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Sustainable Investing

Making Progress Toward Sustainability: A Heineken Case Study

We unpack the business strategy behind Heineken’s efforts to reduce water use and advocate responsible alcohol consumption.

By David Byrns, CFA, Brandon McKinzie

Key Takeaways

Heineken has aimed to reduce its water usage in brewing beer, particularly in water-stressed emerging markets.

It has allocated part of its advertising budget to promote the responsible consumption of its alcohol products.

Heineken has also developed low- or no-alcohol products to encourage moderation and capitalize on the growing interest in non-alcoholic beer.

How Heineken’s Sustainability Efforts and NA Options Drive Growth and Social Responsibility

Brewing beer requires plenty of water.

The brewing process involves crops like barley and hops grown on irrigated farms. The product itself, a pint of beer, is almost entirely water.

The water-intensive process of brewing beer is problematic for a company like Heineken NV. The Dutch brewer is popular in water-stressed emerging markets like Cambodia and Egypt. Heineken has innovated its brewing process with technology aimed at reducing water usage.

The company has also been a leader in promoting responsible alcohol consumption. Moderate alcohol use is a social lubricant. Alcohol abuse is unhealthy for the individual and results in broader societal ills. Heineken has dedicated about 10% of its advertising to messages encouraging moderate and responsible consumption.1

Heineken has developed nonalcoholic (NA) offerings in an increasing percentage of its brand portfolio. In 2021, 43% of its business had a zero-alcohol option for at least two strategic brands, which grew to 53% in 2023.2

Offering zero-alcohol choices encourages responsible consumption and helps the company’s bottom line. Consumers have increased their focus on health and wellness, and nonalcoholic offerings allow consumers to enjoy a beer without the health consequences of alcohol. Heineken’s portfolio has grown its sales of non-alcoholic beer both in the Americas — a 23% increase in 2023 from the year before — and globally, where Heineken 0.0 sales grew by double digits in 16 markets to become a market leader in non-alcoholic brands.3

One reason the American Century Global Sustainable Value team thinks Heineken is attractive is because of its commitment to sustainability. The company is dedicated to making its production processes more sustainable and promoting responsible consumption of its products.

We believe it exemplifies a best-in-progress company committed to transitioning toward a more sustainable business model. This shift benefits its consumers and the countries where it operates and enhances the quality of its enterprise. Using less water means lower input costs, and products like Heineken 0.0 help the company latch on to a fast-growing segment of beer drinkers who want less or no alcohol.

Heineken also demonstrates how we use key performance indicators (KPIs) and a tailored engagement approach to encourage the company’s progress toward sustainability.

How Heineken Navigates Industry Dynamics for Sustainable Growth

American Century’s Global Value team thinks Heineken has several attractive characteristics. The brewer generates stable free cash flow and has managed its balance sheet with relatively low leverage, allowing it to navigate industry and economic downturns.

The company also has a strong brand portfolio spread across diverse geographies, from developed markets like Europe to emerging markets like Vietnam. In our view, this gives Heineken a durable and sustainable franchise.

A few large companies dominate global beer markets, resulting in rational competitive behavior and significant pricing power. We believe this allows companies like Heineken to navigate external shocks like commodity price spikes by adjusting their prices to maintain profitability.

For example, in 2021, when the prices of commodities like barley and aluminum surged, Heineken and its competitors were able to increase their prices. Without this pricing power, we estimate that the earnings of global beer companies like Heineken could have been reduced by about 25%.

Heineken’s Business Model Progression

We set out several KPIs for Heineken, including reducing water usage. As a baseline, Heineken used 5 hectoliters of water to make beer in 2005. By 2019, this amount had dropped to 3.5 hectoliters. Heineken has set a target to reduce water usage further to 2.9 hectoliters (hl) by 2030.4

This water consumption plan helps reduce the impact of its brewing operations in markets like Egypt and Mexico, where water is scarce. Water is also an input cost, and reducing its use improves operational efficiency.

Figure 1 provides an example of the industry- and company-specific KPIs we developed for Heineken.

Figure 1 | Monitoring Heineken’s Carbon Footprint

Representative KPIs we evaluate to determine the company’s progress toward sustainability

Data from 1/1/2019 - 12/31/2023. Source: American Century Investments.

Driving Sustainability Through Active Engagement with Heineken

Global Sustainable Value actively engages with companies like Heineken. With some companies, we escalate our engagement to ensure that they continue to make progress toward sustainability, whether through proxy voting or, in some cases, disinvestment.

Heineken has continually made progress with the KPIs we laid out for management. So, our engagement has been mostly limited to encouraging the company to continue its journey toward better sustainability.

Our well-defined engagement plan allows us to continuously monitor the company’s progress and escalate our engagement, if necessary.

David Byrns, CFA
David Byrns, CFA

Portfolio Manager

Senior Investment Analyst

Brandon McKinzie

Brandon McKinzie

Client Portfolio Manager

Discover more about our Global Sustainable Value capabilities.

Heineken, Heineken N.V. Annual Report, 2023.



Heineken, Heineken Holding N.V. Annual Report, 2019; Heineken, Heineken N.V. Annual Report, 2023.

Many of American Century’s investment strategies incorporate sustainability factors, using environmental, social, and/or governance (ESG) data, into their investment processes in addition to traditional financial analysis. However, when doing so, the portfolio managers may not consider sustainability-related factors with respect to every investment decision and, even when such factors are considered, they may conclude that other attributes of an investment outweigh sustainability factors when making decisions for the portfolio. The incorporation of sustainability factors may limit the investment opportunities available to a portfolio, and the portfolio may or may not outperform those investment strategies that do not incorporate sustainability factors. ESG data used by the portfolio managers often lacks standardization, consistency, and transparency, and for certain companies such data may not be available, complete, or accurate.

Sustainable Investing Definitions:

  • Integrated: An investment strategy that integrates sustainability-related factors aims to make investment decisions through the analysis of sustainability factors alongside other financial variables in an effort to make more informed investment decisions. A portfolio that incorporates sustainability factors may or may not outperform those investment strategies that do not incorporate sustainability factors. Portfolio managers have ultimate discretion in how sustainability factors may impact a portfolio’s holdings, and depending on their analysis, investment decisions may not be affected by sustainability factors.

  • Sustainability Focused: A sustainability-focused investment strategy seeks to invest, under normal market conditions, in securities that meet certain sustainability-related criteria or standards in an effort to promote sustainable characteristics, in addition to seeking superior, long-term, risk-adjusted returns. Alternatively, or in addition to traditional financial analysis, the investment strategy may filter its investment universe by excluding certain securities, industry, or sectors based on sustainability factors and/or business activities that do not meet specific values or norms. A sustainability focus may limit the investment opportunities available to a portfolio. Therefore, the portfolio may underperform or perform differently than other portfolios that do not have a sustainability investment focus. Sustainability-focused investment strategies include but are not limited to exclusionary, positive screening, best-in-class, best-in-progress, thematic, and impact approaches.

The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

References to specific securities are for illustrative purposes only and are not intended as recommendations to purchase or sell securities. Opinions and estimates offered constitute our judgment and, along with other portfolio data, are subject to change without notice.

No offer of any security is made hereby. This material is provided for informational purposes only and does not constitute a recommendation of any investment strategy or product described herein. This material is directed to professional/institutional clients only and should not be relied upon by retail investors or the public. The content of this document has not been reviewed by any regulatory authority.