vinay mathur heineken asia pacific

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SOCIAL NETWORKING SINCE 1864

HEINEKEN Asia Pacific

The Heineken Experience 6th June 2016

Confidential | HEINEKEN TIMOR S.A 2

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HEINEKEN | Truly Global Presence

~170 plants in 80 countries

~90,000 employees

HEINEKEN Asia Pacific | One of the widest footprint across Asia Pacific 26 + 19 (India) plants in 16 countries

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China (2)

Vietnam (5)

Mongolia (2)

New Zealand (4)

New Caledonia

Indonesia (2)

Solomon Islands

Papua New Guinea (2)

Lae

Malaysia

Papua New Guinea

Cambodia

Vietnam

China

India

Sri Lanka

Thailand

Mongolia

Laos

New Zealand

New Caledonia

Indonesia

Solomon Islands

Australia

Sri Lanka

Laos

Thailand

Cambodia

Malaysia

Singapore

Myanmar

Myanmar (1)

India (19)

Countries with Plants Countries with Sales Offices

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Approval Process

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Dec’13

Initial discussion

with Vice PM on proposal

Detailed discussion with

MoF on proposal & Biz Model

MoF takes proposal to CoM, but

turned away

Mar’14

Discussions with various Ministries

Jun’14

Discussions with MoF

Start SIA process with

SEAPARI

Jul’14

Engage a local lawyer

Proposal & SIA draft

finalized with SEAPARI

Sept14

Inter ministerial meetings with Directors & Ministers

Approval Process (Contd..)

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Nov’14

CoM approval SIA signing with SoS SEAPARI

Land lease signing with Minister of

Justice

Jan’15

Preparations for signing SIA

Jun’15

Obtaining land clearances

Project commencement

Sep’15

Finalize suppliers & contractors

Commence local

production

Dec16

Project progress

What attracted us to Timor Leste 2

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1

201

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4

201

5F

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Significant & well managed Petroleum Fund (USD billion)

Source: Govt reports/forecasts from ANZ Bank

Infra investments driving non oil GDP, albeit of a low base

Head room to grow beverage consumption

Low per capita

♦ No local production

♦ Beer & CSDs ‘traded’ not

‘distributed’ – wholesale

channel mix >70%

♦ Non exclusive Route to

Market - combined with

other goods

♦ Dumping ground for

parallels

Reasons

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11

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Timor Leste PNG Solomon Philippines

Beer per caps (Ltrs)

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Timor Leste Philippines

CSD per caps (Ltrs)

If anyone can make it happen…it is HEINEKEN

Our beer brands have a leadership position in TL

SIA with the Government under the Private Investment Law

- Lower excise

- Import protection

- Land lease from the

Government

- Import duty exemption

for project capex

Why Soft Drinks?

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Beer @7/ltrs per caps

Beer @11/ltrs per caps

CAPACITY 30m liters

BREAK EVEN 15m liters

USD 32m

Million Liters

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Soft Drinks+Water

(no import protection)

CAPACITY 55m liters

BREAK EVEN 20m liters

USD 38m

Soft Drinks+Water

(import protection)

We are close to finalizing a Soft Drinks franchise

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List of key milestones – Commercial production from Dec 2016

Apr-15 May-16 Jun-16 Jul-16 Aug-16 Sep-16

Milestones •100% piling completion • Start shipment of PEB

•100% foundation completion •Shipment of tanks, pipeworks & fittings •Start shipment of utilities equipment •Start PEB installation

•100% PEB completion (frame and roof) •Start installation of tanks •Start utilities installation •Shipment of BH, tanks & fittings

•60% PEB completion (wall) •Start BH installation

•Shipment of can line, PET line, tanks & fittings

•100% PEB completion (wall) •Start can line installation

•Start PET line installation

HTSA Org Status

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And around 300 Indirect employees (distributors, transporters, project workers, brand ambassadors, stockists, other service

providers)

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70 (4%) customers made up 80% of sales

