Heineken N.V. (HEIA) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to day 2 of Heineken's Capital Markets Event. We will begin now with the presentation from our CFO, Harold van den Broek.

Good morning. Welcome, everyone. Welcome back, and welcome to you who are virtually joining. I hope you had a good afternoon yesterday. The tasting sessions, were they good? Refreshing? Dinner was really good. We certainly enjoyed it. So we're really looking forward to day 2. What you're going to hear from day 2 is really a different narrative from what we had yesterday. Yesterday, after Dolf set out EverGreen, the reasons why and how we think about the future, we saw this coming to life when James, Ronald and Yola presented the growth strategy, the digital strategies and the people strategies. And I hope you really felt this in the regional presentations, too, from Marc, Jacco and Roland. But today, really, it is about productivity, it's about capital and it's about the investments that we make. And this is the second part of bringing EverGreen together, growth and value creation. So Stacey will be there; Marc will be there; and Soren, the much awaited presentation on Europe, I know, will also join the stage later today. Well, let me say first a few words about myself, 30 years in the fast-moving consumer goods industry, 23 years in Unilever, 7 years in Reckitt, the last 2 years running the Hygiene division, and since 1.5 years happily joining Heineken. Proud to be here, CFO, Member of the EB and a proud Member of the Executive Team as well. Let me now turn to what we really want to talk about. In order to deliver balanced, superior value in a sustainable manner, there are 4 key areas that I want to touch upon. The first is how we deliver volume and value growth. Second, how we step up productivity and really build this in the DNA of our business. Third, how we think about disciplined capital and P&L investment resource allocations. And fourth, how we deliver this through sharper focused performance management. Now these 4 are not just stand-alone objectives. These 4 are really meant to come together to start to build a continuum, a continuum that manifests itself in our growth algorithm. Higher growth means more space for productivity in portfolio, in organizational productivity, in network productivity, productivity on our balance sheet. With the productivity, we can fuel further reinvestments, turning into the next stage of growth. I hope that's what you got from the animation. Let us first spend a few moments on our strengths and opportunities, looking at the rationale for EverGreen. Now important to say is that throughout this presentation, you will see, like we did yesterday, some numbers referring back to 2022. Now please, these are ambitions, estimates, indicators for obvious reasons. So particularly in my part of the presentations, let's not measure all the boxes. This is indication only, please. But let me just start here. We have a proud heritage of entrepreneurships, 158 years of balancing short-term delivery with long-term investments that has built a great business that is Heineken and it has also sustainably delivered value creation, compounding at about 10% per annum for this time period. And as you see from this chart, we're above the industry average, and we're certainly above a number of our peer group companies. And we're very proud of that, the fact that we can balance the short and the long term while still sustaining value creation. At the same time, as Dolf referenced yesterday, and this chart is updated to then stretch forward into 2021, there were real challenges unfolding that needed to be addressed, in gross margin, in marketing and selling expenses coming down, in the operating margin that was no longer expanding and in our capital turnover. Now all these realities are still true as we went through the COVID period because that is also a factor. In the past couple of years, we have been dealing with external challenges. There was COVID. We've been through a period of supply disruption and high inflation. And at present, if you look at the world, some parts of the economy look vulnerable. At the same time, never let the crisis go to waste. We have put organizational focus in place. We have seen a helpful change agility unfold in the organization. We have got a commitment of our people that many companies would aspire for. You saw some evidence of that from Yolanda yesterday. We have learned through these past periods that we can very quickly scale our portfolio to change consumer needs, whether it's from on-trade to off-trade. We've also learned to manage investments up and down as markets open or close. We have learned to become much more cost conscious. And we've learned to really be networked as an organization because there were similar issues to deal with in many markets. So we really have built in the past couple of years an organization that is set up to be different in the future. And this is what really EverGreen is all about. EverGreen is a multiyear journey that is building on a great heritage. We're very proud to be pioneers, entrepreneurs that are unlocking markets with the beer brands. We are also facing realities also in the past. When the cost structure was out of [ WACC ], Heineken access. We've been patient and vigilant in our acquisition approaches. And we've always, always been OpCo-centric. We care about customers and consumers, local proximity matters for that. But in the middle, there is this big and. We want to respect what we've built and add to it. We want pioneering growth and with a healthy balance between volume and value. We want reality on cost and now do this on an ongoing basis. We want to be disciplined, to remain disciplined in acquisitions and now apply it to all of our investments and the capital base. We want to be OpCo-centric and at the same time really leverage a networked, disciplined organization. That is really what EverGreen is trying to achieve. And with doing that, we also put our performance metrics in a different level. We've now shifted towards the Green Diamond, where growth, productivity or profitability, sustainability and responsibility and capital efficiency are all part of what is now the new defined success model. This is the shift that EverGreen is ambitioning. But first and foremost, we are and will remain a growth company. So in the growth algorithm, let's start there. How do we move from volume-led growth to volume- and value-led growth? Well, first, let's look at the left-hand of this slide. Every 7 to 13 years, Heineken doubled its revenue. We built a fantastic footprint, advantaged to the tune of about 100 and 150 basis points, as Dolf and James mentioned yesterday. We have strong market positions, a fantastic portfolio geared towards premium, and we have strong brands where our brand power is ahead of market share growth. I know this was detailed yesterday, but it's still a very good reason why we are a growth company first and foremost. What we now want to add is balance to this revenue growth. So volume remains critical. We do believe in acquiring new consumers, we do believe in expanding channels, as Ronald indicated yesterday. We do believe in new service occasions. Volume growth is key for the long-term success of this business. And we are very happy to see, as you see on the left-hand side of this slide, that throughout the COVID period, we are regaining volume as well. At the same time, when we are strongly believing in brand power and investing behind the brands, we believe it's really necessary to price for inflation. And as you see from the middle part, this was not historically our strength. On average, we've been pricing at about half the weighted inflation in the markets weighted to our footprint. But you also see that in the second part, we're accelerating that. This is what we've also called out very explicitly that our ambition is to price euro for euro for inflation. And the last part yesterday, it was a question in the Q&A as well. There is so much emphasis on mix and premiumization. You see the results on this slide. The effect of premiumization and mix management is also coming through. So when we're talking about healthy balanced growth, it's purely locked into volume growth. Penetration, consumer acquisition, it matters, and we add pricing and we add mix, it's that balance that we want to obtain. We are also doing this structurally. To build the revenue and margin capability, and Yolanda yesterday articulated that this was one of the 5 strategic capabilities that we're now unlocking in this organization. And we're touching all of the components, discounts and trade terms, mix management, price pack architecture, we're building organizational muscle playbooks to really make this systematic in our business. Yesterday, you heard 2 great examples. Marc talked about the fantastic achievement that we created in Brazil, where through complete portfolio mix management, we now have a portfolio that is in gross profit per hectoliter twice as much as what we had in 2017. You saw the shift in premium. But also in Mexico, you saw that actually profitability was moving up faster than revenue growth did. Revenue margin growth is something that our Mexican business have been doing for many years. They are probably one of the leading businesses that we have in this field. And not only year after year they define further opportunities with more advanced technologies, they also start to teach the rest of the organization so that everyone can move from foundation to medium level with the help from Mexico. So that's the growth part. I now want to turn to productivity. And I'm going to deal with productivity in 3 parts: one, supply; second, commercial productivity, marketing and sales; and third, organizational productivity. But before I go into the detail, I want to highlight that the journey of productivity is by no means new to Heineken, but its approach is changing. It is really important because before 2019, we also faced realities of competitive cost levels. In many cases, we unlocked cost initiatives, targeted interventions to bring the cost base down. These were intermittent programs, hard resets at given period of time, that if you add up all the announcements, delivered EUR 1.9 billion. [indiscernible] in 2022 was faced with a crucial reality, COVID happened, EverGreen needed to be unlocked. So one of the biggest and first things that this organization did was to announce this EUR 2 billion productivity program, I'm sure that you were all aware. By design, this was done to counter the effect that COVID unlocked on this business and to fund EverGreen. Secondly, there was a very big change announced, namely that this was not an intermittent program, this was the start of a journey to really bake this in into an ongoing way of working in Heineken. And we announced a EUR 2 billion program by 2023, gross savings. Why gross? Because in that period of profit, there were so many factors at play. Inflation was spiking, and we couldn't price for it. Costs were rising, we couldn't do anything because the world was just dealing with COVID. So I'm also very unapologetic for the fact that many of these savings were basically reinvest or to offset that impact. It's just a fact of life. It was that way. But what I do believe is that we're now starting to get to maturity so that progressively we can move from the middle box to the third box, to make sure that we really build this as an ongoing continuum of cost performance so that by the end of 2023, going into 2024, we can really start to see an ongoing productivity being generated by this organization. It should start to be embedded in the cost-conscious culture. Now to manage expectations, yesterday, somebody asked me, this is going to be another 2- to 3-year journey. So please don't think that by the beginning of 2024 January, hey, flag's out, cost-conscious culture is there. I don't think that's how it works. It's about finding new energy, new momentum, new productivity place on an ongoing basis. But we have what it takes. We're starting to become much better in performance on cost, in embedding capabilities in the organization, which is why we believe that it's right to move from a big cost ambition over multiple years to an ongoing delivery of productivity savings of EUR 400 million year-on-year. Part will be reinvested, you will hear more of that. Part, I think you will really see that coming through in the composition of our cost structure. So that really is the transition that we aim for in our productivity journey. Let me briefly touch base on what you already know. We are firmly, firmly committed to first finish the EUR 2 billion. And it will not have escaped you that we say EUR 2 billion or more, the greater than. We do see EUR 1.7 billion clearly on the horizon on 2022. And we also have visibility of what we have planned for and locked in business cases into 2023, including in the financial P&L, which is why we are standing here relatively confident that this EUR 2 billion is going to be delivered. Teams are working on it, we know what to do. And you also see the decomposition of this, and I'm sure Magne later on will talk to you and give you a bit more flavor, but about 2/3 of this is coming from the supply chain. A small part is coming from commercial productivity, not because we're not working in productivity on commerce, but because we're reinvesting. We believe in investing behind the power of our brands. And then there is 25% of organizational productivity. Let me now give you some color to all of them. We do have a track record of supply productivity gains. And as you see on this slide, these are the key drivers and the key outcomes. We've consistently, in the past 2 years, worked on simplification of our product portfolio. And the number of SKUs have come down by about 17%. We don't believe that this has led to a loss of sale. It has been really a pruning of the portfolio. There is more efficient -- there is more efficiency in the supply chain as well, expressed here as a volume produced per FTE in the supply chain. And this has grown by about 10% over that time period 2016 to what we expect '22 to end at. And this is not only less people, it's also lower cost. So our production fixed costs are coming down by about 100 basis points in that same time period. But what is important is that we also have next opportunities in sight. We know that because of our fragmented footprint, the proximity to local customers and consumers, the many markets that we service, the average throughput in our brewery is lower than our nearest competitors. We know that. And whilst it has the advantage of proximity, it has a disadvantage in terms of cost to operate. And this is why we are going to do 2 things very differently. First, we're going to bring in agile networks, servicing multiple customers, multiple markets. And Soren, this afternoon or this morning, will talk about that. And secondly, we need to find different ways to let our breweries learn from one another in a much more intentional and a much more transparent, faster way. This is what we call connected breweries. And by really driving productivity at scale, we believe that we can have -- unlock a significant part of savings that are needed in order to offset this cost disadvantage. So those 2 elements are going to be detailed later by Soren and by Magne. We also want to talk about how we've improved commercial productivity. You heard James yesterday talking about the fact that we're much more precise about what our strategic brands, what's our game-changer brands and what are other brands in our portfolio that also play a role, but not those of strategic and game-changer brands. Because of the local proximity of our markets, the heroes that we want to celebrate, there was probably a bit of a lack of focus about what was really strategic and what we could do at scale. So the one thing that we did is we repurposed the investment that was already there. And what James showed yesterday is, therefore, we took much of the funding behind what we call solid brands, strategic brands, nonstrategic brands, however you want to call it, portfolio brands, and really put that behind the game-changer and strategic brands. Now this focus has helped because the game-changer and strategic brands gave much more funding and grew much faster as a result, and this was the indexes that James also called out yesterday. Secondly, we've worked on productivity. And we spoke about this before in some of our announcements, but we work very hard to really make sure that the investments were spent on consumer-facing activities. And you see on this chart that actually out of total marketing and sales expenses, we've increased that ratio from 60% to 70%. And last but not least, by changing the different ways of working, by making sure that we are coordinating the efforts of how we buy media and how we down-select the media houses and the agencies, we have been able to offset inflation, which in the time period was about 20%, and realized hard cost savings by about 20%, too. So I'm separating the 2, inflation avoidance, and savings delivery, price reduction as measured at pricing -- at quality parity. This is important because it means that it's not visible, but the money within the advertising and promotion spend or the marketing and sales spend has become much more productive as a result. And also here, we know how to go further, and we want to go further because the slide James showed is something that we truly believe in. We believe that if we can get more investment into our brands, we're increasing brand power. Consumers care more for our brands, that drives pricing opportunities. And with these pricing opportunities and the right investment behind these brands, we will gain market share. This is the cycle that we firmly believe in and why we're unapologetically reinvesting many of the productivity savings behind the stronger brand portfolio. The 2 initiatives that I want to talk about is, first of all, increase this commercial investment productivity. We're now using, in some of the pilot markets, like in Mexico, much more Artificial Intelligence to do commercial planning. And the initial pilot results are very promising. Obviously, you don't see a number on this page because I first want to see it 100% validated and scaled before we communicate, but the direction of travel is that this is appealing. Second, unlock value from partnerships. We really believe, and we're very proud of sponsorships. But this is not an ego booster. Sponsorships are also making good commercial sense. We're extremely proud of the partnerships. They're good for our partners, we believe, but they're also very good for our brands, and there is much more to come there. Also, organizational productivity has to play its role. We really do believe that as part of the organization of growth, productivity needs to set in by doing things differently all the time. And it is emerging. First and foremost, you see that the number of full-time equivalents in our organization is decreasing. Now the smart ones around you will also say, yes, that 7% is not only at the top end, it goes to the gray bar. And that is because we allow for the first year of acquisitions, and we also allow for intentional go-to-market changes, like we had the route to market in Brazil or the [ SIX ] store that Marc was talking about yesterday. We believe that these are investments in our business, and you heard yesterday why they matter. But on an ongoing basis, we are really driving FTE productivity down in our organization. This is not only FTEs. You also see it reflected in our cost base. And in the sales -- the SG&A, personnel expenses as a percentage of revenue, this has come down by about 140 basis points in the last 4 years. At the same time, we're investing in our business because you heard Ronald speak about the massive growth in capability in the digital eB2B. And just as an illustration, the head office here around you in Amsterdam is now shifting and is now almost 45% of the people that are walking around here and working very hard every day are digital and technology or eB2B people. This is very different than just 2 years ago when that was 30%. So the composition of our workforce is geared towards delivering our strategic objectives. And there is further potential. There is further potential leveraging local success models and scale. So the 250 basis points you see on this chart is different from the 140 basis points that I showed on the previous slide because, obviously, we've also done productivity on nonpeople productivity items. That's the difference. And we really see potential for more. Ronald yesterday talked about the front office digital enablement, this was the component that Dolf said I'm very excited about. And then there was this other part about automation and simplification that I'm very excited about because ultimately, what we see is that we start to measure, as Ronald showed, what the impact of digitization is. We know that in Italy, we see a productivity of the sales force, the same example that Ronald used, of 25%. And although it is a micro example, we can now start to measure this at scale and implement at scale. We have now the organizational enablement even in small changes to do 600 deployments a year, a new sales force tool, a new procurement update. So we're starting to mobilize change agility at scale in our organization enabled by digital and technology. That's why I think the left-hand side is possible. The second thing, and you will hear more about that when Soren speaks this afternoon or this morning, is that we become really a networked organization. We really want to see the power of OpCo centricity and scale. And this is obvious when you're talking about shared services in finance. Many people have done this before, we have now also got one, and we're standing this up. It's not all everywhere yet. But we have got this. We have got a global procurement organization. And where we have embedded these hubs and COEs, we see productivities of 35% being possible. Now James, yesterday, he spoke about an innovation hub. We are talking about HR hubs over time, not to do everything because we still want to remain an OpCo-centric connected organization. So we're not going to mindlessly centralize and automate. This is not the point. The point is that we're not very mature on this journey. And then therefore, as we start to embed these hubs and COEs in the organization, we see space for further organizational productivity. And that is what made us confident to actually continue this journey of filling the beer glasses. We have delivered EUR 1.3 billion in 2021. We've committed and actually said already EUR 1.7 billion in 2022. In 2023, we see that the EUR 2 billion is within reach and probably a little bit more and locked into plans. And we now have the ambition to make this an ongoing recurring theme in 2024 and beyond. Now obviously then there's the question, how long will this last? Perpetuity is a very, very long time. I don't know. But certainly, what you can hear from my presentation is that this is not a 1-year initiative. We really believe that for the next set of years, we will be able and will deliver this EUR 400 million of productivity. And not only I'm standing here saying that is the case. On the right-hand side, you see that our top leaders in Heineken are actually agreeing with this trajectory. This for me was a super important proof point. We have a way to go, and we are behind this. Let me now move over to disciplined resource allocation, the next side part of the growth algorithm. Because it's one thing to save, the other thing is how do you invest? We have very clear investment priorities. And actually, you can see them called out in this circle, maybe start at 11 o'clock. The first and foremost thing that we want to do is invest behind brands and innovation to unlock the potential that James was talking about. Yesterday also the question came about what is your right level of the marketing and sales investment? We don't know. But what we do know is when we see an opportunity, we want to fund it. And we want to fund it by building really brands and innovation that preserve the base that we have, but also go after new consumers, new occasions and preferably with accretive margins. Now not always, like Jacco demonstrated, when there is so much potential in Vietnam at already very high profitability levels, we're perfectly happy to go into mainstream because it's accretive for Heineken overall. So please, I don't want to be dogmatic about this. I really want to give you a sense of direction rather than precision. Second, we want scale in top markets. Mexico is a good case in point. And where we invest, we want to do so to grow our market profitability and our competitiveness in those scale markets. Why scale markets? Because with investments, it's probably easier to capture the value synergies and the leverage from those scale markets. We want to invest in digital and technology, and we're using the discipline of use cases that Ronald was talking about in order to judge whether this is scalable or not. Ronald yesterday also called out a few where it made no sense to go beyond. So we're actually quite disciplined in measuring before we scale. And fourth, we really want to invest in sustainability. And Stacey is going to talk about that much more. But we believe that this is a global need and a company desire to participate in that journey, and we want to fund it, not only for doing good, but also as you're all very well aware, there is a cost of inaction, too. And we really don't want to be caught out having penalized and losing consumer reputation by not doing our job. We really want to be not leading in all parts, but really at the forefront, in the middle, at least doing our job, that part, the upper half, if you say, in sustainability. And on the right hand you see, of course without numbers because that would be competitive information, but we've got clear line of sight also about where we want to step up the investments. And this is non-exhaustive, but it gives you a bit of a sense of what we are investing behind. We also have really good capital discipline in Heineken when it comes to acquisitions and when it comes to financing. And this, I think, is well respected and we want to keep it that way. There was a huge and great discipline in Heineken that is still maintained today of being very precise of acquisition business cases. This is why patience, vigilance and discipline really came together. And as you can see from this chart, the vast majority has delivered on or above the acquisition business cases. Secondly, we're quite disciplined in our financing structure and particularly the net debt-to-EBITDA ratio really trends back every time below this 2.5% -- 2.5 mark that is our target. And you saw recently from Moody's that this discipline is also appreciated. Hopefully, a little bit with the belief in the strategy that we're explaining to you as well. We have a robust free operating cash flow and earnings per share growth over time. Over the past couple of years, from 2016 to 2019, our free operating cash flow has grown by 25%. And despite the COVID unsettlement, we still believe that we're ending the year at about mid- to high single digits growth in our free operating cash flow. Our earnings per share in that same time period grew by 20%, and we still believe we continue that journey, despite relatively limited leverage, by about another 10%. Now on our capital productivity, we improved. CapEx in absolute has remained between the EUR 1.6 billion to EUR 2.2 billion mark over this period in time. Now obviously, during the COVID years, for all kinds of reasons, caution in terms of the volumes, but also some of the inability to execute some of these programs, this was at the lower end. And it will not be a surprise to any of you that also the CapEx ratio as a percentage of turnover has come down also because of inflation repricing. So I don't want to be too congratulatory on this slide on the left-hand side, but it is a factor. At the same time, our working capital has improved. But as you see on the right-hand side, all of this has led to a relatively stable asset turnover or capital turnover. And in 2022, the uptick, yes, brings us back to 2016 levels. So although this chart is meant to illustrate that things are moving in the right direction, we do believe that we have a clear scope to improve and an intent to do so. Please mind the word progressively there. Because we do believe that particularly in the capital expenditure part, in the near term we have still many things to catch up on and to do. You saw on the previous slide that there is investment cases being made in Mexico, in Brazil, Vietnam. So in the near term, CapEx, we expect will be between 8.5% and 9%. But as we go beyond, and in particular after what Soren has been speaking about has been completed, we see an opportunity to take that down a notch. Now please, I'm not going to disclose what that notch means because we will do that in due course, but the intent needs to be signaled. In working capital, I think we have been good, but you see what our competitive set has been able to do. So a bigger call to action is to actually be more disciplined on working capital management to unlock unproductive use of capital and put it to better use. And all of that, together with the productivity and the growth that we were talking about, makes us quite firm that the capital turnover ratio needs to start to move up over time. This is not going to be short-term promises. This is going to be near term, it requires work. But as our cost and productivity program starts to mature, this is starting to come higher on the agenda and firmly on the radar screen. Now let me then for a moment talk about performance management. Performance management is something that is more than a spreadsheet. Performance management starts with strategy, culture and enablement capability. And what you see is that we've got plenty of that. We have glidepaths with cost buckets, performance dashboards with granular view processes that has now been embedded in the organization, dedicated teams coordinating across different markets. We've got structured training, knowledge sharing, sharp league events, events to learn, engage and celebrate. All of this has now been put into motion in the past 2 years. So the whole enablement strategy and capability dimension have been geared up. But rather than me talking about it, let's hear it.

