2007 Annual Report Also see

Also see www.enjoyheinekenresponsibly.com .V . 2 0 0 7 A n n u a l R e p o rt

01 Profi le

02 Performance highlights 04 Milestones 2007 Report of the Executive Board 06 Chief Executive’s statement 10 Outlook 2008

12 Executive Committee 14 Operational review 14 Top-line growth 14 The Heineken brand

16 Innovation, research and development 17 International marketing

18 Shifting the balance 18 The Amstel brand 19 Sustainability

21 Personnel and organisation 22 Regional review

22 Western Europe 26 Central and Eastern Europe 30 Americas

34 Africa and the Middle East 38 Asia Pacifi c

42 Risk management 47 Financial review

52 Dutch Corporate Governance Code 56 Decree Article 10

Report of the Supervisory Board 58 To the shareholders 61 Supervisory Board 62 Remuneration report

Financial statements

65 Consolidated income statement 66 Consolidated statement of recognised

Income and expense 67 Consolidated balance sheet 68 Consolidated statement of cash fl ows 70 Notes to the consolidated fi nancial

statements

132 Heineken N.V. balance sheet 133 Heineken N.V. income statement 134 Notes to Heineken N.V. fi nancial statements Other information 138 Auditor’s report 140 Appropriation of profi t 141 Shareholder information 145 Countries and brands 152 Historical summary 154 Glossary

Heineken is one of the world’s great brewers and is committed

to growth and remaining independent. The brand that bears

the founder’s family name – Heineken – is available in almost

every country on the planet and is the world’s most valuable

international premium beer brand.

Heineken aims to be a leading brewer in each of the markets in which we operate and to have the world’s most prominent brand portfolio. Our principal

brands are Heineken® and Amstel®. In addition to these, we have more than 170 international, regional, local and specialty beers around the globe, brewing a Group beer volume of 139.2 million hectolitres. Our other leading brands include

Cruzcampo®, Tiger®, Z˙ywiec®, Birra Moretti®, Ochota®, Primus® and Star®. We have the widest presence of all international brewers, thanks to our global network of distributors and 119 breweries in more than 65 countries. In Europe we are the largest brewer and distributor of beverages.

Our global coverage is achieved through a combination of wholly-owned companies, licence agreements, affi liates and strategic partnerships and alliances. Some of our wholesalers also distribute wine, spirits and soft drinks. Our brands are well established in profi table, mature markets, whilst the popularity of our beers is growing daily in emerging beer markets.

Marketing excellence and innovation are key components of our growth strategy. In everything we do, it is the consumers and their changing needs that is at the heart of our efforts.

We also fully acknowledge our role in society. Social responsibility and sustainability underpin everything we do. We will continue expanding initiatives to combat alcohol abuse and misuse and we will work hard to reach the highest environmental standards in the industry.

History

The Heineken story began more than 140 years ago in 1864 when Gerard Adriaan Heineken acquired a small brewery in the heart of Amsterdam. Four generations of the Heineken family have been passionately involved in the expansion of the Heineken brand and the Company throughout the world.

Employees

In 2007, the average number of people employed was 54,004. Their hard work and commitment are the basis of our Company’s success.

2003 2004 2005 2006 2007 1,357 1,377 1,392 1,569 EBIT (beia) In millions of EUR 1,846 2003 2004 2005 2006 2007 806 803 840 930 Net profit (beia)

In millions of EUR 1,119 2003 2004 2005 2006 2007 85.2 96.7 100.5 111.9 Consolidated beer volume

In millions of hectolitres 119.8 2003 2004 2005 2006 2007 18.5 19.2 20.1 22.5 Heineken volume in premium segment

In millions of hectolitres 24.7 2003 2004 2005 2006 2007 85.2 96.7 100.5 111.9 Consolidated beer volume

In millions of hectolitres 119.8 2003 2004 2005 2006 2007 Heineken vo In millions of Revenue +6.2%

€12,564 million

€1,846 million

Net profi t (beia) +20.4%

€1,119 million

119.8 million

hectolitres

24.7 million

hectolitres

Net profi t (beia) increased by 20.4 per cent, the best

•

performance for the past nine years, driven by an increase

in EBIT (beia).

Consolidated beer volume grew by 7.1 per cent to 119.8 million

•

hectolitres of which only 0.5 per cent was attributable to the

fi rst time consolidation of newly-acquired companies.

Volume of the Heineken brand in the international premium

•

segment grew 10 per cent to 24.7 million hectolitres, increasing

Heineken’s worldwide share in the segment.

Our performance

highlights

Results

In millions of EUR 2007 2006 Change in %

Revenue 12,564 11,829 6.2

EBIT2 _{1,528 1,832 (16.6)}

EBIT (beia)2 _{1,846 1,569 17.6}

Net profi t 807 1,211 (33.4)

Net profi t (beia)2 _{1,119 930 20.4}

EBITDA2 _{2,292 2,618 (12.5)}

EBITDA (beia)2 _{2,568 2,346 9.5}

Net debt 1,926 1,914 0.6

Dividend (proposed) 343 294 16.7

Free operating cash fl ow2 _{745 1,122 (33.6)}

Balance sheet In millions of EUR

Total assets 12,968 12,997 (0.2)

Equity attributable to equity holders of the Company 5,404 5,009 7.9

Net debt position 1,926 1,914 0.6

Market capitalisation 21,639 17,654 22.6

Results and balance sheet per share of €1.60

Weighted average number of shares – basic 489,353,315 489,712,594

Net profi t 1.65 2.47 (33.2)

Net profi t (beia) 2.29 1.90 20.4

Dividend (proposed) 0.70 0.60 16.7

Free operating cash fl ow 1.52 2.29 (33.6)

Equity attributable to equity holders of the Company 11.04 10.23 7.9

Share price as at 31 December 44.22 36.03 22.7

Employees In numbers

Average number of employees pro rata 54,004 57,557 (6.2)

Ratios

EBIT as % of revenue 12.2% 15.5% (21.3)

EBIT as % of total assets 11.8% 14.1% (16.3) Net profi t as % of average shareholders’ equity 15.5% 27.5% (43.6)

Net debt/EBITDA (beia) 0.75 0.82 (8.5)

Dividend % payout 30.7% 31.6% 74.5

Cash conversion rate 57.9% 105.6% (45.2)

EBITDA/Net interest expenses 22.7 19.7 15.2

1 _{Please refer to the ‘Glossary’ for defi nitions.}

2 _{‘EBIT, EBIT (beia), net profi t (beia), EBITDA, EBITDA (beia) and free operating cash fl ow’ are not fi nancial measures calculated}

in accordance with IFRS. Accordingly, it should not be considered as an alternative to ‘results from operating activities’ or ‘profi t’ as indicators of our performance, or as an alternative to ‘cash fl ow from operating activities’ as a measure of our liquidity. However, we believe that ‘EBIT, EBIT (beia), net profi t (beia), EBITDA, EBITDA (beia) and free operating cash fl ow’ are measures commonly used by investors and as such useful for disclosure. The presentation on these fi nancial measures may not be comparable to similarly titled measures reported by other companies due to differences in the ways the measures are calculated. For a reconciliation of ‘results from operating activities’, ‘profi t’ and ‘cash fl ow from operating activities’ to ‘EBIT, EBIT (beia), net profi t (beia), EBITDA, EBITDA (beia) and free operating cash fl ow’ we refer to the fi nancial review on pages 47 to 51.