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

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11

412

11

28

13

51

42

14

91

56

16

31

701

77

18

41

911

98

11

,051

1,1

211

,191

1,2

611

,331

1,4

011

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1,5

411

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1,6

811

,751

1,8

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# cases

# of customers

Total universe is 2,500 Active customers Jan’15 – Jan’16 is 1,900 In May’16 active customers 700

80%

Distribution update

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♦ Sales area is divided into 4 (four) areas: Dili, Central, West, East

♦ There are 25 stockists spread over the 12 districts

Lisun warehouse

Dili: 7 Lisun’s salesman for alcohol category Districts: 8 Lisun salesman for mix category

Dili: 4 Heineken’s salesman Districts: 3 Heineken’s salesman

Timor Food Safety Risk :

• No waiting room for truck driver, mixed FLT and walkways

• Improper stacking system

• Semi manual activities

• No Safety Sign

• No PPE (safety shoes and HV jacket) considering the FLT traffic

Recommendation :

• Waiting area for driver, separation walk ways and FLT

• PPE implementation

• Hand Gloves

• Safety Shoes

• Safety Sign and Poster

“Think Safety – Think Family”

• Install fire extinguisher put on easy to access area.

Sales team building in Bali

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Team building and motivation trip was held on 4-6 March 2016; attended by Heineken and the distribution (Lisun) salesforce

MBI Training for Brewery Staff

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35 personnel currently being trained at MBI in Brewing, Packaging,

Engineering and Utilities :

• 4 person from the 1st batch (Sept 2015) back in Dili.

• 30 people from 2nd batch trainee – January 2016

• 14 in MBI Tangerang and,

• 16 in MBI SampangAgung Surabaya.

• 3rd batch trainee on 1st of June 2016 Recruitment process has been

improved with conducting filtering for analytical and logical test.

MBI Training for Brewery Staff

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Monthly Training Evaluation :

• Process Knowledge and On the Job Training Assessment

MBI Training for Brewery Staff

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SAFETY FIRST – Safety Training by MBI Staff

LOTO training

Sustainability Initiatives to be developed in the following areas

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TECHNICAL TRAINING

WATER MANAGEMENT

RESPONSIBLE DRINKING

WOMEN ECONOMIC EMPOWERMENT

Specific CSR Initiatives underway

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WOMEN ECONOMIC EMPOWERMENT

Identified 5 recipients along-with the Secretary of State for Women Economic Empowerment

Building kiosks/push carts for the recipients, provide them credit from Lisun & direct delivery of Lisun products to their door step

Basic training in running the kiosk from HEINEKEN staff

COMMUNITY OUTREACH

Set up dumpsters on the approach road to Hera & other parts of Dili

- Working with Ministry of State Administration to refurbish 15 dumpsters & deploy

Working with the Ministry of Education to provide internet & tablets (teaching aid) to one/two school/s in Hera

Experience with Trade Invest

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SEAPARI

♦ Very professional

♦ Extremely responsive

♦ SoS full support, hands on

CoM approval

♦ Twice on agenda, but not discussed

♦ Last minute objections from MoF

Advisors; MoF unclear on how to

extend investment benefits to us –

SIA or legislation

♦ SEAPARI SoS & Vice PM pushed hard

to get approval

♦ Good local knowledge

♦ SIA draft simple yet

comprehensive

♦ HEINEKEN clear position

HEINEKEN lawyer

♦ Single window body should not

be changed so often

♦ This is the key gateway for

international investors & needs

to build investor trust

♦ Same for Investment Law

Our suggestion

Some learnings

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SIA does NOT replace Biz Registration License from SERVE, Investor

Certificate from AEI & Dividend Certificate from Tax Authorities

Work Permit process vague & tedious; SIA has in principle approval,

however actual process > 6 months

Limited awareness of SIA details within the Government – details to be

proactively shared. Strong commitment from Government on the SIA

Issues

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Parallel import of beers continue…..need a sustainable solution

HEINEKEN committed to responsible consumption…….however high

alcohol beers (>8% abv) continue to be permitted

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