One of the things we've done to capture more value in Mexico is organize [ cross OpCo ] benchmarks, where we identify one cost bucket, where we together with one other OpCo dive into that in a lot of detail. Since 2019, Mexico has been generating more than [indiscernible] savings year after year. We aim to continue to deliver around [indiscernible] cost savings year after year in the future.

We work basically in 3 initiatives: more premium, less economy, priced ahead of competition and pack channel mix, in this order. We were extremely happy to see our OpCo having a much better revenue per hectoliter than our main competitor in Brazil, while gaining volume share, but mainly value share.

We able to cut down 1,600 basis points of our fixed cost as a percentage of revenue. So we see our company being more agile. We measure, we make sure that progress are recorded. If one else has failed and once we have success, we celebrate it because it helps energize the company.

We have very disciplined governance cycle to continue drive cost and value as a mindset in the business. We also go ground up. So cost [indiscernible] competition, regular engagement activities continue to be a core part of a regular company calendar.

We have multidisciplinary teams attacking the different elements of the P&L with clear saving targets. All senior managers have clear cost KPIs. So pretty basic methodology, but when you apply it in a disciplined way, it leads to material cost savings.

So rather than me speaking about this, I hope this gives you a flavor that this is not just me. It really starts to be embedded in the business. Now all of this, obviously, needs to lead to results, to short- and long-term value creation. And let me just share again how Dolf opened. We have strategic priorities. We've got the growth algorithm that I've been talking about. And ultimately, the outcome needs to be locked in the Green Diamond. This is how we measure success. And starting with the 2022 guidance, nothing new there, you've read the announcement, we aim for superior and balanced growth. The growth savings we talked about, the operating margin at 15.6 or slightly ahead compared to last year, but the operating profit growth, we expect to be significantly ahead of 2019. Also on the right-hand side, I don't think there are many surprises for you who are following us. Now let me spend some time on the 2023 guidance because this is important. We built this up into 3 parts: the market, what we do and what our outlook is. Starting with the market. We believe that the global economic outlook remains challenging. And just as a data point, we see declining consumer confidence in markets where we operate, that represent about 65% of our revenue base. This is why we're a bit cautious on the global economic outlook. We still do experience a high inflationary environment. We project for 2023 a high-teens input cost inflation, despite the fact that some of the commodities and other materials have come down of recent peaks. This is because of our hedging, and that will still have to work its way into 2023 and 2024. Now obviously, there are significant incremental energy cost. And the energy cost, the energy pressures are most pronounced in Europe. So that's where you will see probably a doubling impact of the energy cost for sure. And all of this leads to selective markets that experience higher levels of inflation. And in those higher levels of inflation markets, we also expect wages to increase in order to counter that inflation. So that's the market outlook. That makes us determined but also agile in how we plan our actions. We really want to continue to focus on EverGreen. Premium matters, innovation matters, and we will continue to support. We will increase the brand support behind our brands and our strategy as well as continue to build strategic capabilities. And that requires us to be extremely disciplined on pricing and cost. So as you can see here, although market pricing remains a local-for-local decision, and pricing is important to state here, we will be competitive on pricing. Our overall ambition is that with pricing, we offset inflation. About 80% of our commodities and contracts are covered at this moment in time, including energy for where we can. In some of the markets, the government dictate this, so we don't have an influence on these price levels. And we do have a high savings ambition that is now accelerated and amplified in Europe for the reasons that are on the left-hand side of this slide. And all of this, therefore, made us consider the outlook. We believe that in 2023, we will see price mix-led growth, where pricing aims to cover inflation, as I just said, where we expect stable to modest volume growth, solid in developing markets, but lower in Europe; and we still confirm a mid- to high single-digit operating profit, organic growth [indiscernible]. Why? Because we believe in our growth savings program that will surpass the EUR 2 billion. But the equation also means that net revenue growth will likely be ahead of operating profit growth. And a few other data points. Interest rates are going to edge up a little bit. This is not because of our loan structure, this is because the lease commitments that we have and some short-term borrowings that are increasing in interest costs. We expect a tax rate of 27% and CapEx of circa 9%. So hopefully this has given you quite a bit more color on how we see 2023. The mid- to long-term ambition is unchanged. All 4 quadrants of the Green Diamonds are coming together. We aspire to superior and balanced growth. We step up investments to drive that balanced growth. We aim to drive profitability from our cost savings program, but also the volume leverage coming through over time, driving an operating profit ahead of revenue. Our CapEx in the near term will be about 8.5% to 9%, but we try to take that down a notch in the medium to longer term. And together with the left-hand side, we aim, therefore, to increase the capital productivity. And the 3 components that Stacey will also talk about of what we put in our long-term incentives, net 0 emissions, water usage and diversity in senior management remain a core part of how we define success, and we will invest behind that. So this is really the short, the 2023 and the mid- to long-term outlook that I wanted to cover. So on my last slide, what I hope you will remember is that we do have a path to balanced, superior growth and value creation, anchors in the 4 key pillars that I've been talking about. I hope that this is not a huge shift from what the past was giving us. But really, the power of and is something that we want to build into our company. And with that, you will see on the left-hand to the right-hand side is that the Green Diamond is shifting. It is still growth, first and foremost, but all the other parts of the Green Diamond have to be staffed up in relevance and ambition. With that, thank you very much. I'm handing over to Stacey now.

