Beer money for Heineken as supply chain makes savings

26 August 2009

27 August 2009 | Allie Anderson

Heineken International saved ?14 million (£12.3 million) in the first half of 2009 by cutting costs throughout its supply chain.

The world's third-largest brewing company, which brews and sells more than 170 beers and ciders globally including Heineken, Amstel, Foster's, and Strongbow, announced the savings in its half-year financial report.

The company said they were achieved through Heineken's 'Total Cost Management programme', a three-year cost reduction initiative for 2009-2011 targeting areas of supply chain, commerce and wholesale.

In total, the programme delivered savings of ?50 million (£44 million) up to the end of June. Of this, 28 per cent was achieved through using the company's buying power to drive down costs and secure more competitive contracts with suppliers.

The cutbacks have boosted Heineken's revenue and contributed to a half-year bottom line profit of ?489 million (£430.5 million), a 20 per cent increase on the same period last year.

Jean-François van Boxmeer, chairman of the executive board and CEO, said in a statement: "Our rigorous Total Cost Management programme is delivering early results, with annualised savings of ?120 million achieved. We see substantial opportunity to drive down our cost base in the second half of the year and beyond."

Job losses at Heineken's western European brewing plants and corporate redundancies in Russia and the US each accounted for a significant proportion of savings, with supply chain the third major driver.

SMaug2009

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