Important highlights

Amstel in

South Africa

Heineken regains control of Amstel Lager in South Africa, following an arbitration award by the International Court of Arbitration of the International Chamber of Commerce in favour of Amstel.

In addition, Heineken takes an in-principle decision to construct a brewery in South Africa.

Amstel Lager will be marketed, sold and distributed in South Africa through brandhouse Beverages (Pty) Ltd., the Cape Town-headquartered joint venture between Heineken, Diageo and Namibia Breweries. Until the new brewery is completed, the production of Amstel Lager will be brewed in existing Amstel breweries in Europe and transported to South Africa.

March

May

June

New UEFA

Champions

League

advertising

campaign

Heineken launches a new advertising campaign for the Heineken brand and the UEFA Champions League partnership, which establishes the new theme “Enjoyed together around the world.” This new campaign builds on the truly international premium status of both Heineken and the UEFA Champions League.

Heineken and

FEMSA sign

ten year

import

agreement

for the USA

Heineken and Fomento Económico Mexicano, S.A.B. de C.V. (‘FEMSA’) extend their existing three-year relationship in the United States for a period of ten years, effective 1 January 2008. Heineken USA will continue to be the sole and exclusive importer, marketer and seller of the FEMSA beer brands, Dos Equis, Tecate, Tecate Light, Sol, Bohemia and Carta Blanca, in the USA.

Krušovice

Brewery

in Czech

Republic

This acquisition provides a strong opportunity to accelerate top-line growth in the Czech market. The Krušovice brand is very popular among local consumers and Heineken is confi dent that with appropriate commercial investment, this brand has clear potential to grow.

September

October

December

Heineken and

Carlsberg to

bid for

Scottish &

Newcastle

Heineken and Carlsberg confi rm their intention to make an offer for the entire issued share capital of Scottish & Newcastle plc. Through the deal, it is intended that Heineken will ultimately obtain a number 1 position in the UK and number 2 positions in the key markets of Portugal, Ireland, Finland and Belgium, as well as greater exposure to developing markets and segments, with positions in India and the US import market. Carlsberg will ultimately acquire Scottish & Newcastle’s interests in Russia (BBH), France and Greece.

In January 2008, the board of Scottish & Newcastle recommends the terms of a cash offer to its shareholders.

The Syabar Brewing Company has been operational since October 2005 following the reconstruction of a state-owned brewery, employs 280 people and is located in Bobruysk, 140 km south-east of Minsk. The portfolio consists of the national

mainstream beer brand Bobrov, which holds the number two position in the market and the recently introduced premium brand Syabar. 2007 sales volume is estimated at 600,000 hectolitres, compared to 370,000 hectolitres in 2006.

Rugby World

Cup 2007 in

Paris

Heineken launches its new campaign entitled ‘Continental Shift,’ offi cially starting the countdown to the opening game of Rugby World Cup 2007 in Paris on 7 September. Heineken was once again the Offi cial Beer of the Rugby World Cup and holds Offi cial Sponsor status. Referring to a new campaign theme ‘One World, One Cup, One Beer’, Heineken presented a TV commercial in which thousands of fans from all over the world show their passion for the game of rugby and for Heineken beer. The television commercial was shot in a number of iconic locations around the world, and is based around the idea that rugby fans would do anything to get to Rugby World Cup 2007.

Heineken announces the acquisitions of the Rodic Brewery, in Novi Sad, Serbia and of the Syabar Brewing Company, in Bobruysk, Belarus. Rodic was established in 2003 and employs 282 people. The Rodic Brewery facility is a state-of-the-art, 1.5 million hectolitre brewery, located in Novi Sad, northern Serbia.

The company’s portfolio consists of the beer brands MB Premium, MB Pils and Master. Total 2007 sales volume is estimated at 500,000 hectolitres.

Acquisitions in Serbia

and Belarus

2007 was a very strong year for Heineken. We signifi cantly exceeded the expectations set at the start of the year in terms of profi t growth and we delivered on our ambitious cost-reduction targets. Along the way, we made good progress towards becoming an organisation in which performance and focus on consumer needs are the key drivers of our strategic agenda.

Our success is clearly refl ected in the results we achieved against our key metrics:

Organic growth in net profi t (beia) up •

22.6 per cent

Organic revenue growth up 7.3 per cent •

Organic consolidated beer volume growth •

up 6.5 per cent

Heineken® growth in the premium segment •

up 10 per cent.

2007 was an outstanding year. We

executed our plans faster, more

effi ciently and with greater impact

than ever before. Alongside this, we

maintained our focus and insistence

on performance and delivery. We will

not be complacent though and will

continue to focus on delivering what

we have promised.

Report of the Executive Board

Heineken N.V. Executive Board

Left: Jean-François van Boxmeer

Chairman of the Executive Board/CEO

increased shareholder returns. In particular, we will have an important new distribution platform in the UK and other markets to drive growth of the Heineken brand.

Our acquisition strategy is focused on building leadership positions in markets where we operate. Scottish & Newcastle UK is the leading brewer and cider producer. Hartwall in Finland, Centralcer in Portugal and Alken-Maes in Belgium command respectable number two positions in their respective countries. We will also reinforce our business platforms in both Ireland and the USA. Last but not least the signifi cant stake in India’s leading brewer UBL will open tremendous opportunities for the future.

Alongside this, we will have acquired some very strong, complementary brands such as Newcastle Brown Ale, Foster’s and Strongbow cider, which have international appeal and potential.

I would like to take this opportunity to wish all our new employees, business partners and customers a very warm welcome to Heineken. These are exciting times for all of us and we will continue to build on the superb heritage and sterling past performance of Scottish & Newcastle. Priorities for action

We remained focused on our four Priorities for Action:

Accelerate top-line growth •

Accelerate effi ciencies •

Accelerate speed of implementation •

Focus on selective opportunities. •

Accelerate top-line growth

Looking back at the past few years, much has been achieved in terms of top-line growth. For the year 2005 we announced revenue growth of 7.3 per cent, of which 2.2 per cent was organic. For 2006, revenue growth had risen to 9.6 per cent, of which 7.1 per cent was organic. In 2007, we once again increased our positive annual revenue growth by 6.2 per cent, of which 7.3 per cent is organic. We have also signifi cantly grown the Heineken brand – our key strategic asset – which again showed excellent growth of 10 per cent in 2007. This is a great achievement and I would like

to thank our employees, and our trade and business partners for playing their part in this performance.

All regions contributed to growth

Our results also reconfi rmed that we continue to benefi t from our ability to extract value from our mature markets. Nowhere is this more evident than in Western Europe where, despite the challenging market conditions, we signifi cantly outperformed the sector with EBIT (beia) growth of 5.1 per cent.