Hi, everyone. Great to be with you. Thanks for a couple of terrific days, lots of great conversations and a very warm welcome to everyone who's joining us digitally as well. I'm Stacey Tank, and I look after Transformation and what we call Corporate Affairs, and that includes our topic of today's sustainability. I started my career at General Electric the first, 10-plus years, working in everything from industrial businesses, like aviation, power, health care, also consumer banking, commercial banking and movie studios. At that time, GE had a lot of different businesses, working in finance, in audit, in marketing and in communications. In 2012, I had the great privilege to join this company for the first time. And I was working in our U.S. business, and I was very happy to be in Green. I took a small departure and went into retail for about 5-plus years and was working for a home improvement retailer in North America called Home Depot, most recently running their Home Depot Interiors and Home Depot Exteriors businesses. And then in 2020, to be part of EverGreen in this new phase of the journey, I got to come back in Green and rejoin the company, in the beginning of COVID, quite an interesting moment to move over to the European continent, and have been here since June 2020. So truly great to be back and great to spend the next 30 minutes talking to you about Brew a Better World. So last year, some of you joined us for What's Brewing seminar, where we talked about our stepped-up sustainability and responsibility ambitions. In this building, in the Heineken experience, somewhere in the archives, one floor below us, is our first sustainability report. That was from 1994. We launched Brew a Better World originally in 2009. Those commitments reached their natural conclusion in 2020. And so we had to, as part of EverGreen, decide what did we want to strive for by 2030? So we have stepped up our commitments when it comes to sustainability and responsibility. And now it's time to build operational, executional momentum. And I'm going to share with you some examples from all over the world how are we getting pushes on the flywheel and building momentum to bring these stepped-up ambitions to life. At the same time, it cannot be something on the side. It has to be truly woven into the fabric of how we run this business, how we make decisions every day. So I'll share a bit more about how we're making this habitual to everything we do in the business. And ultimately, if we're successful, we will drive a resilient and thriving business for many decades to come. So with that, you've heard a lot about the Green Diamond. I think you've seen it in almost every presentation. In 2020, 2021, we know that we drive growth. We are a growth company, first and foremost. We're always thinking about profitability, increasingly, as Harold just shared, capital allocation. And we will do it sustainably and responsibly. This is what success looks like going forward. We believe in balanced growth that honors all stakeholders. That's why we were early signatories to the World Economic Forum's Stakeholder Capitalism Metrics, and so you see this will be about holding all of this in balance going forward. Now stepping up these ambitions requires a number of shifts going from good progress on Brew a Better World starting in 2009 to more ambition going forward, and we'll walk through what that looks like, to solid local execution moving towards a global neural network, that's not only moving forward at a greater pace in many places, but also learning and sharing across for the benefit of the network, from fragmented partners locally to some really key global relationships that will help us move forward in a systemic way at scale, from stand-alone progress tracking to fully integrated performance management. And I'll show you some examples of that. And delivery targets held by some to as a few Harold and Yolanda talked about targets on carbon, water, gender that are held by everyone who has long-term incentive compensation in this company, that's our top 800 leaders. So integrated incentives. You may recognize the coaster as a brewer. We love a good coaster. So this is our strategy for Brew a Better World. It has 3 pillars: environmental, social sustainability and responsible consumption. Dolf mentioned yesterday, this is a program with 3 pillars and 3 beneath, bringing us on the path to 0 impact, on the environmental side. The path to an inclusive fair and equitable world when it comes to social sustainability. And when it comes to responsible consumption, the path to moderation and no harmful use. Below each of these pillars, if you click through, you see additional themes. So what does it mean environmental sustainability and the path to 0 impact for us? It starts with our most stretching commitment. We were the first global brewer to commit to net 0 carbon Scope 1 and 2 in production by 2030 and in the full value chain by 2040. Also, maximizing circularity, starting with 0 waste to landfill, and we will continue to think about circularity and our circularity ambitions over time on topics like packaging, which many of you are often keen to learn more about. And of course, water, no water, no beer. Water is critical to our industry, and we will continue to be more efficient and think about the health of the watersheds where we operate. On social sustainability, we think about inclusion and diversity, which Yolanda talked quite a bit about yesterday, of course, owned by all of us, especially our regional presidents bringing this to life every day. We talk about fair and safe workplace, not just for our own employees, but for employees who also work adjacent to our businesses, and making a positive impact in communities. All of our operating companies have a social impact program that they drive every year, and I'll share an example there a bit later. So that's environmental sustainability, social sustainability and as a brewer, incredibly important and woven into the spirit of how we were founded here in the center of Amsterdam, responsible consumption. This starts with making it easy for consumers to make whatever choice is right for them that could be reaching for a Heineken 5.0 ABV, or reaching for a Heineken 00. This is much of the work that James is leading and our Regional Presidents bring to life in the regions to make it easy to choose whatever is right for a consumer, at least 200 options in the majority of our markets around the world, which will bring to life by next year. Also addressing harm. Every one of our opcos has a harmful use program that they bring to life every year, and we want to make moderation cool. One of the best ways for us to reach consumers is through our brands. And so James and the team are leading work here that include things like brand Heineken spending 10% of its media budget every year on responsibility, touching 1 billion consumers every year. So this is the frame of the program, and we're making progress. We can see and feel the forward momentum. So for example, on the environmental side, we see off our 2018 base in production, we've reduced absolute carbon emissions by 20%. A lot more work to do, but making good progress here. On water, we've moved from 2017, 3.6 hectoliters per hectoliter to 3.3 hectoliters. Here, we're on our way to 2.9 hectoliter per hectoliter globally. And in water-stressed regions, of which we now have 31 breweries in water-stressed sites, we will go even lower to 2.6 hectoliters. And of course, we also won't be satisfied with that. So continuously thinking about how can we be as efficient as we can be when it comes to water. Social sustainability. Here, an example of fair and living, working standards for our employees. We work with a third party called the Fair Wage Network. The Fair Wage Network helps us take an objective look at what is not just minimum wage, but what is a fair and living standard for our employees. Now 99% plus of our markets are there, and we'll be fine-tuning that and getting over the finish line by next year. And then you heard Yolanda talking about women and senior leadership yesterday. When I originally joined the company in 2012, we were around 10% or 11% females in leadership. You can see here by 2017, we were at 19%. Today, 27%. That's on the way to 30% by 2025. 40% by 2030, on the way to gender balance. And again, this is one that's tied to long-term incentive compensation going forward. On responsible consumption, you can see that we're spending 10% of brand Heineken's media budget every year on responsibility. We touch over 1 billion consumers with responsibility messages. And we're making progress on that always a choice ambition so that consumers can reach for a 0.0 or a 4 or 5.0, whatever's right for them. Now over 45% of our markets offering those choices, and we'll get all the way to bright in the next year. So now we're going to take a look around the world. We have a film that will show you some of the additional executional momentum that we've seen over the last year. Let's roll the tape. [Presentation]

Terrific. So a zoom around the world. And as we continue to make progress, we also work with organizations that you know and reference. You recognize Sustainalytics, MSCI, CDP to make sure this work is accurately represented and reflected in ratings. And so far, solid progress. MSCI, for example, in their ESG rankings, having us at AA for the third consecutive year. So now let's work our way around the coaster, some additional examples from you, for you of what the Regional Presidents are bringing to life in countries all around the world. So we'll start with net zero carbon. And on carbon, the cost of inaction, and Harold was just mentioning this, the cost of inaction is growing significantly, whether it's consumer expectations, business continuity, taxation. Carbon taxation is becoming a topic all over the world as governments need to raise revenues because of COVID-driven budget deficits. So here, we are taking an ambitious stance to get to net zero in production by 2030. Water. Water is key to our business, of course. So how can we become more efficient in the breweries and balanced watersheds, particularly in water-stressed regions. We'll talk about social sustainability, and some examples when it comes to both our third-party employers, smart outsourcing programs and social impact programs as well as responsibility and addressing underage drinking and harm. So first, let's go to the environmental pillar. And one of my favorite examples is the team in Spain. They have been doing incredible work and have been front-running on this agenda for many years. I was there a couple of months ago with the team, and I was in Sevilla, where you can see the electric distribution already bringing the beer to the city in Sevilla, a program that was a pilot that they're now scaling. They were already on 100% renewable electricity by 2020, so far ahead of where we've been setting our holistic ambitions. And it was really exciting to step foot on the first thermal solar installation that we've done at this scale anywhere in the world. Typically, we use solar for electrical energy, that's 1/3 of the energy we need in the breweries. But this is thermal energy. This is heating energy coming from solar panels. A large installation that's underway will reduce the brewery's footprint by 60%. And yesterday, you may have seen in the news that they announced the same thermal solar installation is going to break ground in Valencia. So scaling, and lots of momentum in Spain and a lot we can learn from to scale around the world. Let's go to Mark's team in Brazil. Now Brazil is talking about green as the new premium. Their consumers care a lot about these topics. And we see, and James told us yesterday, when we drive meaningfulness with consumers, we drive brand power, we drive the business. Well, sustainability is driving measurable meaningfulness for our brands in Brazil. A couple of examples of how they brought this to life. They were making it easy for both customers and consumers to secure renewable electricity for their homes or their businesses. They created a portal, one-click kind of shopping for renewable electricity and now over 10,000 contracts signed and growing. At Rock in Rio this year, another example with brand Heineken, they were engaging in a reforestation effort, but in an urban way through micro forests. That was such a success at Rock in Rio, they're now scaling these micro forests to cities all over Brazil. Yesterday, you probably also heard Mark talk about returnable glass bottle. We love returnable packaging for a lot of reasons. You heard Mark say it helps the shape of the P&L because it's a profit accretive. It is also, of course, much less wasteful and has a much better carbon footprint. 85% less carbon for returnable packaging. In Brazil, they're already at 60% returnable packaging by weight and growing. So really setting the bar for what's possible. Okay, let's talk about water. Now if you think about water and Mexico, you might immediately think about Monterrey. And before going to Meoqui, I wanted to mention Monterrey. Over the summer, there was a drought, a serious drought in Monterrey. And it reminds us that when you look at the watershed users in Monterrey, less than 1% of water is used by brewing, less than 4% by industry, 70% by agriculture. What it reminds me is that we have to be as water-efficient as possible in the breweries. And we need to work together, all the users of the watershed to come up with systemic durable solutions that will last for decades. Because as much as we get the 1% down, we also need to work together to find solutions across the board. Meoqui is setting the bar globally for us when it comes to water efficiency in the brewery. They passed this psychological 2 hectoliter per hectoliter mark. They're at 1.87 hectoliters now, and what Magne and the supply chain team are great at is also lifting up these practices on reusing water more efficiently and scaling them across our hundreds of breweries around the world. So very much setting the pace, and more to come in our other breweries across the world. Let's go to Jacco's business in Indonesia, and this is a great example of that kind of collective action that we need in water sheds. In 2014, we started working with NGOs and with the government to rehabilitate the watersheds around our breweries. We saw illegal logging, we saw waste traps in the river that were essentially hurting the watershed and the ability to generate fresh water. We started working with those organizations to balance the water around the brewery. But in the last year, we took it to another place with L'Oreal, with Nestle, with Danone, with Unilever, forming the Indonesia Water Coalition, and now we're working for the next generation to fortify this watershed and build sustainable solutions for the benefit of those communities. Let's talk about social sustainability next. Here, let's go to Søren's business in the U.K. In the U.K., we have the unique pubs estate. I know many of you based in the U.K. will know the pubs. And here, we see the team learning -- leaning into our company purpose around the joy of true togetherness. We know the holiday times are coming up. It's a wonderful time for all of us to be together with family and friends. In this case, there are many folks who may be on their own for the holidays. So our U.K. team has been working with over 100 philanthropies and nonprofits to bring their constituents together having meals, breaking bread, connecting in our pubs in a program that they call Brewing Good Cheer. And in another example, we'll go to Roland's market in Nigeria. Our team in Nigeria is blazing the trail on what we call our smart outsourcing program. Again, this is working with that Fair Wage Network, but not on our employees' fair wage and living standards, but on those working adjacent to our business. Here, we're working with the Fair Wage Network and our suppliers to make sure that those third-party employees don't just make a minimum wage, but they have pension contribution, maternity leave, they can take vacation, that they have fair and living standards embedded in our supplier contracts and in their contracts. This work in Nigeria, we've learned a lot, and we will be scaling this and bringing it to other markets around the world. And our third pillar, responsibility. A couple of examples here will go to Søren's market in Croatia. For the last 10-plus years, the team in Croatia has been working with schools, educators, psychologists and parents on a youth underage drinking program. Now in 58 schools, a significant step-up even from the year prior. This is helping educators and parents have conversations with youth to prevent underage drinking. One of the most notable things here in addition to the continuation of the scale of this program is that it's a long-standing program. These can't be 1-year interventions, incident-based. They have to be systemic over time. And yesterday, Mark talked about the six stores. So in Mexico, we have retail, which is a great way for us to do retailer education on the sale of underage -- or sale to underage and to prevent that. So in Mexico, we have both in-person and online training to address underage and harmful use, and now scaled to over 15,000 merchants and counting. So you can feel some of the progress, but it cannot be siloed or incident-based. It has to be systemic. It has to be coming through our ways of working, and simply the way that we run the business every day. So how are we doing it? How are we making it habitual in the same way we're working on cost-conscious culture, every day nudging behavior and decisioning? So first, we've stepped up our governance. Now some people think governance isn't exciting, but I get excited about governance because it helps to debottleneck things in the business so we can work together and move at pace. So we've tied, for example, sustainability and responsibility to remuneration for the first time. We've heard about that. We've integrated it into performance management. So now when we're doing business reviews, and we're traveling to our operating companies or we're speaking on regional performance, we look at a dashboard, we call the evergreen dashboard. On that dashboard, you can see, are you gaining share? How's the health of the top line of your business? How are your margins? And how's it going on decarbonization? How are you doing on hectoliter per hectoliter water efficiency? How is it going on gender balance? It's not something on the side. It's integrated into the reporting. We've also launched a Supervisory Board Sustainability and Responsibility Committee actually end of 2020, and an S&R SteerCo, which is chaired by Dolf and many of us on the executive team joined to make sure that we can look holistically at progress and again debottleneck and ensure learnings are moving across. We also need to embed sustainability into existing processes. So we're thinking about green by design. If we're going to invest in greenfields or in capital improvements in breweries, we need to think about that being as water-efficient as possible today as we put shovels in the ground as carbon efficient or net zero. Starting from now, how can we think green by design? How can we also incorporate sustainability into our annual planning processes, our strategic 3-year planning processes? How can we ring-fence the CapEx and the OpEx that we need to bring these ambitions to life? And we've learned a lot, there's a parallel with cost-conscious culture, as Harold was speaking about. In 2020, 2021 as part of my transformation hat, we were learning how to embed our ambition EUR 2 billion cost out into the way that we think and work every day. You saw in one of Harold's slides a funnel, and we said we're going to put ideas into the funnel. And we're going to nurture them along and decision, looking at business cases, do we want to bring this one forward to something need a decision because it's stuck? Maybe this one we save for later. So now going into 2023, it will be our third year of using this funnel way of working for cost consciousness, and it's becoming habitual in the way that we work at the operating company level. Now we're putting carbon into that same funnel so that we can work to decarbonize the business, to make sure that it becomes a habit, it becomes part of just the way that we run our businesses. We can also see transparently how is our road map going, and what are the practices and themes that we can then pull up to understand better and leverage at a global scale. And of course, mobilizing the organization. This is about people, behavior, inspiring and mobilizing. So we have clear executive team ownership, very much a team sport, sustainability and responsibility. We also have stepped up our upskilling. Yolanda yesterday talked about key capabilities that we need to hone to thrive and deliver evergreen. One of them is decarbonization. None of us have ever decarbonized an industrial business before. This is something new. So we're all coming up to speed. We launched a partnership with the Climate School and launched a Brewing a Better World Academy this year to start bringing our leaders up to speed. And of course, a big theme you've been hearing in repetition is learn, share, reapply. When Spain is using solar for thermal, can that apply somewhere else in the world? How can we learn from each other to go faster? Now one of the favorite topics is transparency and reporting, and we see a great convergence happening, but we're in the early chapters, I think. We'll get to a great place 5 or 10 years from now, and we're in this middle part where many organizations over the last decade have been trying to provide simplicity and clarity. So all of you can understand objectively how is it going and sustainability and responsibility within our business and many others. Now we see the ISSP launching, International Sustainability Standards Board at COP26 last year. In Europe, we see CSRD standards coming into fruition, not yet published in their final form, but reporting will begin on those standards in 2024. And so we're doing the disclosures we've always done as we prepare for what's coming, and there will be a simplification over time. But I'm reminded, and some of us talked about this, the origins of financial reporting, and I'm a former reformed financial auditor, started in Italy in 1494. Some of you downstairs when we had lunch yesterday saw big books up on the shelves. That's historical debit and credit ledgers from the origins of Heineken in the 1800s. It's taken us hundreds of years to mature our financial reporting capability, and we're in the early phases of getting good at this when it comes to nonfinancial reporting. So very much a journey, very much something Harold and I collaborate on every day because finance is going to play an increasingly important role in bringing the vigor that we have in the financial statements to the nonfinancials, but very much on the radar, early days. And hopefully, this will provide simplicity for all of you in the years to come. So with that, we've stepped up our ambitions. We're getting momentum in bringing them to life. We're weaving it into the fabric of how we run this business. It cannot be something on the side, but rather something all of us are leading every single day. And if we do this, I truly believe delivering these ambitions, we will deliver a more resilient and thriving business for many decades to come. And of course, we will brew a better world. Thank you.

