HEINEKEN – LEADING THE WAY FOR SUPPLEMENTAL RETIREMENT SAVINGS 5 MARCH 2014

Sandra Winstanley Heineken

Presentation to Mercer AME CB Conference | 5 March 2014

Supplemental retirement

savings

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A long-standing presence and extensive geographic footprint in Africa

57 plants in 20 countries

Broad production footprint

20 countries

32 breweries (consolidated)

13 breweries (participations/JV’s )

3 soft drink plants

3 malteries

2 packaging plants (1 glass, 1 plastic)

2 wineries

1 distillery

1 extract plant

Export to virtually all countries

A long history, some landmarks

1900 HEINEKEN imported its first beer

1923 DRC the first brewery

1946 Entering Nigeria

2003 Entering Egypt

2007 South Africa greenfield brewery

2011 Acquisition SONA Group Nigeria

2011 Acquisition Harar and Bedele Ethiopia

2012 HEINEKEN East Africa Import Company

Legend

Operations

Consolidated

Joint Ventures/Participation

Export

Production Footprint

Consolidated

Joint Venture/Participations

Why look at retirement savings?

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Agenda

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Objectives Status The Model Case Studies Implementation “Roadmap” Challenges!

Objectives

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Target reward to meet long term employee needs in emerging markets, where there is presently no reliable provision in old age by state or employer

Establish HEINEKEN as employer of choice in AME: Improve attraction and retention Reinforce commitment and loyalty

Demonstrate that HEINEKEN is a responsible employer

Status - Analysis

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Some OpCos e.g. Nigerian Breweries and Brarudi (Burundi)

already have supplemental plans First wave of 8 OpCos selected: Egypt, Tunisia, Kenya,

Tanzania, Uganda, DRC, Ethiopia, Sierra Leone

Collaborated to review sources of income in old age: Social Security Prevalence and type of supplemental plans Secure providers

Status - Findings

Findings - range of situations Severe “gap” in reward package - little/no State and

employer benefits leading to extreme poverty in old age

Some State provision and/or some supplemental provision

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Status - Outcomes

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The way forward: Developed a practical model to be a simple and standard benchmark

Flexible enough to accommodate local preferences and support

OpCo strategy; and aligned with global principles

Prepared draft “Roadmap” to implementation

Global, regional and local alignment

Content of the model

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4 key building blocks Core of the model ♦Defined Contribution (no employer guarantees) ♦ Employee education and communication

Some requirements are mandatory; others for consideration

Model - Design

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Must have’s Who is included? How to pay benefits? When are benefits paid out?

Model – Funding Contributions

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♦Defined Contribution = known and stable employer cash cost

♦ % depends on market practice (if any) and extent of Social Security

provisions

♦minimum employer contribution is 6%

Model - Governance

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Committee (e.g. Trustee Board) to make decisions about plan

management Employee representation Responsiblities

Model - Investments

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♦ Secure external investment entity preferred

♦ If not available, consider funded vehicle offshore

♦Or self-investment (commercial loan back to company)

Case Study – HEINEKEN East Africa: Kenya

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New OpCo Low Social Security Strong peer group market practice for

supplemental plans

Benchmarked employer and employee contribution amounts

Assets with multi-employer umbrella Trust Fund DC plan launched 1 January 2014 with full

employee support!

Case Study – HEINEKEN East Africa: Kenya

Clear business case Straightforward process (despite social security changes!) No consultation needed Reliable market data Strong regulatory environment Well developed provider / investment options Quality advice available Local in-house experience

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Case study - Haïti

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Acquired in 2010 1,200 employees, mainly production Average age relatively high; turnover very low Social Security: mandatory employer contributions, but unreliable/

non-existent pay out Few multinationals No secure banks

Brana, Haïti – Challenge #1

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Brana’s solution HR and Finance collaborate to develop a business case including

Social Security and sources of income in old age Long term HR strategy Social responsibility Cost/benefit analysis

Do we really need a retirement savings plan?

Brana, Haïti – Challenge #2

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Brana’s solution Careful consideration of contribution % and salary Cap on contributions No mandatory employee contributions for low paid employees …considered phasing in contributions and implementation

How much is the plan going to cost?

Brana, Haïti – Challenge #3

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Provider/asset manager security High inflation Brana’s solution 50% set aside in a secure investment vehicle in USD 50% loaned back to Brana (with a fair investment return)

How are we going to invest the money?

Brana, Haïti – Challenge #4

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Brana’s solution Invested time in educating employees about the benefits of saving money for old age

Trained the HR team Group presentations Simple written materials

How are we going to convince employees of the value of the plan?

Brana, Haïti - Outcomes

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All employees signed up!

Helps to attract and retain talent

In time....will help to enable older employees to stop work

Brana is leading the market

DC plan is aligned with the model

Brana, Haïti - Learnings

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Local management support

Collaboration between HR and finance essential!

Budget, budget, budget! Find the best financing solution

Stong project manager and planning

Invest in employee communication!

Implementation Roadmap

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Timing for plan development and launch

OpCo Q3 Q4 Q1 Q2 Q3 Q4

Financial projectionsPlan launch

Second opinion external adviser on proposed plan design

Determine provider shortlist and select preferred provider & Develop governance structure

Financial projections

Determine provider shortlist and select preferred provider & Develop governance structure

Final decision to implement by OpCo in collaboration with Region

A[pproval PGC

Plan launch?

Second opinion external adviser on proposed plan design

Finalize plan proposaLaunch employee communication

Preliminary discussion on plan design and financing, discussion on existing unfunded gratuity plan (i.e. Phase out?)

Explore use of existing employee co-operative admin and investment structure

Financial projections, plan proposal, Secure budget

Final decision to implement by OpCo in collaboration with Region

Plan launch

Determine plan desig Approval PGC Launch employee communication

Egyp

t

2013 2014

Keny

aFinal decision to

implement by OpCo in collaboration with

Region

Approval PGC

Prepare employee communication

Finalize plan proposal

DRC

(Bra

lima,

Bouk

in)

Implementation Roadmap

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Expand to other OpCos Determine local needs Collaborate to develop plan that is aligned with the model Approval by OpCo MT, region and global Implementation plan Consultation (where needed) Employee communication and education Plan launch!

Top 3 remaining challenges

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♦ Secure and quality providers

♦High inflation /hard currency

♦ Transition from existing practices

Questions..?

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