Heineken to restore marketing spend, restructure cuts 8,000 global jobs

Heineken to restore marketing spend, restructure cuts 8,000 global jobs

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Heineken's EverGreen plan, which was launched in the second half of 2020 under CEO Dolf van den Brink, will play a crucial role in restoring the company's marketing and spend levels, and front-load investments to accelerate its digital and technology transformation. Heineken said in its financial statement that this will include its digital route to consumer, digital core and backbone, advanced analytics and global data hubs. The plan will also help Heineken mitigate the incremental costs from accumulated inflation and significant transactional currency costs.

“We will drive efficiency of our consumer and customer-focused investments, restoring our marketing and sales spend as a percentage of net revenue to the levels of 2019 by latest 2023, fully reinvesting all commercial productivity gains,” Heineken said.

Moving forward, Heineken plans to connect all consumers through its B2B platforms, reaching about US$12.1 billion net revenue by 2025 in traditional channels. At the same time, its entire sales force will also be digitally empowered by 2023. “We will continue to invest selectively in direct-to-consumer platforms and touch all consumers with individual data-driven marketing,” the company added.

At the same time, Heineken plans to cut 8,000 jobs as part of its restructuring plans, following a pandemic-stricken year which led to an approximate US$248 million net loss in 2020. The brand said in its financial statement that the total restructuring charge will amount to approximately US$508 million and amass run-rate direct savings on personal expenses of about US$423.68 million.

Heineken said the restructuring timelines will vary depending on the specific circumstances of each of its local operations, including a reduction of personnel costs at the head office by a run rate of 20% to be implemented at the end of the first quarter of the year. Run rate refers to an estimation of future financial data assuming that current trends continue.

Heineken's spokesperson declined to comment on MARKETING-INTERACTIVE's queries regarding the impact on its marketing team in Asia Pacific, deferring to the financial statement. The spokesperson also reiterated that where specific markets are concerned, the timeline will depend on the specific circumstances of the local operations.

 The restructuring is part of its EverGreen plan and is expected to accumulate about US$2.4 billion gross savings through 2023, and restore operating profit margin to around 17% by the same year, Heineken said.

On a whole, Heineken posted a revenue of about US$27.8 billion, decreasing 11.3% organically from about US$34.3 billion before exceptional items and amortisation. Net revenue dropped 11.9% before exceptional items and amortisation to about US$23.8 billion. Asia Pacific, in particular, had a net revenue of US$3.8 billion before exceptional items and amortisation.

Marketing and selling expenses before exceptional items and amortisation represented 10.4% of net revenue. According to Heineken, it adapted its commercial activities to the fast changes in consumer behaviours and consumption patterns. The brand added that it continued to invest in the long term health of strategic brands and areas of long term growth.

Van den Brink said EverGreen leverages both its strengths and new opportunities to chart the company's next chapter of growth. "Firmly putting customers and consumers at the core we aim to continually enhance and expand our portfolio and footprint. We are stepping up our focus on continuous productivity improvements and raising our environmental and social sustainability ambitions," he added.

Separately, Heineken shifted all media buying and planning services to dentsu in January, with dentsu Red Star becoming the sole media agency. This comes as Heineken aims to maximise its global media investment to drive sustainable business growth. Dentsu said previously that it will implement a future media model allowing Heineken to access more specialist capabilities and talent to accelerate the growth of its brands. Meanwhile, Publicis Groupe will retain media duties in its home country of France.

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