Thank you, Stacey, and we now have a break -- coffee break. So we will reconvene at 10:45 on the dot, okay? Thank you. [Break]

Good morning, everybody. Just wait for everybody to get their seats and their coffees. Yesterday, my voice was pretty much gone. Today it's back. It sounds a little bit funny, but it's here. And that's helpful for our presentation. I have to say, I'm very happy that it is back because I truly look forward to spending the next half an hour telling you about beer in Europe, and about the Heineken business in Europe. Just first 2 minutes -- 2 seconds about me. I'm Danish. I started my career in LEGO in sales and in marketing. I spent a couple of years at Diageo. And then I spent about a decade in L'Oreal, where I was in various Marketing Director jobs, General Manager jobs. Joined Heineken 9 years ago. First, in Global Marketing, and then I had the honor of running our business in Italy for 4 years before starting the role I'm in right now for about 2.5 years ago. The story I'm going to tell you today is fundamentally a story of strong fundamentals in Europe. I think we have a surprisingly many ways, strong beer market in Europe. We have a strong Heineken business in Europe, but we also believe that we have a business with real opportunity, a real opportunity in terms of transforming our portfolio, and a real opportunity in terms of leveraging more than we have in the past, the scale of our business to drive profitability and to drive capital efficiency. Now if you look at a couple of numbers on our business, I think there are just two that are really probably worth keeping in mind. One is we are the clear market leader in Europe. We have about 18% market share, about double of the #2 in the markets. And we have a #1 or #2 position in 18 of 23 operating companies. Now if you take a look at the market itself, the European beer market, I think maybe contrary to what many would have expected some years ago, it's a market that is showing quite a lot of resilience. If you're looking at a volume level, volume over the past years is pretty much flat. Now that shows quite significant -- that covers quite significant regional differences. So you have real pockets of growth in countries like Italy, countries like France, and you have countries of real decline in Eastern Europe and part of Central Europe, where we come from very, very high historic consumption levels. But overall, the volumes in Europe are largely flat over the past years. However, when you look at value, you see consistent growth. So about 2% CAGR over the past years, and that's a growth that is very much driven by premiumization. So premiumization is a trend that pretty much exists in every single significant European market in beer. And I think fundamentally, that's a real sign of health in any category when a consumer is willing to pay a little bit more for the products you're selling. I also think it's worth calling out what James also showed yesterday, which is that the share of flow for business -- for beer. So the role be placed in the repertoire in the life of our consumers is actually slightly increasing. So beer is as relevant as it ever was in Europe. So fundamentally, when you look at these numbers, I hope you'll agree with me that there's quite a lot to like about the basics of this market. So we are the market leader in the market that is actually very, very resilient in the past years. Now if you allow me to take a little bit more look at the Heineken business in Europe, what you see is that the margins of Heineken in Europe are below those of our main competitors and you might be surprised by that because obviously, usually in this business, scale market share other things translate into superior margins. So far, that has not been the case. And you could ask, why is that? Why is it that in spite of our large share, we are not actually showing superior profit margins. And of course, as always, there's a number of reasons for it. But there are probably true main drivers. One is the fact that we are significantly underrepresented in premium beer. Our market share in beer is less than our market share in the total market. And beer overall has -- premium beer significantly has higher margins than the overall market. The second main driver of the differences in margin is the fact that, as we also spoke about earlier, we have a brewery network that is significantly more scattered than our competition. The average size of our brewery in Europe is about, as you can see here, 35% less than that of our main competitors. Now that has some benefits, but it certainly also has some disadvantages, not least from a cost perspective. So part of my story today will really be about saying this is where we are starting from. How can we use this as an opportunity for value creation going forward? But before going to that, let me just say a few words about the current situation because, of course, there's absolutely no denying that Europe at the minute is in a challenging position. We have a horrible war happening, of course, in our region that has had a major impact on consumer confidence across markets. It has a major impact, as Harold was also saying before on inflation, which hits consumers in all countries. It has a big impact also, of course, as we all know, on energy prices that impacts a business like ours that is heavily dependent on energy, not least one-way glass, is a very energy-intensive packaging format. So of course, that has an impact on us. And we would be fools not to recognize that this creates some short-term headwinds. However, what we also believe is that this type of headwind is an opportunity. It is an opportunity to double down on the transformation program we have started in Europe a few years ago. We believe that the current, you can say, situation very much illustrates that we have to look at our business and to take the very best of what has always made Heineken an outstanding business in Europe, but also periods with some different types of working from different ways of approaching our business to actually create a business that truly is ready to win in the kind of more volatile world, we are all pretty much in already. So that's why when we look at our business, we formulate our ambition, as we say we want to work to shape the future of beer in Europe. If beer is not healthy, if beer is not seen as a good category, if the category does not have relevant profit, nothing else matters. But in this category, we are absolutely determined to win, win value market share on a very consistent basis. But also to Harold's point from before, improving our profitability, improving our capital efficiency. Now how are we going to do that? We have 3 main levers that we see as critical for making this happen. The first one is about winning in premium. And you'd not be surprised about that. You heard about the premium importance in EverGreen overall. You saw the fact that we underrepresented in premium in Europe. I'll talk to that. Second, yesterday, Roland, I think, showed very well how we are working to digitally transform our routes to market, not least in HORECA. This is a massive opportunity. I'm not going to go deeper into that because I think already Roland spoke well to that. But in terms of ways of working, in terms of our opportunities optimize that channel and truly double down on that, I think we're only scratching the surface here. And then the third and not least, we believe that we can significantly better leverage the scale of our network. And I'm going to talk to that also in a bit more detail. But let me start with premium. What other things we have done over the past years, and we are doing at the moment to make sure that we are getting more than our fair share of premium. First of all, we took a very hard look at our brand portfolio. You know very well that one of the things that makes our special is the fact that we have very, very strong global brands, of course, led by brand Heineken, but we also have outstanding local brands. We are very proud of that. We believe there's an enormous amount of value to be gained from that. What was in the past, will be in the future. However, what we also saw in Europe was that we had a very, very broad portfolio of brands we were investing in. So over the past years, we have been working hard to say what are the brands that truly have potential to grow, to be the lighthouses of our business going forward and what are brands where we don't need to invest proactively. And that's why from '19 to '22, we have cut a number of brands in which we invest with more than half. So we focused our portfolios much more than we have done in the past. Now what that has allowed us to do is to step change the investments behind the brands that we are actually getting behind. So as you can see here, in terms of investments behind our focused brands, we are more than doubling this. But not only that, as James, I think, explained well yesterday, when you focus on many, many brands, the issue is you have to develop new TV spots, you have to develop new products, you have to develop all kind of stuff for a huge portfolio of different brands. That's why the split between consumer facing and nonconsumer facing historically in Europe was not very favorable. By focusing more, we have been able significantly to reduce and bring that ratio to a much more healthy level. And that's why in terms of actual investments in activities that go in front of real consumers, well, there's a very, very significant uplift in the investments we're making at the moment. Now that has allowed us to focus on a few big bets in the region to really double down on what we believe is the future growth drivers. I listed free up here. One is about what we call our next-generation brands. Brands that are developed specifically for consumers, who are a bit younger, generation Y, generation C brands that are premium and brands that are scalable, brand that can become in a relatively short time a significant part of our local portfolio. That's what we call next-generation brands. Second, we are getting a lot more determined to actually launch major things in a real scalable way. And I think yesterday also from James, you saw Heineken Silver as a good example of this. Heineken Silver was launched across Europe. It's on track to become, as James said yesterday, not the #1 launch in beer, not the #1 launch in drinks but the #1 launch in FMCG in Europe this year. I think that shows the power of this organization when it truly gets behind a real opportunity. And what is very exciting is, as James showed, it's actually recruiting consumers into the Heineken brand, but more than that, it's recruiting consumers into the beer brand because it's a different type of -- into the beer category, it's a different type of proposition than what has been so far. And of course, 0.0 and beyond beer continues to be a massive opportunity for us. It's not the kind of thing that just takes up from 1 day to another. But by consistently building our presence in this space, we have no doubt there's a lot of value to be unlocked. So some really exciting bets. But maybe I'll spend a little bit more time on the next-generation brands. These brands that are really made to recruit younger consumers into the beer category. And we have a small video to show that. [Presentation]