Performance from our Central and Eastern European (CEE), African and Asian markets was outstanding and are beginning to deliver on their potential for both profi t and volume growth. CEE is our second largest profi t pool. Consolidated volume grew by 9 per cent and EBIT (beia) rose by 22 per cent. With an 18 per cent volume growth and 41 per cent EBIT (beia) increase, Africa and Middle East was the fastest growing region in 2007. The Americas region was again consistent in growing both its consolidated volumes and EBIT (Beia) and our Asia Pacifi c region continued its positive growth in volumes, revenue and profi tability. In the fi rst half of 2007 we also made two very positive steps, which will help us to maintain strong regional and market performance in the future. Firstly, in May, we renewed the sales and marketing agreement with our partners FEMSA in the USA for a further 10 years. This will allow our American operation to mature into a true portfolio business, fi rmly positioned in the growth segment of the US beer market. Secondly, we regained control of the Amstel brand in South Africa and decided to construct a brewery there. This will mean a stronger, more profi table business in partnership with Diageo and Namibian Breweries.

Scottish & Newcastle: a strategic acquisition The second half of 2007 was dominated by our planned acquisition of Scottish and Newcastle plc., in combination with Carlsberg. This strategic acquisition, which is still subject to approval of the relevant authorities, will reinforce our position in Europe, and will drive a sizeable, reliable cash fl ow and profi t stream to support future expansion and

The savings are fl owing through to the bottom line, enhancing our profi tability. In combination with stronger top-line growth, this has delivered the strongest operational profi t growth in many years. The Fit2Fight rationale and the techniques for achieving it are becoming more and more embedded in the organisation and are crossing all disciplines.

Looking ahead to 2008, we will complete our Fit2Fight programme on time and with the stated level of savings.

Accelerate speed of implementation

We have begun the implementation of an internal project on information logistics, which will support and simplify our Company-wide decision-making processes, by ensuring that the right level of accurate information on any aspect of our business is available in a timely manner.

In parallel, we have made good progress on our major business-wide change programme to centralise IT and to introduce common systems and processes.

The market-by-market implementation of our brand portfolio reviews is well under way. It has clearly delivered growth on many of our leading regional and national brands such as Primus (+14.5per cent), Star (+13.1per cent), Ochota (+14.5per cent), Cruzcampo (+1.7per cent), Z˙ywiec (+8.2per cent), Gulder (+10.9per cent), Goldenbrau (+15.5per cent) and Three Bears (+46.2per cent).

This focused approach to investment in brand building, innovation and execution is ultimately what allows us to increase our profi tability. Accelerate effi ciencies

Key in our drive for effi ciency is our ‘Fit2Fight’ three-year-cost reduction programme, aiming to save €450 million (including infl ation) before tax from our fi xed cost base over the period 2006–2008. This year, the second year of the programme, we delivered additional gross savings of €191 million. To date, as we promised we would, we have realised, €305 million or 68 per cent of the total programme.

Thanks to our performance-driven approach and our strategic focus, at the beginning of 2008, I believe that we emerged stronger, more effi cient, and more competitive than we were a year ago. Looking ahead, we will continue to invest the energy of our people and resources of our business into ensuring that environmental and social sustainability remain high on our agenda. We will strengthen our existing commitment to responsible consumption activities in partnership with our employees, the industry and third parties in order to play an active role in addressing alcohol misuse. In addition, we will maintain our focus on meeting the environmental and safety targets that we have set ourselves. Our 2007 Sustainability Report will once again transparently set out what we have done and what we have achieved in this regard.

In 2008 and beyond, we remain resolute in our desire and determination to deliver value for all our shareholders through the sustainable growth of our business and our position in the global beer market.

Jean-François van Boxmeer

Chairman of the Executive Board/CEO Amsterdam, 19 February 2008 Ultimately, however, it is not about processes and

systems. It is about whether we do or do not implement decisions more quickly. For me, there is no better example of this than our experience in South Africa, where from a virtual standing start in March of 2007, we had Amstel back on the market and in the hands of our consumers by September. Within six months, we had brewing, packaging, shipping, marketing, sales and distribution up and running and delivering for our consumers and trade partners – a great achievement.

Focus on selective opportunities

Although the focus during 2007 was of course on our planned acquisition of parts of Scottish & Newcastle, we were also active on other fronts. Total investment in acquisitions amounted to €245 million net of cash acquired, with much of this focused on markets in Central and Eastern Europe. In Vietnam, thanks to our acquisition in 2007, we are now the number two brewer with Heineken brand volumes of more than one million

hectolitres. In the Czech Republic, we acquired the Krušovice Brewery, a strategic addition

considerably narrows the gap between the number two brewer and Heineken.

In December 2007 we acquired the Rodic Brewery in Novi Sad in Serbia and announced the acquisition of Syabar Brewing Company in Belarus. In January 2008 we acquired Tango Brewery in Algeria, and announced a cooperation with Efes Breweries in Uzbekistan, Serbia and Kazakhstan.

All these transactions take us forward in both our strategy to become the number one or two player, in key identifi ed markets where we see

Full-year profi t outlook

Heineken expects that 2008 will be another year of good organic growth in net profi t, based on a further improvement in sales mix, better prices, higher beer volume and savings in fi xed costs. The international premium segment will continue to grow at a higher rate than that of the overall beer market and the Heineken brand will benefi t from this trend. In its last year, the Fit2Fight cost-savings programme is expected to deliver approximately €150 million of gross costs savings thus delivering in full the Fit2Fight programme launched at the beginning of 2006.

As a result of worldwide input cost infl ation, Heineken expects a 15 per cent price increase in its raw material and packaging costs. The Company expects that it will be able to pass on the impact of the increased input and energy costs in most of its markets. Due to the uncertainties around the possible impact of worldwide consumer price infl ation and weakening economies on consumer spending and beer consumption, it is too early to make a reliable estimate of volume levels for 2008.

Heineken expects the capital expenditure related to property, plant and equipment to total around €1.2 billion in 2008. Part of this investment is related to capacity expansion and the construction of new breweries in Central and Eastern

Europe, Asia and Africa. In principle, the capital expenditures will be fi nanced from the cash fl ow. The total restructuring costs associated with the Fit2Fight cost-savings programme is expected to amount to about €225 million, of which about €75 million will relate to 2008. As a result of cost-reduction programmes, the underlying downward trend in the number of employees will continue.

This outlook for 2008 provides further information

on general developments in the international beer industry,

their effects on Heineken’s position, its profi t forecast and

its capital investments.

In the event of a successful offer for Scottish & Newcastle, Heineken’s share of the assets will be consolidated for the fi rst time when the deal becomes effective.

The intended acquisition of the assets of Scottish & Newcastle represents a signifi cant strategic step that will create strong platforms for future profi t and cash fl ow growth. It will enable the Company to grow its fl agship Heineken brand faster in profi table markets and make the Heineken Group the leading brewer in the highly profi table European beer market. Following the transaction, Heineken will hold 18 number 1 or 2 positions in Europe. In Western Europe, where Heineken has increased its profi tability consistently, year after year, Heineken will acquire number 1 and 2 market positions in signifi cant new profi t pools.

The transaction will also add attractive brands with international appeal such as Newcastle Brown Ale, Foster’s, John Smith’s Bitter and Strongbow cider to Heineken’s leading brand portfolio. In addition, Heineken will acquire a 37.5 per cent stake in United Breweries, the leading brewer in the still small but fast-growing Indian beer market. On a pro-forma annual basis, this acquisition would add over 27 million hectolitres and revenues of approximately €3.6 billion to Heineken, thus becoming twice as big as the second player in the European market.

