Heineken has big hopes for its Polish operations

Related tags Eastern europe Poland

Poland is set to become the prime international market for Heineken
as Grupa Zywiec reports booming sales and profits for the first
half of the year. A strategy focusing on one brand for each beer
segment and concerted efforts to reduce production costs are said
to be the secret of the success.

Grupa Zywiec, which has been a part of the Heineken group since 2001, recently released the best half yearly results in its history, reporting a sales increase of 17 per cent and a 33 per cent increase in net profits. The Polish figures helped to boost the group's net turnover in the Central and Eastern European region from €447 million in the first half of 2003, to €883 million in the first half of 2004. Having sold a total of 4.8 million litres the Polish market is now only second to the Spainish market in terms of beer volume sold.

"The significant improvement we have seen in our results is largely due to the successful implementation of our policy to focus on core brands in each segment and to reduce costs,"​ said Krzysztof Rut, group spokesman. "This strategy has been in place for the past five years and now it is really starting to come to fruition."

Rut went on to explain how the company's drive to expand, while consolidating its production operations and costs had given it economies of scale. "We have done much to enhance our purchasing and production operations, which has helped to considerably reduce costs and make operations significantly more profitable overall. Now we are turning our attentions to the structure of the company and trying to reduce costs in every aspect of our business."

Consolidation has not been limited to the production and purchasing processes though; the group's marketing strategy has also focused on specific products for each segment. This has entailed concentrating the marketing efforts of one core brand for each segment. In the case of the premium segment, this has entailed directing marketing efforts on Heineken as the group's international brand, and Zywiec as its core national brand.

"Poles are still very traditional in their purchasing habits,"​ said Rut. "This means that major international brands are often not as popular as major national brands, and this has proved the case with the Heineken brand. This is a situation that tends to define markets in this Central European region."

For the coming year, the group says it is planning to further increase production and purchasing efficiency, whilst continuing to further develop its core brands.

"We still see plenty of room to increase cost efficiencies,"​ said Rut. "Currently we have six breweries that are spread across Poland. What we intend to do is overhaul the supply and distribution chains to ensure that each of these facilities has the most effective and efficient system in place, which will be accorded to its geographic location. We will also be looking to reduce employee costs."

During the course of 2003 the group closed down its brewery in Braniewo and sold off its Rzeszow, moves that were said to have caused a number of cost synergies that benifitted the results for the first half of 2004.

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