Make no mistake about it, we have always had beautiful brands. We have always had these kinds of brands. But I think what we may be not always so good at was really scaling them, really getting consumers to buy into the key propositions. And as you can see here, I think in the past couple of years, an enormous amount of work has happened to really say, how do we take these brands from beautiful jewels to actually driving the future of the beer market. Significant growth, about 70% growth over the past years in terms of sales passing EUR 1 billion. It's really significant in our P&L. But also not only sales is encouraging when you're looking at revenue -- when you're looking at brand power, we see a consistent growth in the brand power of these brands. And I thought there was just an interesting small data point, which is we asked Kantar to say, if you took all the brands in Europe, and there's quite a few beer brands in Europe, and you rank them and say, what are the brands that grow brand power the fastest across the continents. The top 10 you see out here, out of the top 10 fastest-growing brands in terms of brand power, 9 of them belong to Heineken, either of them are next-generation brands. So we think that gives us a real opportunity for the future because we all know that brand power is a good indication of where you can actually take your brands for the future. So we are quite excited by that. And actually, when you're looking at this in the overall premium journey, of course, our next-generation brands are key in driving volume, in driving revenue and in driving gross profit, but it's not just about that. There is an overall step change in the premium portfolio. You see the numbers up here, volume over the past years up with 30%, revenues with more than 40% and gross profit with 50%. So we said there is an opportunity here. We think we're starting to tap into that opportunity, but also make no mistakes about it. It takes time to build outstanding brands. And I think we are only in the beginning of that journey, but certainly, it's an exciting journey. Now the last thing I want to say about top line and growth is that I talked a lot about premium and premium is important. But that does not mean that we are giving up in any shape or form on our mainstream brands. So we are extremely keen on making sure that our consumers are given all the reasons to also buy our very, very important mainstream brands. So just this year, we are relaunching a whole range of our biggest mainstream brands in Europe. You see some examples behind me, you see, Cruzcampo from Spain, you see Strongbow in the U.K., you see Zywiec from Poland. Very big, very important brands for us that are all getting relaunched in the coming months because we are absolutely determined to win in premium, but certainly also to make sure we're getting our fair share of the rest of the beer market. So that's about the top line. Now as I said, the second big opportunity for us is about leveraging our scale. It's about asking the question how do we take that picture and actually use the scale of our business to deliver relevant margins, the right types of margins in Europe. And one of the things we first looked at and we looked at a number of things, and I'll come back to that in a second. But one of the first things we looked at was our supply chain. As I said, we have a very dispersed supply chain, many breweries, many small breweries. And that's why we maybe sat down about 2 years ago, and we said, what can we do about this? How do we, on one hand, make sure that we are building a supply chain that is supporting Heineken in the Heineken way. So how do we make sure that we build a supply chain that actually is right for what we call disciplined entrepreneurship. We don't want to have a supply chain that feels like some decent thing happening very far away from the countries. But at the same time, leverage the scale. And that's where we develop what we call the network, the network model for supply chain. I'm going to spend a little bit of time that. And again, we spent -- we started it up about 2 years ago, and it's now in the process of getting delivered. Very simply, there are 4 dimensions to this new approach to supply chain for our business in Europe. The first one is about platforming. You've all seen the auto industry. They've done a remarkable job of platforming everything that was not adding value to the end consumer and then truly investing in features in components that actually really matter. This idea of platforming what doesn't really add value and invest -- overinvest where consumers value, where customers put value. That's the first element of this new approach to our business. What we believe it allows us to do is to operate a lot of different brands, a lot of different SKUs, but in a much more integrated way. Point number 2 is about optimizing our network. We have so far had a supply chain that was country specific. I used to run Italy wonderful, all my breweries, supply my products in Italy at pretty much, nothing else. We were all very happy with that. You could make all decisions wonderful. But the issue, of course, with that is, that is not so efficient. It's a bit stupid that a store in the north of Spain cannot receive products from a brewery in Marseille in the south of France because they operate in completely different ways. It's not good for the environment and quite frankly, it's not good for cost. And that's why we said we need to find a way to make this network work much more together. We need to find a way of actually creating real efficiencies within the network. That's point number two. Point number 3 is about optimizing the way we work functionally. And here, there are 2 dimensions. The first one is that we have always been extremely good at running our business, optimized in very functional ways. So for example, a production line was always in Heineken run extremely well. We have had extremely good supply chain professionals for years and years that were outstanding at that, and they've done an outstanding job. But the thing is we were very good at measuring the efficiency of that line, what we didn't measure so much was the end-to-end efficiency. So it was the efficiency from the supplier to the consumer. And one of the big differences in this new approach is looking at efficiency end-to-end, measuring efficiency end-to-end. The other elements are functional optimization is about asking the question, where should we do what? Now you'd probably say that's pretty obvious because other countries -- other companies have done that for years. But the truth is in Heineken, we have been replicating the same functions in OpCo after OpCo after OpCo. So for example, maintenance, we have had maintenance departments pretty much in every brewery with spare parts in every brewery with specialists in every brewery, and everybody were focused on making sure that, that brewery and at most, that country was run well. That was making sure that our breweries was running well, but it also drove a lot of costs. And that's why now we are focused on saying what are those things that truly add value locally and what are the things you put into hubs, things like forecasting, things like transportation management, things like services and so on. There is no reason at all to keep them 23x. That's an opportunity. That's the other piece of the functional optimization. And then the fourth element, the fourth dimension, it's really about the sustainability. I think Stacey talked very well about the ambitions. We want to be absolutely world class when it comes to sustainability, make no mistake about it. We will never do that if we don't have a true world-class approach to this question in supply chain. And that's the fourth element of this new approach. So that's kind of the building blocks. That's the theory. As I said, we developed that a couple of years ago. And in the past years, we've been working on putting it into practice. So I'm going to share with you a few numbers on where we are. I'm not going to go through all of them, but I think it will give you a sense of the kind of progress we are looking at. So in terms of one-way packaging, we are cutting the number of one-way packs in Europe with more than half. Does that mean that everything comes down in a brand bottle that looks exactly the same? No, not at all. What it means that we're only differentiating way truly makes sense. In the past, we've had brown bottles that, quite frankly, I had no way without a rule of separating, but they were different, some were a little higher, some were a bit wider. What does that mean? It means they cannot run on the same lines. That's not efficient. And quite frankly, no consumer cares. In terms of secondary packaging, the same kind of thing. We are cutting the number of secondary packs with about half that allows us also to actually scale again across countries. If every country have completely different secondary packs, that's one of the good reasons why you cannot produce a product in France and export and sell it in Spain. The last one is for us building -- brewing outstanding beer is hard blood. It doesn't get more important than that. Quality is at the core of this company. We are extremely proud of our brewers. I'm not a brewer. Some of my colleagues are, but the success of this company has very much been built on the outstanding qualities in terms of brewing. We will never compromise on that. But that doesn't mean that, for example, worts have to be individual in every single brewery, even experts cannot taste the differences. So you might say, why are they all different? Well, because historically that's how wort. We didn't ask the question, are these actually driving meaningful value to anyone. And the truth is not. But that certainly doesn't mean that delivering outstanding products is not at the very heart of what we're going to be doing. We're just going to do it on the base of things that actually matters to consumers and not on things that we have done historically. We've been doing it in a certain way. Now in terms of network optimization, as I said, there's a lot of opportunities for increasing the flow between countries. We are just getting started on that journey. And decision on closures of breweries, it's purely a local decision. So there's not kind of a global master plan of saying, this is exactly the rules we need. But of course, when you start running an overall network more efficiently, where local countries look at their brewery network and say, is it really efficient to have all the breweries I had in the past. And the truth is, in a number of instances, it's not the case. And that's why just this year, we announced 7 closures of breweries. We just put it into context in the 5 years that went. Before that, we did not close a single one. So I think this is where we are enabling countries to ask some hard questions about what is the right journey for their networks locally. I'm not going to go through all these numbers, but you look at things also like efficiency of lines, for example. Maybe 15% doesn't sound like a loss. But if you look at the amount of efforts we have in our network, it's a very significant number. You also see the numbers on, in terms of sustainability. We are already now starting to reduce significantly our carbon emissions as we also saw earlier. We are very, very determined to drive returnable packaging as a key format in Europe and also to premiumize returnable packaging, we believe there are big opportunities here. I think we're already in a very good way. And then you see plastic, we're just getting started. But just this year, we reduced the amount of plastic we're using with almost 400 tonnes, which is a not insignificant number. But again, are we there, not at all, it's just the beginning of the journey. Now, looking at time, I'm not going to spend too much time on this one here, but it just shows you an example of the Dutch OpCo, which is really hard blood. It doesn't -- this is our heart and soul. This is our home. And nowhere are the difficult decisions, probably more difficult than in Holland. Yet, the Dutch team is truly embracing this journey. You see here platforming across the board. You probably heard the announcement about the brand brewery, which is a beautiful historic brewery that will transition into a small microbrewery instead and thereby allow us to have a significantly more efficient setup here also the user hubs and so on, very, very significant opportunities in Holland. And we could take these examples country after country after country. But again, let me just say, it's only on the beginning. There's no question in our mind that this is a real opportunity. And in terms of the deliverables, of course, this needs to help significantly with the productivity targets that Howard has shown you before, we should be delivering at least 40% of the ambitions of the MD out of this. Asset utilization will be going up. You can do the math as to why that is. When you actually have a network, you can start using ideas much faster. That will improve our innovation rates that already is and of course, sustainability will be delivered. And it will also be delivered in a very significant way. So in terms of deliverables, we are pretty confident. But I also have to say that I spent now quite a lot of time on the supply chain transformation. And it's important. There's no doubt. We spend a lot of energy on this. It's a big change in the way we operate as a company. But supply chain is just one area of the transformations we are making. We have many other opportunities for leveraging the scale of our business in Europe. You heard Harold and others talk of the finance standardization for example. We have implemented what we call SHARP-X [indiscernible] system, which allows us to put a lot of functions into our hub in SHARP-X. Again, is that something new? Is that something other companies have not done? No, not at all. Is it an opportunity for value creation? Very much so. In terms of the sales force, again, you heard the numbers in terms of efficiencies from some of the new digital platforms is that happening right now? Absolutely and in a very significant way. And spans and layers, especially in the beginning of COVID was a big question. Are we actually as lean as we should be? Are we actually as efficient as we should be? Do we actually have an organization where bureaucracy is becoming less and less? And we are more and more putting our focus on delivering value the consumers and to the customers. But also here, there's a lot of work that happened. And you see it in terms of FTE reductions you see it in terms of fixed cost reductions. So again, is this the end of the journey? Certainly not. This is the beginning of a journey, but it's not a journey that started yesterday. It's a journey that started with COVID, which allowed us, I think, to ask questions, we maybe haven't asked in the past. Now the last slide I want to share with you is a little bit about the how. If I had another half an hour -- I had already gone a bit late so I'm not going to spend another half hour. But if I had another half an hour, I will spend it talking about only the people side of this because you all know that it's -- strategy is very nice. It's very easy to put in all kind of big ambitions. And systems and all the rest, it's not so easy, but it's also not -- let's be honest, not been done many times before. I think the people side of making a transformation happen is the core success. And of course, the key thing for us is how do we create this change to a network setup without losing what makes Heineken. How do we do this while creating an organization that still has that local entrepreneurship, that real local ownership. And just a few words on how we do that, and we can maybe talk about it in more detail later. First of all, it's very much about a very clear governance. So in Europe, all key decisions. We have actually replicated the approach to the executive team in Europe. We created a management team, we call it, European management group that consists of the 6 largest OpCo MDs and the key functions. All key decisions are made there. The good thing of that is our best people are involved in making the big decisions, but also when decisions are made, there's no debate about whether it's getting implemented because people were part of the decisions. I think in Heineken world, that's important. The other thing we have done is we have been very, very deliberate about saying what must be delivered when. We call it nothing more, nothing less. What's the delivery agenda for EverGreen in a given year? That's key because the big risk, I think, of an organization like this is we try to do too many things. We've been investing a lot in transformation office. We talked about the funnel. I think here, there's a very, very standardized way of taking initiatives and landing them into a P&L. We're investing a lot in upgrading our leaders, in a leadership program, in investing in capabilities. As you see here, 4,000 people have gone through it already. And then the last piece of this transformation, which I think is critical, is that this is not a change happening by a kind of team of super specialists flying in from Amsterdam. It's not a group of kind of flying doctors that arrive in Italy and say, "Okay, guys, this is the new way working, we'll teach you and then good luck with that. " That doesn't work in this company. What we've done is we said, actually, the real owners of the change has to be the people who currently work in countries. So we have about 1,200 people of our colleagues from the countries today, owning the delivery and owning the development also of these transformation programs. So many, many of our best leaders today have 2 heads. They have heads that is a country heads and they are the heads that is in Europe heads. So for example, our Supply Chain Director in Italy, he's running our Italian setup, but he's also responsible for production excellence in Europe. And the credibility of course, he has when he goes to the colleagues in Spain and say, "Guys, this is -- these are the ideas. " It's just different than an expert coming from here that somehow may have a bit more theoretical approach to it. That's a big part, I think, of making it happen in the Heineken way. And the last piece is about talent. This is an opportunity to really step change our investment in younger talent to drive this change. So that's a little bit about how we make it happen and that's the last slide. So overall, as I said in the beginning, the way we look at Europe is first of all, strong fundamentals in the beer market. Also, we have a wonderful heritage of our business in Europe. We are very proud of that. At the same time, we have real opportunities, real opportunities in terms of portfolio, real opportunities in terms of scaling our network. And we believe that we're just in the beginning of that journey to really start improving with that, both our market position and our profitability and our capital efficiency. And that's the story of Europe. Thank you very much.