1. Jean-François van Boxmeer (Belgian; 1961)

Chairman Executive Board/CEO

In 2001 appointed member of the Executive Board and from 1 October 2005 Chairman of the Executive Board/CEO. Joined Heineken in 1984 and held various management positions in Rwanda (Sales & Marketing Manager), DRC (General Manager), Poland (Managing Director), Italy (Managing Director). Executive Board responsibility: Heineken Regions, Group Human Resources, Group Corporate Relations, Group Supply Chain, Group Commerce, Group Legal Affairs, Group Internal Audit, Company Secretary.

2. René Hooft Graafl and (Dutch; 1955)

Member Executive Board/CFO

In 2002 appointed member of the Executive Board. Joined Heineken in 1981 and held various management positions in DRC (Financial Director), Netherlands (Marketing Director), Indonesia (General Manager) and the Netherlands (Director Corporate Marketing, Director Heineken Export Group). Executive Board responsibility: Group Control & Accounting, Group Finance, Group Business Development, Group IT and Group Business Processes.

The two members of the Executive Board, the fi ve Regional Presidents and fi ve Group

Directors together form the Executive Committee. The Executive Committee supports

the development of policies and ensures the alignment and continuous implementation

of key priorities and strategies across the organisation.

3. Didier Debrosse (French; 1956)

Regional President Western Europe

Joined Heineken in France in 1997 as Sales and Marketing Manager, after having worked with Nivea and Kraft Jacobs Suchard, where he had various commercial positions. He was later appointed General Manager of Brasseries Heineken in France. In 2003 he became Managing Director of Heineken France and Regional President in 2005.

4. Marc Gross (French; 1958)

Group Supply Chain Director

Joined Heineken in Greece in 1995. In 1999 he became Regional Technical Manager North, Central and Eastern Europe. In 2002 he became Managing Director of Heineken Netherlands Supply. Prior to joining Heineken, he held various management roles with international food and consumer businesses. He was appointed Group Supply Chain Director in 2005.

Executive Committee

5. 7.

9.

1.

5. Siep Hiemstra (Dutch; 1955)

Regional President Asia Pacifi c

Joined Heineken in 1978 and worked in various commercial and logistic positions. In 1989 he was appointed Country Manager of Heineken Export based in Seoul, South Korea. Subsequently, he held various management positions in several countries including Papua New Guinea, Ile de la Réunion and Singapore. In 2001 he was appointed Director of Heineken Technical Services and Regional President in 2005.

6. Tom de Man (Dutch; 1948)

Regional President Africa and the Middle East

Joined Heineken Technical Services in 1971. Following this, he held various management positions in Singapore, Korea, Japan, Nigeria and Italy. From 1992, he was Group Production Policy & Control Director. In 2003 he was appointed Managing Director of Heineken’s operations in Sub-Saharan Africa and Regional President in 2005.

7. Frans van der Minne (Dutch; 1948)

Group Human Resources Director

Joined Heineken in 1975 in sales. He held various management positions in the export organisation. In 1988 he was appointed General Manager of the Murphy Brewery, Ireland. In 1989 he became Director of Heineken Export and in 1999 he became Director of Central and Eastern Europe. He was appointed President of Heineken USA in 2000 and became Group Human Resources Director in 2005.

8. Nico Nusmeier (Dutch; 1961)

Regional President Central and Eastern Europe

Joined Heineken in 1985 as a management trainee and graduated as a master brewer in 1988. Since then he has held various management positions within Heineken in many parts of the world. In 2001 he was appointed Managing Director of Grupa Z˙ywiec in Poland and Regional President in 2005.

9. Sean O’Neill (British; 1963)

Group Corporate Relations Director

Joined Heineken in 2004 following eight years in senior roles within the alcoholic beverages sector. Prior to this, he held management roles with a global communication and corporate affairs consultancy based in the UK, Russia, the Middle East and Australia. In 2005 he was appointed Group Corporate Relations Director.

10. Stefan Orlowski (Polish/Australian; 1966)

Group Commerce Director

Joined Heineken in 1998, working as Vice-President & Managing Director of Grupa Z˙ywiec. From 2003 to 2006, he was Chief Operating Offi cer, fi rst of Brau Union AG and as of 2005, of Central and Eastern Europe (C&EE) with direct responsibility as Managing Director Central Europe for the Central European markets and for Marketing, Sales and Distribution of C&EE. In October 2007 he was appointed Group Commerce Director.

11. Floris van Woerkom (Dutch; 1963)

Group Control and Accounting Director

Joined Heineken in 2005 as Group Control & Accounting Director, after having worked with Unilever for 18 years, where he held various international positions including Finance Director in Mexico and regional Vice-President Finance in Latin America.

12. Massimo von Wunster (Italian; 1957)

Regional President Americas

Worked with Wunster Brewery, a family-owned brewery founded in 1879, before joining Heineken in 1995. He held various positions within Heineken’s Italian organisation, before being appointed Managing Director of Heineken Italia in 2001 and Regional President in 2005.

(Regional Presidents and Group Directors are shown in alphabetical order.) 10. 3. 4. 6. 8. 11. 12.

Top-line growth

Top-line growth is the key measure of the strength of a focused company. At the start of the year, we set ourselves challenging targets in terms of growing both profi tability and volume across our brand portfolio. Through a combination of focused marketing investment, innovation, increased emphasis on in-market execution, strong creative marketing and a continuing commitment to meeting consumer and customer needs, our top-line performance across our brand portfolio in 2007 was strong with an organic 7.3 per cent increase in revenue and a 6.5 per cent rise in organic consolidated beer volume growth.

The Heineken brand

Nowhere was this growth more evident than for the Heineken brand. For more than 125 years the brand has been and continues to be at the physical, emotional and fi nancial heart of our global portfolio. Throughout its history, successive generations of managers and marketers have made Heineken the world’s most valuable international premium beer brand. 2007 once again saw strong growth. Volumes of the brand in the international premium segment grew considerably by 10 per cent, driving further growth in the brand’s share of the segment.

Operational review

Our number one priority is to drive top-line

growth through the creation of a global

portfolio that combines the power of local and

international brands and with the Heineken

brand as the jewel in the crown.

•

•

•

•

•

Total 24.7 100%

Heineken volume by region In millions of hectolitres

Heineken 28.0 20.1%

Amstel 10.6 7.6%

Other 100.6 72.3%

Total 139.2 100%

Global breakdown of brands In millions of hectolitres

Premium Light was fuelled by strong repeat purchase, and the expansion of packaging choices for consumers with the launch of a ‘slim’ can and a 5-litre DraughtKeg.

2007 was another very successful year for DraughtKeg. This unique 5-litre ‘go anywhere’ draught system provides an exciting beer experience to share with friends. Driven by the strong volume growth, in 2007 the focus was on up-scaling the DraughtKeg supply chain and rolling out systems to more markets. As a result,

DraughtKeg is now selling in 94 markets.

