Tiger beer, celebrating its 90th anniversary in 2022, aptly the year of the Tiger. Since then it has grown to running operations in 24 countries in the region, from India to China and Papua New Guinea to the Solomon Islands.
What Heineken does best, is embed itself into the culture and fabric of the region, brewing beers that are authentic and innovative to the lands they are brewed in. Whether it is on the beaches of Bali (Bintang) or the hustle and bustle of streets in downtown Hanoi (Bia Viet), Heineken beers reflect the idiosyncrasies of the world’s fastest-growing region. APAC accounts for almost 13% of the group’s global beer volume and €2.7bn in net revenue – and growing quickly.
The Far East, and particularly Hong Kong and China, have been adversely impacted by the coronavirus over the past six months in comparison to their western peers, but as and when lockdowns ease, and regional travel opens up, Heineken is magnificently placed to benefit from an increased spend from consumers both domestic and tourist.
For such a global business, the operations are cannily nimble. During the coronavirus crisis, when the Mexican government ordered a lockdown and deemed brewing as non-essential, they shut operations across breweries nationally, including Heineken brand Dos Equis. Heineken managed to shift production to The Netherlands continuing operations and still allowing the beer to be brewed, shipped over the Atlantic and sold in supermarkets and stores across Mexico and globally.
We love the brewer’s quality aspects; strong recurring revenues, excellent management and superior brands, and believe it’s a great way to provide emerging market exposure in our portfolios.
The contents of this article are for information purposes only and do not constitute advice or a personal recommendation. Investors are advised to seek professional advice before entering into any investment decisions. Please also note the value of investments and the income you get from them may fall as well as rise and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.