Well, still good morning, and also a warm welcome from me. My name is Magne Setnes, and I overlook the supply chain of Heineken. And I am just thrilled to be after Soren because I always knew that Soren was a brilliant marketer, but he really speaks as a true Supply Chain Director. So Soren, for your next career step, please come see me. So I need to kick off, yes. Here we go. Okay. So a little bit about me. I'm Norwegian. So this is kind of the Scandinavian section following Soren. And I've been with Heineken for 22 years. And before taking this job in 2020, I was the General Manager of our operations in Austria, a beautiful country with a lot of breweries and also operating very much, like Soren was saying, in our own little bubble and quite autonomous. Prior to that, I've had many different roles in Heineken. I have even worked in controlling and -- but maybe most importantly, which is not here, is that my first job in Heineken was in research. I was a researcher working at the University and Heineken recruited me to do big data. That is 22 years ago. Obviously, that project didn't happen at that time, but I'm very happy to see what has been presented now over these past days that we are now really getting into big data. At that time, we were maybe a little bit ahead of over time. So what am I going to talk to you about. I'm going to talk to you about our track record on operational efficiencies on driving productivity and how we do that. Then we take a quick look at how we are optimizing up and downstream. So not only the brewery itself, but also inbound and outbound and most importantly, tell you how this contributes and how much to our EUR 2 billion savings and going forward, then explain the concept of a brewery network. You heard about the network. Soren talked about the network. And I'm going to tell you a little bit about how we are going to drive learning and scale of knowledge in this network. Last but not least, I'm pleased to show you what we call the connected brewery, which is how we are driving for connectivity for digitalization of our operators and our machines and breweries in order to operate effectively inside the connected -- or inside this brewery network. Now supply chain covers, of course, all elements of the Green Diamond. And I have deliberately chosen to spend most time on the elements of profitability and capital efficiencies because I do think they are an important -- very important part of what we do, and they also help fund all the other things. I will dive a little bit into sustainability as well. Now when you look at this picture, this is [indiscernible] brewery newly extended to 11 million hectoliters capacity. You understand that we -- when we build these things, we really need to make sure that we spend our capital right and that we operate in an effective way. Now before going further, let's take a look inside this brewery. And I do want to emphasize that even though we are going to talk a lot about numbers, this -- here is Mr. [ Tong ] who works as an operator in our brewery in [indiscernible]. He's one of the 40,000 people that work in our global supply chain. And you should not go away here without knowing that we really love to make great beers and beverages, and that is a passion that we have. And we really do appreciate and work closely together with our commercial colleagues. You heard from -- in the beginning from James Thompson about all the innovations, about all the products development. Now this is something that we really enjoy doing. And we use our brewery network to operate as a team when we develop these products. A good example is Heineken 0.0, which was developed in parallel across several breweries around the world, really driving to find the best technology and the best recipe for this beer. And this is our success that we can claim because of the way that we are able to work together. Going forward, we are making some key shifts in our supply chain. Yes, we build on a strong foundation of operational excellence, and we have been obsessed by that for quite some time, has always been in the individual breweries. This has helped us also in the past to drive reduction in usage of energy, materials, to reduce lost time and has led, among others, to a good track record of reducing CO2 footprint, as Stacey was alluding to 20% over the last few years. Going forward, there are some elements that we are kind of boosting, continuing to evolving and one of them is the network operation of our breweries, really making sure that people get much closer to each other that they share and learn among each other and that they help each other, not always relying on the center. So we want this network to work much -- in a much more autonomous way, but going in the right direction, of course. Another big ambition and really an acceleration is the journey towards net zero. So we have said in our value chain, we are reliant on a lot of partners. We are asking them to join us on the journey and be net zero by 2040. That is a tremendous ask. And the only way you can ask people to do that is if you show the way and you do it yourself. That is why we have said in our own operation, we are going to aim for net zero by 2030. So don't ask of orders, what you cannot do yourself, we will learn, we will share with them. And hopefully, that is going to inspire them as well. I'm not going to spend a lot of time on the net zero. Stacey talked a lot about this, but I do want to use 1 slide on this. This is our road map as it stands today. All our individual operations, all 180 plants have created a road map how they are going to get to net zero by 2030. This is an evolution. This is the sum of us pulling that from all our operations. We have a central team that educate them, the trains that drive the sharing of the learning. And this is where the technologies at this moment. Just a few weeks ago, this was the picture. How it is going to evolve? Which technologies are going to come in place? In which brewery at which year? And when we add it all up, you see here, on this side, the electricity, it's about 1/3 of our carbon footprint. And the much more difficult part -- the other part is the thermal energy. This is all the heat that we need. This is for gas and oil play an important role, and we are going to replace them. I would not say that this is easy. Electricity is not easy, but it's easier than the thermal and we are making great progress on electricity, putting that in place, the green electricity. And we are developing technologies and pilots in many plants around the world on the thermal things. And one of the things that are coming up, but for instance, you might have heard about it, heat pumps. In the beginning, it was a small piece of our solution spectrum, but these things are improving, and we see that taking a bigger part. Biomass, super important. Brazil is a great example of that. And electrification with electric boilers, something we're doing in the Netherlands, also in our solution spectrum. Is it going to be exactly like that? I don't know. This is what we think today. This is what our operations think today. And every year, we learn, we share the learnings and we move on. Now this gives you an impression of our brewery footprint. It is the broadest in the industry, and this shows the plants that we own and operate around the world. It does not show license or partner breweries. Pay attention to these ones. The light green ones are what we call connected IoT breweries. Now we have a brewery program to connect to our workers with digital tool, but also IoT component where we connect all the machines. Now this is growing quite rapidly, and I will show you in a little while how we do that. Now when you have a network like this, you have a tremendous opportunity because you're so close to the market, you close to your consumers, you are on post with what's happening there. You can react quickly. You can optimize and react quickly. You can also learn a lot. Can you imagine, in my role, I have all this diversity and people looking for solutions to problems and all these things. If I only could gather all of that, there might be very smart things coming up in India that I really need to improve something in Brazil. So the aim is really to capture all of that and to spread things across the network very quickly. This is essential to us because of what Soren said and also Harold, that this proximity that we have, while it is great, it is also an issue for scale. And we have to be very, very aware of that, simply because every time we want to improve something, we need to do it in more places than our competitors. So with this benefit also comes to responsibility to address the downside of that. Now we have been aware of that for some time. And here are some of the results, some of you have seen that earlier. I took, say, the last 5 years. We see here production fixed expenses, improving more than 100 basis points. Important in that is the labor productivity. And you see kind of a reciprocal graph. So when expenses went up, productivity went down and now productivity is going up again. Very important part of our fixed cost. We have now have the highest labor productivity that we've ever had in the supply chain. And we added 7% versus 2017. Another very important part. And while it has been always important, but maybe due to our local focus, not always top of mind for everybody, is the CapEx that we spend and how our asset utilization is. Here is represented by brewhouse utilization. We are really driving for better asset utilization. This is a snapshot from all our brewing operations around the world. The brewhouse and important part of the brewery and we see we're adding 5% point improvement versus 2017. This is really, really going up. And this is super important in countries and especially in these times in countries where we are growing, in markets where we are growing rapidly, like Brazil, where we are growing very fast and where we have to keep up by putting in place new assets, but not only that, but using the assets that we have in a much more productive way. Now when you drive for these things, there's always the danger that something fails in the end-to-end chain, right? The production manager want to make the run a bit longer, wants to have more of these products because it's going great. I want to hit those KPIs. But the logistic guy maybe say, "Hey, I need another product because I have a customer this and that asking for something else and you are producing." So you have these debates going on. And we've been able to make sure that this happens while we keep customer service good and improving. This is the aggregated NPS score of the total Heineken company. So all markets, all channels. You saw a few of them earlier on from Africa, from the digital route to market and so on. And this is the total NPS of the company. I'm particularly proud also to show you that in the most recent Advantage Insights survey that is looking back at the previous year, which has been quite difficult for everyone working in supply chain, as you know, there's been a lot of disruptions, that 90% of our operating companies that participate in the survey are in the top tier among the FMCG. These are customers, big retail customers telling us that we are basically doing a good job. And if there is anything here that I'm proud of, it is that because this is happening when that is going on and all the other things that we all know about in the world around us. Now we drive the productivity, the efficiencies in our breweries through a disciplined performance system. For more than 20 years, we've been collecting information from operations. And we've put this in a static database and we have gathered it, and we've used it to build models and things like that. In the past years, the digitalizations have started helping us. More and more, our systems are becoming harmonized, easier and easier it is for us to get the data out and to aggregate it and we put it into a strict performance management process. Everyone who works in our organization have a list of key performance indicators that they know they have to deliver. This is super broad. This has to do, for instance, with line efficiencies, the number of minor stops and -- or it has to do with the usage of oil from the maintenance team, all kinds of small things. But we aggregate this up, and we've constructed on top of that, what we call a driving system. The driving system is really a composition of those parts that have the highest impact on the cost, and some of them are aggregations of other ones. And in that driving system, the one very important parameter are, of course, the productivity. Another is energy usage, another is losses on your line and so on. But we don't measure in that driving system, the so-called OEE on the line, where we measure more, what does it mean end-to-end for the performance of the brewery. The OEE, the operational efficiency of the line is a KPI for those who are really operating that line. So gone at times when I could work into a brewery and everybody was saying, "Hey, look at my OEs, it's fantastic, 80%." And then maybe you didn't have stock in the warehouse, you had customer complaining, your cost went to the roof. That does not happen. Now -- this is also delivering results. And so far, I said more than half, but Harold let the cat out of the bag and said 2/3 of the savings in our gross savings initiative of EUR 2 billion is coming from the supply chain organization and rightfully so. And we are a big part. We're half the people in the company. We have most of the assets, it's right, it should be that way. Some of the things that we are doing. I just mentioned a few examples because it would otherwise be way too much, but these are global numbers. 17% less SKUs, right? 17% less SKUs across our global network in a time that we are doing innovations and adding new things. Super important to be cognizant about your tail of SKUs and to manage that. Identify those that are costly, not adding value and maybe small in volume. Every SKU is somebody's baby, I like to say, because there's someone who's spending a lot of time maybe selling that to a customer, producing that and so on. It's hard to give up, but we really, really need to be business mindful about our SKU portfolio. Then looking at some country examples, 5% more capacity created in Brazil by optimizing our current asset base, right? This is additional to the capacity that we are adding by putting in new assets. Super important, that 5% of additional -- that's 5% of additional sales volume for us. We are growing. We need the volume. So when we can contribute maybe on -- from a supply chain point of view, only 5% is not that important, and you might not feel so great about it. I heard Soren saying that he was not impressed with 15. He's a tough guy. But this is transformed directly into sale and transformed into top line of the Heineken brand. Nigeria, another example. And I like this example because it shows how we are looking outside and it's only the brewery and if -- think about if you noticed in Soren's presentation, he said 11% truck utilization in Europe. So we've been looking at what's happening in Europe. What have we learned from them. We put that into the excellence operations in Nigeria and say, "Hey, replicate that and improve it where you can." The Nigerians, Soren they manage 20%, right? 20% capacity increase, that means basically 20% less kilometers driven because the way we load it, the way the trucks are constructed, we took away weight in certain separation element. And we took a close look at in the entire value chain, how does our pallet stacking work with all our customers and consumers and do we have opportunity to add an extra layer on the pallet. I mean it's not rocket science. It just needs to happen. You just need to be cognizant, aware and on top of these things all the time. Another great example from the Netherlands is a 19% reduction in repair and maintenance spend. We heard that all breweries have their maintenance crews, they have their engineers, they have their spare parts. And they don't always have to do stuff but when you come to work and everything is working, you still want to contribute. So you still work on things. So we have done unnecessary maintenance at times. We have not been planning well how we deploy our spare parts across the network. And we are starting to see these kind of results. And I will show you something later that also contributes to these kind of savings. And going forward, we will continue. So we will continue in the entire value chain, not only the brewery, we will continue upstream, which is everything before we make the beer. And we'll continue downstream, which is after the beer production. Some important elements to talk about or that as -- just as examples here, the onshoring and vertical integration. So I think Marc was the one mentioning that from Brazil, and for Mexico. So right now, we are importing bottles, empty bottles to Brazil. It's just not enough bottles for us there. And we're working with our partners to make sure that we get new bottle capacity onstream, and this will come onstream empty bottle capacity in Brazil after the summer next year. Mexico, very much driven by the fact that it's been difficult to get cans, but we have a huge plant in the north of Mexico in Meoqui, and we have land around it. So why not try to -- in that plant try to integrate a few more things. So there is a glass factory on site. There is a [ maltery end ] site. And now we are building a can factory. Now predominant driver was in the beginning, it is difficult for us to get cans there. But we are also now looking at the cost efficiencies that we can get from that and also the learnings, which are important when you talk with all your suppliers. Africa, local sourcing of ingredients from sustainability point of view, but also for cost and resilience. We don't want to ship raw materials into Africa, if we can grow it locally. Sometimes it's barley and sometimes it's other ingredients that we are experimenting with, and we are using things like sorghum in our beers there. And upstream, the last example, optimizing malteries. Malteries are huge consumers of energy. And the -- it's a very traditional industry. And we have said, let's take a close look at that. And we have a huge maltery in Alberta in Belgium. They also need to become carbon neutral. We're also working with them and with the brewers in the various breweries, to see what can be optimized in the malting process to make it may be faster, less expensive and better for the brewery performance. So these things are also taking into account. Downstream, I think a lot of these things have been talked about. Warehouse and transportation excellence, it's a program we are running out globally. We're making sure that our warehouse is working the same way that we use the same optimization software on how to fill them, how to sort it and all that, which products sits where in the warehouse to increase efficiencies of loading, reduce time of trucks on-site, but also transportation hubs. Soren mentioned that, but we used to have in more or less every operation, one is every warehouse, some people calling transporters, where is the truck, when is it coming, should be here then and then, it's not the way the world should work. So we have transportation management hubs that take care of that and that plan and schedule these things and analyze the performance and share the learnings and drive improvements. Inside production, I think one of the most exciting things we do is the digitization. And I am going to show you that in a second, what we mean by that. But it's also continuing design to sustainable value of our products. So our production experts are working on the platforming together with Soren's team because you cannot leave that to marketeers alone. They need to know what that are driving the costs and how does this platform impact our production network. And this one continuous improvement in benchmark models, very important. Widespread network that we have means that we have a widespread set of learnings, and we can feed from that and continue to develop our benchmark models. One of my first jobs in Heineken was to make production efficiency benchmark models. At that time, honestly, we thought we were blowing the universe by saying production facilities can go to about 13,000 hectoliters per FTE. And if you asked me at that time, I would say, yes, all the data shows that, that is really kind of the limit. But we learn and we evolve and now we'll be start to be happy when we see 20,000. Some plants go far beyond that. Others are not there yet, but it's really showing that these things are shifting. And many people ask me, and the question was also to Harold saying like, "Hey, can you continue to fill those glasses, the 400 million a year? Well, this is a great example, in the past, we thought that, that was the limit. And now we see that the limit has moved. And this is how the world progresses and we progress with it. So I am confident that we will be able to continue to push that limit. Now I'm going to talk about leveraging the brewery network for a next level of efficiency. This is a very basic kind of join showing you a little bit what we are talking about. Soren talked about the management of it, the S&OP planning, who produces what and so on. I will talk a bit about the operational efficiencies inside the breweries. So we come from this great path, and we're building on what has been done, we've created a standard language, common way of working, TPM programs and all that, but it was all driven inside one brewery with direction from the center. And when something went wrong, somebody from the center needs to fly there and maybe help solve the problem. Basically, what we're doing simple concept, we're connecting all the breweries with each other. If you have a problem, maybe you don't need to wait for someone in Amsterdam to have time to come see you. You connect with another, maybe an operator, maybe an engineer in the vicinity that is also connected, it has the same machines and that can help you. How does it look inside the brewery? Well, it looks like this. Everything and everybody connected. First and foremost, it's about the connected worker to give these workers the tools they need. And today, we have 17,000 workers connected on this platform, and we want to have everybody on the connected worker platform. They get their operational instructions. They get to share learnings with each other. They can copy things from breweries around the world. We can give -- we could broadcast instructions and operational procedures. It's all happening. The second part of it is the IoT analytics. And right now, we have 50, I checked this morning, rollout, 50 breweries connected on IoT, meaning that machines are connected. We are getting all the information from the machine, we can make analysis, but also predicting status of machines, and we can do AI support of decision-making. We do this also together with our suppliers. The unique thing about the way we do it, we find it unique is that we own the data, and we own this data layer. That is our invention, but we can share data with everybody. So I'm not longer depending on the supplier of the robots to be giving me a data collecting thing and another machine was giving me a different data collecting thing. We say, "Hey, we use our own platform." we use IoT technology, which is becoming very, very accessible and not very expensive to connect all these machines through a self-developed data layer that sits in the cloud, and we do this together with a few partners. So it enables me to go to Krones and KHS as examples, who are big suppliers of us and talk about the benchmarking of their machine and compare them to each other, yes. And I own the data. And if I want to do something, say, optimize something on our machine, I don't need always to call them and wait for them to send an engineer and do some programming. I can do this directly myself. Well, not me, but those who know how to do it, and we can do that very much in our network. Central to -- the way we deploy that is really the connected worker. It's really giving our people better tools and schools that we work with are also very excited about it. And -- this week, we presented this together with AWS in their big conference in the United States to an audience of about, I think, 5,000 people, slightly bigger than here today. And yes, this is for us, really a breakthrough. Now I told my guys, so we don't do a lot of marketing in the supply chain. I said, yes, we're going to have this conference. We're going to present something, and they say, "Hey, can we make a video." So I say, go ahead. And we have here a video that has been made by our own operators in 1 or 2 breweries, and we put this together for you to see how it looks like inside the brewery. So -- if you can please roll this video. [Presentation]