Since the launch of BeerTender, the genuine home draught beer experience, more than 300,000 appliances have been sold worldwide.In 2007, Heineken successfully combined DraughtKeg and BeerTender innovations with a unique one-way DraughtKeg for BeerTender. Based on the positive results in France, this innovation was launched in Greece and piloted in the USA. In 2008, other countries will follow. Innovations such as DraughtKeg and BeerTender, clearly differentiate Heineken from our competitors.

Impressively, the Heineken brand grew volume, value and share across all regions, further strengthening its position as the only truly international premium beer. Of particular note is the double-digit growth achieved by Central and Eastern Europe, Africa and Asia Pacifi c. This now provides a very positive balance to the brand’s already strong performance in more mature markets. The growth and higher contribution of the Heineken brand continues to be an important driver of our profi tability and our outperformance of the sector.

Innovation, research and development Innovation continues to contribute considerably to top-line growth. In 2007, volume growth from innovation grew more than 80% and total volume from innovation passed 1.2 million hectolitres. In its fi rst full year of sales, the growth of Heineken

Five years following the introduction, the David draught beer system aimed at lower volume on-trade outlets, is available in 85 markets. During the year, we also made good progress on the mobile Xtreme Draught concept, the next generation of the David system. Xtreme Draught uses either the new ‘Ten Can’ (10-litre draught keg) or the standard 20-litre David keg, making it fl exible and easy to use. It also means optimal freshness for the beer and a better experience for both customer and consumer. The new system is now available in 25 countries around the world. Finding new and faster ways to grow volume is the key rationale behind the roll-out of our Extra Cold programme which adds value to the Heineken brand equity and which is now available in more than 100 markets.

As we move into 2008, all these programmes will continue to be driven at a market level to address specifi c consumer needs or to ensure we are able to offer the consumer a quality Heineken brand experience across the spectrum of consumer drinking occasions.

International marketing

With Heineken now available in almost every country in the world, Heineken is literally the only beer brand in the world that can develop and deliver major international marketing initiatives with such authority and credibility. In 2007, we again used this credibility as a way to clearly differentiate the Heineken brand from its

competitors and as a way to bring the brand alive for consumers and trade partners.

‘One World, One Cup, One Beer’ was the motto for the fully-integrated campaign for the 2007 Rugby World Cup held in France. Throughout the seven weeks of competition, Heineken had a massive presence around the stadia, the tournament and in the world’s media. We also entertained 8,000 guests, including consumers and trade partners from more than 30 markets.

The Heineken brand’s UEFA Champions League (UCL) sponsorship also leveraged the credibility and authority of the brand. The programme was supported by centrally developed international commercials and break bumpers, on air in 156 countries, as well as consistent communication material and trade support programmes. At the tournament fi nal in Athens, the culmination of more than nine months of in-market activity, we broke our own record for guests at a single event when we hosted more than 1,100 guests from around the world. The fi rst UCL Trophy Tour to Asia

Shifting the balance

2007 was notable for taking the fi rst steps in re-balancing our approach to marketing and sales. In the past few years, we have made a signifi cant investment in the architecture, strategy and communication platforms for our major brands. This has undoubtedly helped us drive some of the growth that we are now seeing. What we began during 2007 though was a series of marketing and sales workshops with the clear objective to improve the in-market execution of the plans we have developed – in effect, ensuring that we get the maximum return from the investments we have already made.

During 2008, the focus on marketing and communication excellence will accelerate. Ultimately, our aim is to have the same levels of competence across our business for delivery of sales and distribution that we have traditionally had for creative and consumer communication development.

The Amstel brand

The Amstel brand is another important pillar within our global portfolio, with availability in more than 100 markets and global volume of 10.6 million hectolitres. 2007 was a pivotal year for Amstel with a number of signifi cant developments which helped to set the brand’s course for the future. In March 2007, we regained control of Amstel in South Africa, one of Amstel’s biggest markets. In the short term, we have established a supply chain out of Europe. In 2010 we will switch to local production, following the completion of a brewery in South Africa.

saw over 50,000 consumers have their picture taken with the trophy and attracted a TV audience of more than 200 million people.

However, we do not solely strategically promote the brand. Over the last few years, we have been building a reputation for innovative use of fi lm as a way of reaching our target consumers. With ‘The Matrix’ and ‘James Bond’ franchises already a part of this approach, in 2007 we again sought a high-profi le opportunity to continue the success. We chose ‘The Bourne Ultimatum’, which we successfully integrated into our global marketing campaigns. Music also remains a key sponsorship area for the Heineken brand with more than 100 Heineken supported or sponsored large music events worldwide, including our global music event ‘Thirst Studio’.

2003 2004 2005 2006 2007 11.0 11.1 12.2 Amstel volume In millions of hectolitres 11.4 10.6

Just as with Heineken Premium Light, the Amstel Pulse line extension was a signifi cant driver of the brand’s growth during 2007 and will continue to be so in 2008. During 2007, we added both Hungary and New Zealand, to the list of existing markets where Amstel Pulse is developing a strong consumer franchise.

In the USA, Amstel Light did not achieve the growth we had targeted. We are looking at every aspect of the brand, from its positioning in the segment to packaging and communication. We are introducing new programmes to rejuvenate the brand and help it regain its position in the profi table imported light segment.

Sustainability

As one of the world’s leading brewers, Heineken creates value and enjoyment for millions of people around the world through brewing, marketing and selling high-quality beers. We are proud of this. At the same time, we are fully aware that we have an important role to play in society at large and in the lives of all our stakeholders. These include our employees, customers and suppliers who depend on us for their income, our consumers who enjoy our beers, our shareholders who seek a healthy return on their capital and the communities in which we operate which rely on us to be a good, corporate citizen.

In all of our actions, we seek to balance commercial reality with social responsibility. It is not an easy task and it ultimately means that we can never

meet the expectations of all of our stakeholders all of the time. However, understanding their needs through dialogue improves our decision-making and helps us strike a better balance more of the time. It is this philosophy that underpins our approach to sustainability and to meeting our obligations as a brewer. It was also a key driver behind our decision at the start of 2007 to focus on the seven areas where we as a business have the most impact on society:

Energy consumption and CO •

2 emission Waste water consumption and discharge •

Safety of our employees and installations •

Quality and availability of raw materials •

Supply chain responsibility •

Responsible beer consumption •

Impact on developing markets. •

Through focus, and the establishment of clear targets in each of these areas, we drive the continuous improvement in our sustainability performance. In 2007 we took a signifi cant step, which refl ected this philosophy and reinforced our long-standing commitment to responsible consumption, by becoming a founding company member of the European Forum on Alcohol and Health. This Forum brings together all stakeholder

groups at a European level and seeks to adopt a multi-stakeholder approach to addressing alcohol- related harm. In December 2007, we made a series of commitments to the Forum which built on the two pillars of our alcohol policy: adherence to our alcohol and work programme, training in and compliance with our internal Rules for Responsible Commercial Communication and the Enjoy Heineken Responsibly initiative. We are evolving our approach to promoting the responsible consumption of our products by developing strategic alcohol partnership programmes in many of our markets, designed to educate consumers and spread the responsible consumption message. Alongside the Forum, we continued our

participation in and membership of international industry groups such as the International Centre for Alcohol Policies (ICAP), Global Alcohol Producers Group and the Brewers of Europe. We also worked in local partnerships with other non-industry stakeholders to address specifi c issues associated with alcohol abuse.

