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Let's think about the European earning story. We've had numbers out from the drinks maker Heineken this morning, a beer volumes rising by one point six percent in twenty twenty four. That was ahead of the estimate which was one point four percent. It seems that premium beer such as Bier and Maretti and non alcoholic alternatives are driving the growth. Let us talk to Heinek and Seeo dolfand and Brink who joins us now and can talk us through some of the latest news here.
Dog.
Very nice to have you with us. So you've clearly done okay from premium beer. Tell us where you're seeing the strength in premium beer and why you think you're seeing strength in premium beer right now?
Very good, Thanks, good morning, Thanks for having me across the board. We were very happy with our results. Indeed, volume growth one point five percent, five percent, revenue, eight point three operating profit. That's what we set out to do. Are very happy they were able to deliver that. Premium indeed continues to be an incredible strength of the company.
It's an old trend, but that's still very relevant. Over the last years, premium has outgrown the category time and again we are the leader globally in the premium beer, of course, with the Heinike brand, which was even growing nine percent. We keep investing disproportionately in our key premium propositions Heineken, Boretti, Desperados, Kingfisher, Will Train, India, what have you. But indeed also Zero zero very important, up another ten percent.
We like to say that we're the pioneer. Back in twenty seventeen when we globally launched the Heineka Zero zero brand, the category was basically dormant, and now it's growing consistently double digit year over a year, and we really for sure intend to keep it up.
Okay, do I want to ask you about that growth? I mean, how big can that category gets? As in witness changes in society perhaps and gen z maybe consuming alcohol in a way that's different to older generations. How big does that category grow?
We believe that over time this really will become a meaningful part of the market, and you already can see. I think globally it's still barely one percent of global beer. In Key Europe it's already on average around five percent, and in key markets like Spain and the Lenlands is
already ten percent. I saw recent numbers that, for example, in the food channel in the US, it's already four percent of revenue, so it is really scaling and if we keep this double digit growth up here over year, we do believe it will become a very significant segment of the total beer markets going forward. And again we
are the global market leader. We calculated that since we launched Tiny zero zero, we've captured around forty percent four zero of the total growth of the zero zero segments globally, and we will keep investing, like what we're doing with the Formula one sponsorship, which is fully dedicated against Tindy zero.
Zero off it's creedy in London. I want to ask a little bit about your consumer spending story here in the States. We are seeing a little bit of a slowdown, most recently in earnings in the likes of McDonald's for example, which I can appreciate it's a very different product offering than yours. But the way that you are seeing some of these American companies deal with it is an increase in prices to offset the increase or the decrease or
even the stagnation in volumes. Is that something that you're looking to impose when it comes to maybe offsetting that slow down in the States.
No, so first, the stage is a relative moderate size the market. First, what's really important is our diversified geographical footprint. We're operating in seventy operating companies across for regions. We saw growth in all of them in the aggregate, so
very pleased to see. On the pricing, for example, in Europe, after a lot of input calls, drift and pricing in the last years, we made indeed deliberate choice to be motivated in our pricing last year to really allow the consumer to catch up, and we did see that with beer returning to growth in our core European market. So that's at least how we want to go about it.
Overall total portfolio, we always aim for balanced growth, meaning both volume growth and having good price mixed growth, as we were able to deliver for last year.
Welldo if you talk about that diversification story. I'm looking at the volumes number here, sales coming from Brazil, Mexico, India. Let's talk about another major em marketing that of course is China, where the consumer has been at the core of the concern what are you seeing there? You seeing promise in that part of the world. Is some of the fiscal stimulus coming through from the Chinese government actually showing up in consumption? What does that look like for you?
Yeah, we really focus on the part of the market where the growth is, which is in premium, and we're fully focused on the Heinek brand. Heineke Brands was up double digits again last year in the key Chinese markets. We now also see good growth on the Amstoll brand, So we really focus on premium in the Chinese market.
That's not everywhere the case. In a lot of our larger operating companies, we play both in mainstream as well as premium, and by the way, and this is the first time in a couple of years time that globally we did see mainstream positive at around one point seven percent and premium around five So we feel we're in a good place from that point of view.
Good morning's guy, Let's talk at inflation. How much inflation do you think the consumer will take? How much of a price maker can you still be in this current environment?
Yeah, again, I think we need to be balanced that the consumers had to take a lot of pricing over last years. For example, the energy shock in Europe in our core European markets has really led to very fast price growth in the recent past. That's why again we deliberately kept our pricing moderate to allow the consumer to catch up. You do look at it market by market. For example, in key African markets where you have hyperinflation, you really need to make sure that your price for
the inflation because otherwise the profitability erodes extremely quickly. So it is market by market. But we are happy with how we were able to navigate that last year, allowing consumers to catch up.
How much input inflation are you anticipating going forward. You've got aluminium and steel talents now becoming a reality that's going to affect presumably what happens with the cans. Energy is also something of a crisis here in Europe as well. We're talking about European industry maybe needing to be helped by the European Commission with price caps. How much energy
costs inflation are you talking about? How much materials cost inflation are you thinking about as you plan for the rest of this year.
Yeah, we guide on that in our outlook statements, so we're guiding mid single digits input cost inflation for this year, but actually that's driven by some of these high inflation countries in Africa. If you isolate for them, we expect low single digits input cause inflation, which is pretty moderate, and that has to do that. We are already almost fully hatched for the year for twenty twenty five.
Can I ask you, Adolph, about something that's happening in another sector that many analysts are thinking about how it will affect your sector. I'm thinking here about glp ones, that class of drug that helps people to lose weight, and there have been a number of consumer facing businesses that have made statements about how they expect this to maybe way on demand or at least impact or they're
studying it. Are you doing work on what you think the impact of why the use of this kind of medication will be on businesses such as yours?
Yeah, no, certainly something that we should follow closely. Right now, it's predominantly a US North American phenomenon. The correlation between the medicine and food consumption has been more established then it has been on al cool, So there's it's premature to draw any major conclusions on it. And in the aggregate, I would worry right now more about keeping our pricing moderate. Worries about consumer sentiment is higher on our list than
GP one. And again, the strength of our global footprint, having all those big operations across Southeast Asia, India, Africa, Latin America really makes that. Yeah, we have a diverse five portfolio. Also mitigating of any impact that might come forward in the future.
Doll The final question on the buybacks piece of the equation, and in your earning exampmen, you're talking about one and a half billion euro share Bible program over the next two years, and this was widely expected by the analyst community. But talk to us about the sustainability of that at a time when we are dealing with that geopolitical volatility as well. How long can you keep that buyback plan up?
Now, what's very important we are for many years had a very clear hierarchy of capital allocation priorities first or foremost investing in organic growth, and again we're doing that. We increase our marketing selling expenses at double the rates of the revenue growth with three hundred million increase digital technology. Right now, we're building three new greenfield breweries in high growth markets in Mexico, Brazil, Dubai, so that's always our
first priority. Inorganic opportunities we'll always pursue if that makes sense, like what we did in India with the acquisition of ubl or Distel more recently in South Africa. But we are deleveraging very quickly. We generated more than three billion in cash flow last year. Our leverage dropped to two point two which is now below our optimal capital structure, which gave us to confidence to decide and commit to this share by back of one point five billion over the next two years.
Credit ketch up. Really appreciate your time this morning, A real appreciate a Honeken's CEO, Dolf van den Brink