So I'm super proud of my team for putting that together. And the things you see there are real. Even the walking robot is a real project that we are working on together with Boston Dynamics using this autonomous robotics in our operations. Now why do I show you this? Because it's a lot of small things when you connect it together, it becomes big. And it is driving -- we have seen in the breweries where we are further 10% operating cost improvement. So 10% productivity is coming by deploying these platforms. Capital efficiencies, 5% to 8% by available production time that is being realized. We see this across the breweries where we are deploying. By the end of the year, today, 50 by the end of the year, 60 will be fully connected with IoT, not only the worker platform, but also all the machines connected. And by 2025, a 100%. Now we are putting a lot of money behind this. If you were to buy this off the shelf from all the various suppliers, it will be significant more expensive. But we are investing EUR 100 million behind this to deploy this into 180 breweries. In the years to come, in the next 3 years, we expect to get EUR 250 million return, yes. It means that about 20%, 20% of the beer glasses, the productivity savings of Harold for the next 3 years is going to come from this initiative alone. It's not a small initiative, but it's one initiative that we are doing. And it's the one that I'm super, super excited about. Now some people ask me, what is this? And I just want to make it really visible for you. This is a drone. Now what does it do? You saw in the picture of Bintang, we have a lot of big tanks. These tanks when they are emptied, we pushed CO2 in. And then we go in and we inspect them, to make sure that they are working well. That is a process that takes up to a week because we need to push the CO2 out, need to vent the tanks then we need to build scaffolding inside the tanks, and we need to send people in to look at all kinds of little details. This little friend here does that in a CO2 field environment in a matter of maybe an hour, right? So that is 1 week's work, hard work of several people being replaced by a small drone that go in. The tanks are all the same. It's a program flight path and you're free to look at this and touch it is a funny thing. It's quite heavy, actually. It's a little bit dirty because it came out of the brewery just this week. So this is an example of how we are using modern technology and a very clear example of how we and the beer industry also need to continue to look outside and not only inside our brewing capital to make sure that we stay super productive also for the future. So that was the end. I hope I have shown you a little bit how we drive to improve productivity, also that we're not only in the brewery, but also looking outside. And a little bit about the brewery network, how we try to connect all the people and make them share and learn. And hopefully, the connected brewery movie made by my team showed that a little bit real-life impression of how this is working. Thank you very much for listening. A good day.

While we're going to have the tables and the chairs set up for the Q&A, and I ask our executive team members, presenters of today, and love to join us on the stage for the Q&A. You can probably tell me a little bit more about this because -- so it's got a -- do you want to borrow it? Well, I certainly would like to take one of these home. And does it have a camera?

It does have cameras. Yes. It's the red thing in the front.

Okay.

There are some small cameras on the side for positioning, yes.

Very good. I can use this to -- take a picture of the labors.

Federico, I know you were going to be playing with it. So I took the battery out. So it's completely safe.

Fantastic. Listen, so we are a little bit over time, as you have noted, we will try to be efficient with the Q&A, but we also want to allow sufficient time for you to be able to ask questions not to the drone, but to Magne and to the rest of the team. And yes, please join us, and we can -- I'm going to have a microphone, and I'm going to start just like yesterday, circulating it so that. Now one thing is that, yes, some of you did not get the opportunity to ask a question yesterday. So I'm going to give the people that they didn't get a chance to ask you question yesterday to ask it first. So Richard.

Maybe first one for Harold, you talked about the asset improvement, the asset turnover improvement. How do you make that a continuous process? Because we heard from Magne and Soren, and Magne is going to be 100% connected brewery by 2025. So how do you make sure that also in the longer term, you have this continuous improvement in asset turnover?

Yes. It's a good question that I don't have the full answer to just to be very honest and upfront about it. I think what we're trying to signal today is that -- and I think you heard it through the presentation is that capital is becoming something that we're going to pay attention to. And that in the near-term, there will be more investment. We come out of the COVID period. We have a lot of breweries to build, a lot of growth to go after and catch-up with COVID at the same time. And for those of you who know a capital expenditure is not only the physical infrastructure, it's also the digital infrastructure that we're building, and we are doing also things in sustainability as Daisy, as eloquently pointed out. So in the near-term, these are all that I mentioned, which allows us to still book 8.5% to 9% on the horizon. Over time, asset productivity will come from more efficiency as Magne has just shown, but not only that, we see working capital opportunities. And not only that, we also see asset turn coming into with a more productive organization leading to higher result. So it's the asset base that is also producing more. So it's not only the investment coming down, it's also the returns from the investment going up. And that we will see over time. As I said, this was an indication of direction. It's not a cost size plan, like the cost plan that you've seen today. Let's wait a year or 2 before we get there.

Maybe a second question, back to the Heineken brand. I think there's quite a bit of contribution to the Heineken brand from 0.0 and Silver in the last couple of years. So maybe can you give us a couple of specific capabilities from Heineken from the company, which made this possible, which made this a success?

You mean the development of the product?

No, no, the rollout, the success of the rollout, which specific capabilities that Heineken has made this a success?

Yes. Brand Heineken is beautiful because it is the brand that remodeling, how to get the balance right between running and designing and stewarding a global brand and being locally very relevant. So in the case of 0.0, it was really R&D in the Netherlands that played a critical role in cracking the recipe because we all know 0.0 has been around for decades, it had a very poor taste. We finally cracked it from a taste point of view. And then Poland played an important role because there was real early buy-in from the Polish marketing team on it, and they really start to develop it. And then when some opco started seeing the success there, it started to roll out across Europe. And then when Europe really start to scale, we start to bring in to the Americas, it's a little bit similar to what happened with Radler a couple of years earlier, that was invented Austria raw model there and it started spreading. We see the same with Silver. The Silver recipe was developed by [ Manu ], our Brew Master, if you run together with the R&D team in the Netherlands, it was really build a role model to Vietnam, then it went to China and then Soren started to embrace it and now moving to the Americas. And it's a delicate balance because we don't want to, as we are saying many times, we don't want to centralize the business and make the decisions in [indiscernible] [ free ] tower. But at the same time, you want to collective learning, the collective knowledge that you are developing to be used by everybody in network. So -- and yes, because Heineken is Heineken, it gets everybody's attention. Of course, it goes with bigger numbers, more countries at the time than some of these other brands. But we start seeing it now, for example, with Desperados. Desperados was developed in France many years ago for 2 decades, it was probably a pure European proposition now your start seeing it going global again. So it was -- yes, I think it's all tapping into the same kind of capabilities and emerging nature of seeing the company as a network and really leveraging that.

Thank you, Richard. Who's next. Go ahead with a question?

It's Mitch Collett from Deutsche. Harold, you talked about being able to improve working capital and the gap between you and peers. Can you maybe talk about how far you can get to closing that gap on working capital? And ultimately, how long that might take? And then a question for Stacey. You talked about the availability of 0.0 products. At the same time, yesterday, we enjoyed some products at the other end of the ABV spectrum. To what extent is your responsibility and objectives constraining your opportunity to move in the other direction in terms of ABV?

Thanks, Mitch. Do you want to start, Harold?

Yes, let me start. I'm delighted that there is so much attention to the capital part. That also means that the productivity part really has come through -- so that's -- I take that one. I'm not going to give you numbers right now. Otherwise, I would have put them on the slides. But what I do indicate is that there is a second headroom for us to improve on working capital opportunity. But I think we have been consistent over the past 12 months that we're saying, look, we really are having a lot of change activity in the business. And I hope that in this past 24 hours, 48 hours, you would agree, that this is a deep-rooted sense of change in the organization. And it also requires organizational effort to go there. You heard Soren speak about nothing more, nothing less. And that is why we're also pacing and dosing and testing and learning before we're scaling before we go into big bold commitments that would be a defocus of the organization. This is a carefully orchestrated program that we're trying to execute on the EverGreen. So that is why this will take time. So the opportunity is significant. We will take our time. We will get better, but we have to be a bit patient because there's a lot going on.

And maybe part of the discussion that we're having as a team, we probably may not want to go all the way where others are going from a sustainability point of view how we see the partnership with key strategic suppliers, et cetera. So we don't want to leave the suggestion that we're going to close that gap. There may be things that others are willing to do that we feel is not part of how we want to do business. And by the way, this whole crisis right now, it has shown how important the strategic relationships with your suppliers are, because, of course, working capital to a big extent is about payables. So we're going to do that finding right the right balance. Yes.

Great. So thanks for the question on moderation and appropriate that we're sitting in a brewery that opened in the 1800s where we have been brewers in our hearts for the majority of our history. And beer occupies a special place in social occasions and within the alcohol segment in the sense that it's inherently moderate. So we have been a 4% or 5% ABV player for a very long time. Now James was talking about the unique benefits that brewing offers. It's natural, it's inherently moderate. And those are things that are in our toolkit as core capabilities that we can leverage to meet a lot of different kinds of consumer needs. So there's a lot of goodness there. And we also know that moderate beverages play an important role in society. And even the WHO sites that went low and no alcohol beverages like beer are made more available in society. There are better population health outcomes. So we are brewers. We have a rule of thumb around ABV staying within a certain range. And I would also say we are always listening and learning to what's happening where our consumer is going, where is the innovation going in the market. So it doesn't mean no never. But what it does mean is we think higher ABV beverages. And if you go to the extreme of 40% ABV whiskey or that those products, come with different commercial freedoms, different taxation structures, and they should because alcohol beer has a unique role as a moderate beverage, and we believe in that. So we will continue to innovate. We will continue, I think, to come from our strength, which is beer. We'll continue to watch and listen and learn and innovate in this interesting beyond beer space. But largely in that kind of up to 8% -- 7%, 8% ABV range and take a lot of care if there's something going beyond.

And maybe -- by the way, Stacey, and James did a fantastic job in clarifying at least the internal rules, how we go about it and we feel we had to clarify it internally because when you look out in the market, particularly what's happening in the U.S. where you have soft drink brands that skew very young in age, starting to add alco and even sometimes relative high ABV levels, we are quite worried about it. And I think you already start seeing an emerging pushback from different agencies against that. And I'm super worried about it because that will affect all of us in the end of the day. So we really need to be acting with a lot of responsibility there. And indeed, anything above 8% ABV basically needs your and James sign off. Doesn't mean that you won't ever do it. For example, these old specialty beers like Duvel at 9%, 10%. That's okay. But that's also something that you can't drink very fast. So that is designed in terms of its accessibility is less accessible. So that would be an example where you say, okay, I understand why that's above 8%. But if something is very easy to drink and very sweet and very accessible, and it's above 8%. You better watch yourself. So -- and I foresee this is going to be a big debate in the coming years. I really hope that as an industry, we act responsibly and avoid that it's the others having to regulate us on this.

And I think maybe just building on that, just a very concrete example from Europe. If you go down to the local but [ Hein ] just around the corner here, you will find a whole segment of 50 CL cans with very high ABV content, extremely profitable, very, very much and interesting from a P&L perspective, place to go to. We don't go there very deliberately. We made the decision. This is not the kind of category we want to help to create. So that's a very specific example of us saying, that's not where we think the business should be going.

Thank you for that. Laurence?

It's Laurence Whyatt at Barclays. One for you, Harold. On cost inflation, you've mentioned that this year going into next year could get as high as high teens, but it's entirely possible that going into 2024, we might see a much more benign cost environment. It could even be negative. We'll see where that goes, depending on your hedging and things like this. How do you see pricing over the next 2 years when you have an ambition of in pricing in line with inflation? But of course, we might see 2 very different years when it comes to inflation, but you want to take enough pricing to be able to cover it. And is there a situation that retailers could push back on pricing if we see that very low inflation scenario? How do you see the 2 years paying out?

So let me first remind you of the slides that I've shown because I don't think that I went into 2024. And I also don't want to be on record of believing that 2024 will be a deflationary environment. we will get there when we get there. So let me restrict to what I've shown, and that is indeed in 2023, we see a high teens input cost inflation. Now what we have the intent about is to price for inflation, but do so taking local businesses, local competition, local market context into account. And I fully trust the operating companies and the regional presidents to make the judgment about the statement of intent, but also the reality of the markets and that are facing. So I do believe, as you will have seen in our first half results that we are intentional about the pricing that we take and mix also plays a role, price mix is an important component of that. And we want to continue that journey into 2023. That is what we ambition. And we are also not afraid to lead the way in that. And you heard Marc Busain talk about that in some of the markets. So this is our intent. Do I expect retailer engagement on the topic? I don't like the word pushback, but there will be certainly a way of engagement there, for sure. This is also why we're very, very clear that pricing for inflation leaves us euro for euro, 0 profit, right, one in, one out. It also means that why we're a bit cautious about the growth savings that we're declaring because gross savings in a way may also be needing to reinvest in the business to uphold the consumer franchise that we have. So that is how I see it playing out. Now over term, as I was over time, as I was trying to show you in that particular slide, I do think we need to get better at our ability to price in line with inflation. That is what we have. It comes from half that rate. I don't think that's good enough. It needs to be above half, directionally going into the 0.7% to preferably 1%, passing on price inflation. That also comes with the responsibility to build great brands. This is why we need brand support. That is how I think about it. And then we will see when deflation comes, we'll have another conversation.

Understood. And just one more on the packaging. You spent a lot of time talking about returnable packaging and mainly focusing on glass in terms of what we've seen on the slides. But of course, kegs are return -- 100% returnable packaging, where do you see the role of kegs and therefore, the on-trade when it comes to trying to hit your targets? And is there a potential for your blade system to start getting into returnable packaging as well to try and hit these targets?