In 2007, we began the roll-out of the Heineken Supplier Code to our operating companies. Although it is still too early to report specifi c results, the fi rst comments we received from the relevant markets are promising. All our Group suppliers – representing a purchasing value of over €1.5 billion – have indicated that they are in compliance with our Code and integration of the Supplier Code in regular quality audits has started. Like every energy consumer, we are facing the global energy challenge: increased cost for fossil fuels due to a larger demand and decreasing social acceptance of CO

2 emissions. To curb the increase of fuel consumption due to increased production, we have set a long-term target to improve effi ciency of our energy consumption by 15 per cent in 2010 as compared to 2002. This target is integrated in our Total Productive Management programme and management systems, as a result of which the energy performance of each individual brewery is monitored on a quarterly basis.

•

•

•

•

•

•

* in the Netherlands 3,909 Geographical distribution of personnel In numbers (pro rata)

We will never claim to be perfect or to have the balance exactly right. We are though pleased that in 2007, once again, our sustainability efforts were recognised by our continued inclusion in the Dow Jones Sustainability Index (fi rst within our global industry category) and membership of the FTSE4Good index.

We realise that we do not have the answers to every question. In 2007 our role as

a signatory to the UN Global Compact increasingly enabled us to learn from other organisations in other industry sectors in different parts of the world. More information about where we have and where we have not fully achieved our objectives can be found in our 2007 Sustainability Report, which will be published in April 2008. This report and other information can be found on our website and we invite you to read it and to let us know what you think.

Personnel and organisation

Our people are the basis of our success. Effective management, leadership and reward systems are essential to enabling growth of our pelple and our business.

The programmes initiated in 2006, were continued in 2007. Based upon benchmark research, we started a project to enhance consistency and reliability of our Human Resources data across the Group and to align the information among a number of systems.

We developed a technically improved, more focussed – and in some areas a somewhat simplifi ed – performance management system which will become effective in 2008. This will better support us in developing good leaders and in employing the right people in the right job at the right time.

Job Family Modelling was introduced for Senior Management jobs across the Group. Job Families

form a global platform for consistent and transparent execution of major HR processes, including capability building, career pathing, performance management and job grading. The consistency and transparency provided by this platform allows us to become far more effective and effi cient in the provision and execution of transactional HR operations. We continued to monitor the improving climate of our organisation and the level of employee engagement and were able to roll out a tool that can be used by the operating companies to give both management and employees an insight into how the Company climate and working conditions are perceived.

In the year under review, undivided attention was given to the health and safety of our employees, in particular to the work safety conditions in different parts of the world. In 2007, the average number of employees (pro rata) decreased from 57,557 to 54,004.

Consolidated beer volume In millions of hectolitres 2003 2004 2005 2006 2007 32.8 32.2 31.9 31.9 32.1

Regional review

Western Europe

In Western Europe, Heineken realised good profi t growth driven by the premiumisation of the beer market, higher prices and the delivery of cost savings resulting in an EBIT (beia) increase of 5.1 per cent. Revenue grew 1.9 per cent to €5,450 million.

In 2007, Heineken continued to invest in its key brands and in innovation. In the fi rst half of 2007, two additional fi lling lines for DraughtKeg were installed in the Netherlands, increasing production capacity to more than 1 million hectolitres. As a result, supply and demand were better aligned and DraughtKeg was able to achieve a signifi cant increase in sales, doubling volume versus 2006. Additionally, the roll-out of the Extra Cold beer programme was accelerated, with the installation of Extra Cold fridges or draught installations in more than 22,000 outlets.

Consolidated beer volume in Western Europe was 0.6 per cent lower at 31.9 million hectolitres. Higher volumes were achieved in Spain, Italy, the UK, Ireland and in the export markets in the Nordic region. However, lower volumes in France, the Netherlands and Switzerland offset these gains. Revenue €5.5 billion EBIT €410 million EBIT (beia) €665 million

Consolidated beer volume 31.9 million hectolitres

Heineken volume in premium segment 7.5 million hectolitres

“ Our region benefi ted from the

success of our innovations: profi t

grew and the Heineken brand

continued to gain share. DraughtKeg

achieved an increase in sales

and the roll-out of the Extra Cold

programme was accelerated.

We will continue to invest in

innovation in order to create

opportunities.”

Didier Debrosse

In this challenging environment the Heineken brand continued to gain market share, organically growing volume in the premium segment by 7 per cent. All countries in the region recorded higher volumes of the brand, with Spain, France, and Italy accounting for 67 per cent of the total increase.

A new brewery in Seville

Spain is a key market for Heineken. The beer market enjoys long-term growth in long-terms of volumes and profi tability, driven by an increasing population, a strong on-trade and a healthy growth of premium beers.

Heineken España, one of the most prominent players in the Spanish market, currently operates fi ve breweries located in Arano, Jaen, Madrid, Seville and Valencia, brewing 11.4 million hectolitres consolidated beer volume across 20 brands.

Capacity utilisation is high, running as high as 100 per cent in the peak of the summer season over the last few years. Capacity constraints increased at the brewery in Seville, which was located in the middle of a residential area, where expansion possibilities were lacking and vehicle access was limited. In 2005 Heineken España compared the cost of investing in a new brewery with the cost of expanding the existing brewery and on the basis of that decided to construct a greenfi eld brewery, just outside of the city. Construction started in early 2006 and the new brewery has been fully operational since January 2008.

This new brewery in Seville is particularly important to Heineken: it is the fi rst greenfi eld in the Western European beer industry landscape in the past 25 years and one of the largest breweries in the Group in terms of volume. It marks our strong commitment to the growing Spanish market as well as our continuous drive for cost effi ciency gains and technical improvements.

The brewery has a capacity of 4.5 million hectolitres and a technical capacity of 5.2 million hectolitres. It boasts an effi ciency ratio which is twice that of the old brewery. Total investment (including the site itself) amounted to €220 million. Thanks to state-of-the-art technology and higher production volumes, the new brewery will generate annual savings before taxes of €25 million as of 2008. In August 2006, Heineken España sold the land and buildings of the old brewery, realising a book gain of €320 million before tax. The old site will be closed.

Regional review – Western Europe

continued

France

Consolidated beer volume 6.3 million hectolitres

Market share 31.2 per cent

Market position 2

EBIT (beia) grew driven by improvement in the price and sales mix and cost reduction. Revenue increased slightly. The Heineken brand increased its market share, posting 7 per cent growth on the back of continuous innovation and the introduction of new consumer packs. In the last quarter of 2007, the Heineken brand gained the leadership position in the off-trade segment. The Pelforth Blonde brand developed positively during the year. Total beer volume of Heineken France was lower, particularly in the on-trade due to the effects of mixed weather and lower volumes of low-priced beers.

The one-way BeerTender, introduced in October 2006, has now sold more than 100,000 appliances. Italy

Consolidated beer volume 5.7 million hectolitres

Market share 31.1 per cent

Market position 1

Volume of Heineken Italia increased, driven by the positive performances of its key brands Heineken and Birra Moretti. The Heineken brand grew by 5.4 per cent and reached the 1.5 million hectolitres mark; Moretti continued to grow, selling more than 2 million hectolitres, extending its leadership in the off-trade segment. The roll-out of Moretti 0/0, the alcohol-free beer is on track. The Netherlands

Consolidated beer volume 5.5 million hectolitres

Market share 48.7 per cent

Market position 1

Revenue of Heineken Netherlands was only fractionally down as the increase in selling prices across the portfolio compensated most of the effect of lower volumes. The Heineken brand maintained its market share, whilst Amstel brand volumes decreased, largely due to a higher-than-average price increase. Organic growth in EBIT (beia) was strong, driven by effi ciency improvement across the supply chain.

Innovation initiatives proceeded at fast pace in the Heineken brand’s home market: Extra Cold beer installations are now available in 10 per cent of the on-trade outlets where Heineken’s brands are served. The fi rst of a new Amstel franchise bar, the Loca cafes was opened in 2007 with more to follow in 2008.

A new cider-based drink, Jillz, was tested in two Dutch cities and resulted in positive consumer and on-trade reactions. A further roll-out is planned for 2008.

Volume at Vrumona, the soft drinks company in the Netherlands, was lower due to unfavourable summer weather, however EBIT (beia) improved.

United Kingdom

Consolidated beer volume 0.5 million hectolitres

Market share 1.1 per cent

Consolidated beer volume exceeded 0.5 million hectolitres. Volume of the Heineken brand increased 20 per cent, continuing its strong momentum and exceeding 0.4 million hectolitres in a market that was affected by exceptionally poor weather and the introduction of a smoking ban in the on-trade channel. Consumer acceptance of the premium positioning of Heineken is rising further also driven by the high-profi le introduction of the DraughtKeg and the eye-catching ‘continental pour’ advertising campaign. Marketing investment in the Heineken brand was at a high level and as a result, EBIT (beia) remained negative.

Ireland

Consolidated beer volume 1.1 million hectolitres

Market share 22.2 per cent

Market position 2

The Heineken brand continued to grow its volume in the Irish market by 3.5 per cent. Total volume of Heineken Ireland increased 2.7 per cent and, in combination with the positive price and sales mix effect, drove the growth in revenue and EBIT (beia).

Both revenue and EBIT (beia) increased, driven by higher volumes, better prices implemented early in 2007, and an improvement in the sales mix. The Ten-Can, a 10-litre keg, which can be combined with the mobile Xtreme draught beer unit was successfully launched.

Spain

Consolidated beer volume 11.4 million hectolitres

Market share 31.0 per cent

Market position 1

Volume at Heineken España grew healthily and its market share improved.

The Heineken brand was the main driver behind the good performance. Volume of the brand grew almost 8 per cent as a result of focused and innovative marketing, the successful nationwide introduction of DraughtKeg and the roll-out of the Extra cold beer programme.

Cruzcampo, Heineken España’s mainstream brand, grew 2 per cent in Andalusia, its home region. Cruzcampo lager benefi ted from the halo effect of the recently introduced Cruzcampo Light, which sold 60,000 hectolitres during the year. Revenue and EBIT (beia) increased as a result of the positive volume trend and a better sales and price mix. The greenfi eld brewery in Seville is now complete, and as planned, will fully replace the old brewery in the city in the fi rst quarter of 2008. This will lead to signifi cant savings in production and logistic costs.

Consolidated beer volume In millions of hectolitres 2003 2004 2005 2006 2007 27.1 36.9 39.3 46.9 51.1

Regional review

continued

Central and

Eastern Europe

In 2007, beer consumption in Central and Eastern Europe was exceptionally strong as a result of a mild winter and spring. Consolidated volume increased organically by 8.3 per cent, with

Russia, Poland and Romania as major contributors. Acquisitions in 2007 in the Czech Republic

(Krusovice Brewery) and Germany (Schmucker Brewery) contributed 287,000 hectolitres. This growth in the region is driven in part by an increase in purchasing power and a structural shift from spirits to beer. Economic growth in new member states of the European Union and the development of a modern off-trade also continues to play an important role in the long-term growth of beer consumption of the region. With growing income levels across many markets, the interest in premium beers is increasing strongly.

The Heineken brand added more than 400,000 hectolitres (+19 per cent) to its volume, thanks to initiatives such as the introduction of clear plastic labels in Romania and Hungary, the installation of 11,000 Extra Cold draught beer units, the introduction of DraughtKeg and innovative advertising campaigns. Russia, Greece and Poland were major drivers of growth of the Heineken brand. Revenue increased organically by 8.1 per cent, and fl uctuations in currencies in Poland, Romania and Slovakia contributed €41 million to revenue (+1.2 per cent). EBIT (beia) increased 22 per cent to €444 million largely driven by higher volume, a positive price and sales mix and a modest increase in fi xed costs.

“ Across the region, we are obtaining

leading market positions and

brands. Fast-growing markets, new

acquisitions and further top-line

growth give us an excellent platform

from which to develop both the

Heineken brand as well as our

local and regional brands. We are

excellently positioned to build an

increasingly profi table business.”

Nico Nusmeier

President Heineken Central and Eastern Europe

Revenue €3.7 billion EBIT €381 million EBIT (beia) €444 million

Consolidated beer volume 51.1 million hectolitres Heineken volume 2.6 million hectolitres

PET

Packaging is a key element in Heineken’s marketing and innovation strategy. New pack types create new consumption moments, build excitement around our brands, improved margins and higher volumes.

In the world beer market, glass bottles are by far the most important pack type, accounting for 64 per cent of total volume. The bottled beer segment is still growing, driven by the increasing beer consumption in emerging markets. Beer in cans ranks second in terms of importance, with 20 per cent, whilst draught beer accounts for 11 per cent of world beer consumption. PET

represents the remaining 4 per cent of world volumes, but its share is growing fast.

PET is the acronym for ‘PolyEthylene Terephthalate’, which is a lightweight, colourless, transparent plastic. PET is diffi cult to break and is widely used for soft drinks and water; the fi rst PET bottle was patented as early as 1973. PET is cheaper to produce than other types of packaging and can easily be recycled through incineration.

Especially in Central and Eastern Europe, beer in PET bottles is well established. We estimate that beer in PET bottles accounts for more than 40 per cent of some markets such as Macedonia, and more than a third of volume in markets such as Romania and Bulgaria, and is swiftly growing in both Germany (6 per cent) and Croatia (7 per cent). PET bottles in Russia deserve special mention: they account for 47 per cent of the beer market and are growing strongly. PET is available in many sizes, ranging from 0.5-litre to 5-litre bottles. The most popular format, however, is 2.5-litre, which alone accounts for 25 per cent of the market. Heineken Russia’s beer sales in PET account for more than half of its volume. All of our 10 breweries in Russia produce beer in PET.

Heineken is very active in the PET segment in Central and Eastern Europe and has developed a ‘high quality’ PET proposition named ‘Top Star’, which offers a unique look and feel to the packaging. Several leading brands in the region, such as Goldenbrau (Romania), Soproni (Hungary) and Bochkarev (Russia), have successfully upgraded this format.