Yes. So certainly, if you look at the European business, but also beyond that, there's no question at all that the Horeca plays an absolutely vital role in our business, of course, from a volume perspective, from a revenue perspective and certainly also from a margin perspective. It's also critical in building our brands. We have absolutely no doubt at all that building strong brands happens also very much in the Horeca. To do that, we have developed a whole different sets of a whole range of different draft systems. And we believe that, that allows us to actually provide the perfect of draft experience to consumers in different types of outlets. And we continue to innovate on that, and we continue to work on how can we make them as sustainable and as relevant as we possibly can, and that includes also for the smaller form as absolutely.

I just had a question for you, Soren. Sorry, it's Roseanna Ivory from Aberdeen. I just had a question on the decision to double down on premium at a time where we're seeing really tough cost of living crisis in Europe. And I guess how that's impacting that decision and the time frame around that?

Yes, it's a very good question. And I think what we are seeing is actually a remarkable resilience of the premium category at the moment. And actually, we have seen something similar also in the past. I think we are in many ways, quite fortunate. We are in a category, which is quite affordable. And even though you talk about premium or maybe you talk about EUR 0.10 more for a beer Moretti than you do for mainstream products. And I think even in hard times, you want small highlights in your day. You may not buy an expensive champagne. You may not buy a new handbag, but you do want a little thing that actually provides a bit of happiness in your daily life. And you can say that's certainly the -- what we've seen also in other categories, you know very well the lipstick effect from my old beauty category. And we see something very similar to reset the moments happening also in beer. So I have to say we are quite bullish on the opportunities in the premium also in the current environment.

What's really funny. And I think Roland spoke maybe to it yesterday that, for example, in a market like Nigeria, where we see the market now declining, premium is actually continuing to grow. So indeed, it's not just in Europe where we see good resilience on premium. Yes.

Sanjeet Aujla, Credit Suisse. Harold, just a couple for you, please. Firstly, on the high teens input cost inflation for next year. Can you give us a sense of how much of that is coming from Europe exactly? And I think you talked about energy costs doubling next year. Was that a comment just on Europe? Or was that at the group level?

Yes. It's a good point. I shouldn't have said energy costs doubling because I usually don't give away that level of detail, but there you go. The -- we're not giving regional guidance on input cost inflation. But at the same time, you heard Soren speak about the importance of energy cost into one-way glass bottles, for example. You also have read the newspaper that energy prices are much more elevated in Europe by a factor than we see elsewhere in the world. So I think the outlook statement was therefore quite deliberate to indicate that the point of gravity of the high input cost inflation is indeed going to be Europe, particularly if you take energy into account. Now what we don't want to do is to give you the very specific building blocks, region-by-region about what is input cost, what is gas, what is transport, what have you, because I think that it is our business to run, and we really want to make sure that we have responsible pricing cost savings programs that Soren was talking about, to be able to allow us the commercial freedom to adjust the business as we go forward. But it will be not a surprise to anyone here in the room or on camera. That will be a tough year for Europe in 2023 from an inflation and energy cost point of view. So that's the answer I'm going to give.

Trevor Stirling, Bernstein. Magne, it was great to see the Scope 1, 2 and the path to net 0 in the breweries, particularly thermal. But thinking about Scope 4 or so Scope 3 in 2020 -- 2040 and agriculture was roughly 1/4 of the Scope 3 emissions. Any thoughts about how you're going to get tens of thousands of farmers around the world to net 0?

Indeed, and if there's a Scope 4, we need to talk. I need to get up to.

I'm getting worried.

I'm worried too. Great question. So packaging, logistics, cooling and agriculture are the foremost meaningful elements of that value chain, that's Scope 3. And that's where we've been bringing together, and I think you saw in some of the materials, the cooling suppliers, the packaging suppliers, coming together to figure out, first, as Magne said, how do we lead by example through 2030 and invite them to come on an SBTI journey with us. Agriculture, you could say maybe also with logistics, I personally think will be some of the most challenging areas to urbanize. Also because with agriculture, you have many small holder farmers. And so you have many, many folks to engage with and then behavior change, we know is not the easiest thing to shift. So we have farms agricultural pilot right now that we work through our [indiscernible] opportunity. And in those 500 farms, we're applying sustainable agricultural practices. So you can change seed varietals or fertilizer the way that you're rejuvenating the soil, to maximize your carbon sequestration as you grow crops irrigation types of things -- did I lose the battery a little bit -- it goes. So we're learning a lot from that. And I'm also energized by the fact that largely sustainability is not a competitive topic. So we're talking to many others to try to go as fast as we can and learn as quickly as we can to get to scale. And just like anything else, when Magne is showing the pie chart of all the technologies and all the opcos have a road map. We have to do the same thing for all the elements of the value chain and then keep it present, put KPIs against it and work it over time. So it won't be easy and yet the science is there, the standards are emerging. Now we need to bring it to the world, learn from pilots and scale.

There's one advantage in being a brewer that we have almost 2, 3, 4 inputs, its water, okay? Herbs, malts and you stick it in an aluminum can or glass bottle. And the number -- so the number of ingredients is extremely limited, if you compare it to a big multi-category food or beauty FMCG company. And then when you look to can suppliers, bottle supplies, malt suppliers, it's basically 5 to max 10 suppliers in each of these. So when you take, let's say, 25% of our larger suppliers, you cover 90%-plus of our carbon impact. These are big global companies that also have Scope 1 and 2 commitments SBTI approved. And if not, we are talking to them that that's a requirement for us going forward. And our competitors and other beverages companies are doing the same. So in that sense, I don't want to belittle the challenge. And one of the disadvantages of breweries is that we use energy-intensive packaging. So there will -- a lot will need to go well. But it's relatively simple from the number of players you need to get around the table. And so the other day, Herve, our Global Head of Procurement, we had a conference with the World Global Aluminum Can Industry, the kind of customers like us, the can makers as well as the aluminum providers to collectively sit down and say, okay, how we're going to go and decarbonize. And we will meet all the time to 2040, but at least, yes, it's a more simple approach than I think if you are in multi-categories, and you have hundreds of -- or thousands of ingredients and tens of thousands of suppliers then it becomes progressively even more challenging. Yes.

I think it's right to call out agriculture, in particular, as you do. We work with a lot of farmers feeding into our value chain. So -- but there are a few big elements in agriculture. And one of them is the fertilizer. So fertilizer is one of the big contributor to carbon in the agriculture. And there, the numbers of players also, as Dolf was saying, is limited. And we work together with these companies to develop new ways of getting carbon improved fertilizer eventually control fertilization of the agriculture.

Sorry, there's a question for you. Thanks so much for your presentation. I think you've shown quite clearly how the business is pivoting in terms of what you're focusing on and also the cost opportunity still to come. I think there's a perception amongst the investment community that Europe is tricky. It's going to be very hard to generate much growth and both top and bottom. Could you talk perhaps directionally about how you think about the role of Europe and delivering sustainable superior top and bottom line growth at the group level?

Yes. I think yesterday, we said if you want to play in the Champions League, you need to have -- be able to score the goals, but you also need proper defense. And make no mistakes about Europe as elsewhere. Our ambition is not to play in the Champions League, it's to contend for the cup every year. And to do that, indeed, we do need to, as I spoke about, develop outstanding brands that consumers truly falling off with, we need to develop outstanding products that consumers are truly willing to buy into. And I think that's where we have a wonderful heritage of doing some of that, but hopefully, as you could see, we are, at the moment, really doubling down on saying what are the big opportunities, not just based on what we have done in the past in terms of brand building, but what are really the brands that are truly relevant also for the generations to come. I do think that it's incredibly important to make sure that especially the younger audience is really buying into our category. If beer starts losing relevance with young consumers, then you really have a problem. And that's luckily what we don't see at the moment in Europe, and that's where we think we really need to make sure we have the right brands. Now -- that's the offense part of it. And I think here, I have to say I think we have a huge amount of capabilities to really deliver on that. But just as important, indeed, is the cost side. And I think this is a -- in many ways, probably a new capability we're building. And I think the big shift and Harold called it out really well, is probably in the past, cost was kind of a one-off intervention typically. It was something we did because we had to. There was an external issue or whatever, and then you took out x amount of millions from your business and then you kind of moved on. And I think the big change now is that actually, I think more and more is the realization across the business that you cannot build your top line unless you also are extremely keen on building a very efficient organization. And that's why I do believe that the biggest shift, if you walked into a Heineken office today compared to 5 or 10 years ago, is the amount of time that is being spent very specifically on saying what are the opportunities for really running our business in a more efficient way. And actually, also a real belief that in doing that, you're not just doing something dirty or something bad. No, you're actually doing the stuff that allows us to win for the future. And I think for Europe, and that's the last point I make is -- it's an uncertain world we're in. And right now, what we need to do is we need to make sure that we create a P&L that has much flexibility as we can possibly have. And part of that is working on the cost side. So that's really the -- I think that's the big shift.

We're going to take now the last question because we're about to run out of time.

Andrea Pistacchi from Bank of America. A question on pricing. You said it's -- pricing is a local decision. And I think, Harold, you also said that you obviously fully trust the opcos to take the right pricing in the current environment, but it's not going to be easy to take price. So do you have a mechanism at group level or Europe level, where you coordinate and you can ensure that if there is a shortfall in one country, you can maybe take more to compensate in other countries. And obviously, at group level, hit what you -- or Europe level hit what you intend in terms of gross profit per hectoliter?

Yes, we do. It's called -- I put a particular slide on this. We've got all the visibility that we want. We have performance dashboard. We've got metrics. We measure our pricing relative to the market relative to competition. So we've got a pretty good visibility. But what is most important is that we have got the commitment from the organization to do the right thing and the transparency if that is not possible, so that we can find alternative solutions. So one of the things that I'm not talking about because we showed you all kinds of dashboards is that -- and I said it during one of the drinks, we are in the fortunate position that good news travels fast and bad news does too. So that at least we have an organizational agility so that we can adjust and every month, we have live conversation. Every 2 weeks, we have conversations in the ET. So if something needs to be steered, we know what to do because we know what it is. So that's how we are trying to run it. It really is becoming and they're coming back to a close. It's opco-centric for sure, but this is also where power of networks and agility comes into play. So I'm actually feeling pretty good about that.

Thank you, Andrea. Thank you. So thank you very much, and Dolf you want to now share some closing remarks.

We ended I'm feeling very good. When the CFO feels very good. I'm happy too. I'm going to keep it short because we realize some people have flights to catch, there's a 12:45 bus going. So I will just take a couple of minutes, leaving enough time for you guys to grab your stuff and go down. I don't know about you, but I feel the time has flown since we met early evening on Wednesday, and it has been an absolute joy to be together for this, whatever it was 36 hours or so. And of course, this happens because of very hard, diligent, passionate work by people in the back that are not standing on the stage, but are literally there. So I actually would like to call a couple of people out who have spent days, nights, weeks, months on this. We don't hire big consultants. Every slide you see is made by a Heineken person. And to make it all look sharp consistent that we know is a hell of amount of work. So I'm going to read a bunch of names, and I would appreciate and ask for an applause at the end of it. So first of all, of course, to go IR team left Federico, Miriam, Ruben and Marc supported by Matteo, Serra, Celine, Jeremy. We have all the people who supported the tasting yesterday that was led by Jose and Julieta. And of course, the business support team, Astrid, Martin, Judit and Elkia. So let's have a big round of applause for them. And I'm very happy for them because they're going to have a life again this -- starting with this weekend. I'm just going to show 3, 4 slides, and it's basically a repetition of the slides you have seen. I hope that what I started with, this is a story of continuity and change. I hope you feel that coming through that we honor the past, the foundations, the strong foundations that we're building on, but they were also crystal clear on where we do need to change to stay relevant, to adapt in a very fast-changing world. And as a growth company, first and foremost, really how do we sustain growth in that new context. This is the shortest, most crisp expression of our strategy. And we are very clear on those 5 priority. You have heard each of the team members speak to this. This is where we're spending the vast majority of our time on the #1 of those 5 is all about top line. It's all about growth, but how do you continuously renew, revitalize that growth, then, of course, productivity, digitization, sustainability and very importantly, people, which propels our growth algorithm. We strongly believe in that. And I hope you see how that is starting to work. We do realize not only for us, but for you that with all the disruptions happening, it's not always easy to see through then we're getting components in place, but you don't always all see it coming through in the bottom line and the full P&L. We hope that we have built enough confidence that, that will start to happen with time. Some things will come through sooner. They will be more easy to see. Some of them will take a bit longer. We try to be very honest and transparent about what you can expect more quickly and what will take a bit more time. I hope you also appreciate the amount of change that we're putting on this organization and that we also try to pace that and therefore, quite deliberate about, for example, capital efficiency coming after productivity, but that we really first need to learn that. And it's ultimately all about the green diamond and each of the 4 components. So one of you wrote a nice note yesterday evening, Green Diamonds are Forever or something, we're going to steal that line because I really, really like it. And I hope that you also get a sense that, yes, it's still early days, but we are beyond that starting moment, building the team, setting the direction, getting everybody aligned and they were not really in that kind of next stage of mobilizing and really driving delivery against the priorities. This organization, when it has clarity, it is really good at delivering the goods. You really feel the all 90,000 people machine starting to move in the right direction. And ultimately, this is a journey that is never meant to be a 1- or 2-year journey. We really see this as a 3 to 5 and for some components, even a 10-year journey. So hopefully, over time, you will start seeing this accelerate and picking up speed. And we continue to do this in a crisis while building the future. I use that thinking that it would just need it for 2020 and afraid it's going to be with us for some time to come. Now the most fun slides I want to -- I saved for last. The intent was you get to see Harold and me probably more than you sometimes bargain for. And but I really hope that you get a sense of this team. I'm super proud just sitting there, listening to them, how it's all coming together, they're all very unique, different leaders and yet, we are really flying information. That's also something that I hope you start picking up on it. And yes, we got it. We really feel an incredible sense of ownership and commitment to deliver against all these aspirations that we have set. And yes, building on our notion of history and legacy, we really hope that this team moves the ball further up field. And so that, once again, we are leaving this company a little bit better than that we found it and that we really deserve the confidence that you honor us with. It was a pleasure, and we wish you all safe travel home and look forward to stay in touch. Thank you so much.