Regional review – Central and Eastern Europe

continued

Russia

Consolidated beer volume 15.0 million hectolitres

Market share 12.8 per cent

Market position 3

The winter and spring were exceptionally mild in Russia leading to exceptionally strong market growth. Beer volume of Heineken Russia grew 16 per cent, passing 15 million hectolitres. Total volume of the seven strategic brands, representing around 60 per cent of the portfolio, grew faster than the overall market increasing 18 per cent. Volume of the Heineken brand grew nearly 40 per cent. Amstel Pulse continued to develop well, driven by consistent marketing, the introduction of a 50cl bottle and the increase in numerical distribution. Ochota, our key brand in the mainstream segment and Three Bears (positioned at the top end of the economy

segment) grew strongly. Volume of the Botchkarov brand was slightly lower.

Revenue grew at a double-digit rate, despite the effect of the lower rouble against the euro. EBIT (beia) increased, driven by the effect of higher revenue that was only partially offset by the impact of higher input costs and marketing investments. Production capacity is being upgraded and expanded, and headcount at the breweries continued to reduce.

In 2007 and January 2008, Heineken continued the expansion of its business in the region through a series of targeted acquisitions. At the end of 2007 the Krusovice brewery was acquired in the Czech Republic, whilst the acquisition of the Rodic brewery in Serbia was announced. Early 2008, Heineken established a partnership with Efes Breweries International that will invest in the growing Uzbek beer market. In addition, both companies intend to merge the brewing operations in Serbia and Kazakhstan, leading to number two market positions in both countries. Poland

Consolidated beer volume 11.8 million hectolitres

Market share 33.0 per cent

Market position 2

Beer volume increased 7.3 per cent, with

a stronger performance in the high-end segments of the market. In particular the Heineken brand performed well, growing at 13 per cent and gaining share in the international premium segment. Z˙ywiec, the national premium brand, grew high single digit driven by higher domestic volumes and an increase in export mainly to the USA and UK. As a result of its double digit volume growth, Warka’s market share grew.

Revenue of Grupa Z˙ywiec saw a double-digit growth rate with volumes accounted for half of the increase and higher prices, a better sales mix and a positive currency effect accounting for the remainder. EBIT (beia) grew signifi cantly, helped by costs savings in production and the introduction of a shared service centre.

Austria

Consolidated beer volume 4.5 million hectolitres

Market share 49.8 per cent

Market position 1

The beer market in 2007 was broadly stable. Beer volume of Brau Union Austria was stable as the growth of the Heineken and Gösser brands was offset by lower volume of low-priced beers. Volume of the Heineken brand, in particular, increased strongly by almost 20 per cent, partly driven by BeerTender volumes and the success of the introduction of the 50cl one-way bottle. BeerTender has now sold more than 40,000 appliances since its introduction in 2005. Domestic volume of the Gösser brand increased, mainly due to the introduction of Gösser Natur Radler in the fl avoured speciality beer segment. Volume of the Zipfer brand remained stable. Heineken Austria increased prices in March and April, which together with the higher volume, resulted in an increase in revenue. Further effi ciency improvements in the production and restructuring in all parts of the company drove a double digit increase in EBIT (beia).

Greece

Consolidated beer volume 3.5 million hectolitres

Market share 74.9 per cent

Market position 1

After several years of stagnation, the beer market show growth again in 2007 as a result of a mild winter, a hot summer, and higher tourist numbers.

Athenian Brewery grew its beer volume organically by 5.4 per cent. Volume of the Heineken brand grew 10 per cent, benefi ting from packaging innovations (DraughtKeg, BeerTender and Extra cold beer) and the marketing activation programmes around the Champions League soccer fi nal in Athens. Domestic volume of the Heineken brand came close to one million hectolitres. Amstel, the leading mainstream brand in Greece, grew volume by 4 per cent, in part due to the successful introduction of Amstel Pulse, in both the On-trade and Off-trade channels. Revenue and EBIT (beia) grew at a double-digit rate. Germany

Consolidated beer volume 3.6 million hectolitres

Market share 6.9 per cent

The German market declined in 2007 as a result of poor weather and challenging comparison with higher volumes of the World Cup Football year of 2006. Volume at Brau Holding International, Heineken’s joint venture with the Schoerghuber Group, was 1 per cent lower. Volume of the Paulaner brand grew 8 per cent, driven by the success of its Weissbier and the strength of the exports to the USA, the UK and continental Europe. Volumes of the Kulmbacher and Karlsberg brands were lower.

Revenue was lower, but EBIT (beia) grew as a result of strict cost control and improvement in sales mix.

2003 2004 2005 2006 2007

Consolidated beer volume In millions of hectolitres 10.1 11.5 11.8 13.2 13.7

Americas

Regional review

continued

“ I am very proud that we continued

to maintain our strong position in

the region. Heineken Premium Light

greatly contributed to our success.

The introduction of BeerTender

to the US market expands our

product range and further enhances

consumers’ preference for our

portfolio, with the Heineken brand

as its centrepiece. ”

Massimo von Wunster President Heineken Americas

Markets in the region developed well and saw continued growth. Consolidated beer volume grew 3.9 per cent, mainly driven by Argentina, Canada and the USA.

With strong positions throughout the region, volume of the Heineken brand grew by 5.9 per cent to 9.1 million hectolitres. Both Canada and Brazil renewed the Heineken brand import and licence agreements respectively for 10 years. In the USA, its largest market, the brand is

centrepiece of a combined Mexican and European beer portfolio, the two biggest categories in the import segment.

Revenue increased 3.4 per cent to more than €2 billion, of which 8.8 per cent was an organic increase. Revenue €2.0 billion EBIT €278 million EBIT (beia) €278 million

Consolidated beer volume 13.7 million hectolitres Heineken volume 9.1 million hectolitres

Speed of implementation

DraughtKeg

DraughtKeg is one of the most successful innovations in the beer industry in the past few years. This unique product, developed and engineered by Heineken, is a 5-litre, CO₂ pressurised keg with a tap, which allows a perfect and ‘portable’ draft beer experience. The keg is disposable, 100 per cent recyclable and is manufactured in lightweight steel. Beer can stay fresh for up to 30 days after opening.

It was fi rst introduced in France in April 2005 and is now available in more than 90 countries around the world. It sold more than 10 million units in 2007.

In the USA, DraughtKeg was rolled out nationwide in June 2007 and contributed signifi cantly to the growth of the Heineken brand. In August 2007, Heineken Premium Light was also introduced in the 5-litre DraughtKeg format. The introduction campaign included television, out-of-home and print advertising, as well as a

targeted internet campaign, staged in a night club, which featured a DraughtKeg coming to life through a stunning metamorphosis. Heineken Premium Light DraughtKeg recorded a resounding success and quickly sold out. It ranked fi rst amongst the new Stock Keeping Units (SKUs) of 2007.

Sales of over 200,000 hectolitres in DraughtKeg format exceeded expectations in the Americas. Thanks to this successful performance, most of it achieved in the second half of 2007, the Americas region became the second biggest region for sales of DraughtKeg, after Western Europe.

This was driven by price increases across the region and higher volumes in Argentina, Chile and the USA, which were only partly offset by the effect of the lower Chilean peso and Caribbean currencies. EBIT (beia) increased 4 per cent as the much better operating performance was in part offset by the effect of unfavourable exchange rate fl uctuations against the euro.