Okay. Let's move it on and get started. I'm delighted once again to welcome Heineken to the conference. It's a pleasure to introduce Jean-François van Boxmeer, CEO of Heineken, and Sonya Ghobrial, Head of Investor Relations. Clearly, in his time in charge of Heineken, Jean-François has overseen significant reorientation of Heineken's geographic footprint, a significant shift of its revenue and profit base towards the faster-growing, emerging beer markets of the world. I think those of us lucky enough to have attended the excellent Capital Markets Day in Vietnam back in May this year, were able to see firsthand the group's both impressive portfolio management and trade and execution skills in action.
It's undoubtedly some of the initiatives like that that we saw on the ground that have helped drive the improving top-line growth and the improving margin expansion that have become a feature of Heineken's results over the last few years. With that, Jean-François, let me hand the podium over to you or the stage, however you want to sort of play it. Thank you very much.
Thank you, Simon. I see that I'm mic'd up here and that I might walk. Ladies and gentlemen, I'm afraid that it's every year back to school. It's not the first time I'm here, but that every year I present more or less the same story. Only the title of the slides might differ a little bit. A strategy, and a winning strategy, you don't change every year. For those who attended others of my deliveries at this particular back to school, they will see a lot of similarities with the presentation of last year. I have to find Aha, here. Now to cue, I suppose, here. Perhaps I'll take you a little bit back in the history of Heineken and what in the last 15 years have been changed, and basically, those are four things.
The first one is that we transformed our geographic footprint towards where the beer category is growing. The so-called emerging markets offer population growth, strong growth of urban areas, as well as they display a virtuous circle of economic development and better political governance. We have been doing something like 49 acquisitions, spending EUR 23 billion in various geographies, but the bulk of it has been in the so-called emerging markets. Where in the year 2000 we had 80% of our profits were coming from North America, the U.S., and Western Europe, and only Western Europe, today, over 60% of our profits is coming from the so-called emerging markets and out of our new footprint. The second thing that we changed is we were faced, over the last 15 years as market leaders in Europe, with the crude reality of declining demand.
The declining demand for our category of products has a lot to do with demographics. The baby boomers being 20% more numerous than the X and the Y generation that follow, we were facing with just declining numbers across Europe. Add on top of that people don't take alcohol anymore for lunch occasion, that you don't drink when you are going to drive, as was done 30 years ago, and that people are more conscious of their health and drink a little bit less and more in moderation, which is all good for the sustainability of our business. It took away a lot of volume out of our business, and we have spent quite a number of years in reshaping, in Europe, all our supply chain and distribution arrangements across the continent. We have been closing 48 plants.
We have been reinvesting also, and we have also multiplied the productivity of our operations by 2.5. We invested a lot of time, effort, and also money in the restructuring of Europe during these years. At the same time, in the U.S., which back in the year 2000, was a third of the total profits of our company, competition increased, and from Corona and from the craft beers, the market became increasingly more expensive to compete and cost of doing business went up. Heineken brand was under pressure, and we had to redeploy our Heineken USA business from a practically Heineken-only business into a premium portfolio business. We added the Mexican brands that we currently have here, first in franchise from FEMSA, and then we bought the beer activity subsequently in 2010.
We devoted also a lot of time the last 15 years in transforming our North America operation into more of a portfolio company. This is the second block of what we have been doing the last 15 years. About portfolio, we were very much a company geared towards the Heineken brand. Through all these acquisitions and entering into new markets, we acquired also a flurry of new brands, and we now have above 250 beer brands alone.
We had to evolve from a Heineken-centric company in a portfolio-centric company, still with a high priority on Heineken, because if it would be a division separate in our organization, it is only 15% of the volume, but it is well over 30% of the profits of our company, and certainly the brand, the only global brand we have, but the one which also in the coming 10 to 20 years still has a lot of potential to grow. Finally, people and culture. We evolved from being a very Dutch company, and there is nothing wrong to be a Dutch company because we built the Heineken brand by passionate Dutch people who traveled around the world planting the flag in 179 countries with the brand. It was certainly needed.
Again, through all these acquisitions we have made over the last 15 years, we have had to learn to tap into the resources from other cultures, i.e., other countries in Europe, but also crossing the Atlantic, to countries like Mexico, Brazil, or in Asia and Africa. Today, if the leadership group of Heineken used to be 90% Dutch and one foreign who was the alibi to be an international company, today, the majority is from all over the world, and you have an active, still very active minority of Dutch people in the company. That was the whole transformation over the last 15 years of this company. We work today, as we speak, we have a strategic framework in which we play.
Because we are a company that grew through export and planted its brand as the only true international premium brand all over the world, our default strategy of our original strategy is to be the leading premium brand in the world. That means in all these 179 countries, making sure that Heineken is the premium brand available in these. That is our default strategy. As we acquired and we went into a portfolio strategy, wherever you are in the market, if you want to make money, you better be a number one or a very strong number two. This is our dual strategy, premium segment, premium leadership on the one hand, and where you have a full portfolio, you better make sure you're number one or a very valid and strong number two.
Out of my heart, out of the 86 operations we have across the world and where we have a broad portfolio of products, in 79 of them, we are in that number one or number two position. We always have five, six to work on as we speak. Operationally, we work around six priorities for the business. It's win in premium, we call it, led by Heineken. Of course, Heineken is the flagship brand we have. It also unites a group like Heineken, which is constituted by a lot of acquired companies. To make one culture, it's one practice. You can build it easily when everybody sells the same brand, Heineken, alongside its own national portfolio. Winning premium means that we want strategically to be overweight in premium. Our people are incentivized to grow the premium revenue part of our portfolio faster than the rest.
That's an important pillar. The second one is to shape the cider category. This is a category we entered through the acquisition of Scottish & Newcastle in 2008. Cider is a new business, not to the U.K., not to Ireland, not to a few Scandinavian countries and South Africa. In the rest of the world, cider is a very minute category. Through the acquisition of S&N, we have discovered that business, we think it's portable in other geographies, and it's a long-haul adventure. You're not going to make cider a big category just in five years, nor in 10 years, but in 20 years, you might do so. It's an alternative to beer. It is more unisex in its approach. It appeals to men and women alike.
If we take the success of cider in the U.K. as a measure of what you can do, we think on the long term, this is an important new business for us to develop. Led by true marketing and innovation, we believe that great marketing and good innovation is the essential driver of the top line. Be commercial, aggressive. No, assertive, sorry. I call it aggressive. Assertive, it's you have to have a mentality to win market share. That's, I think, important, and that's very much promoted into the group. At the same time, driving end-to-end productivity. These are all the programs in order to improve our productivity in supply chain, in distribution, in purchasing, in administration, you name it. We have programs in place to continue to improve our end-to-end productivity. The last one is Brewing a Better World, which is our sustainability program.
Sustainability is not something that you run next to your business. You run that in your business alongside a couple of strategic lines that I will share with you. Now, winning premium led by Heineken. You see here just a display of other international brands. We have only one truly global brand, that is Heineken. It's very difficult. It took us 80 years to have it really global. You find it really everywhere. There are a number of other brands that we can make travel or brew under license in other places. You see the portfolio as it stands today, and there are various in shape. It can be a cider like Strongbow or an abbey beer like Affligem. You have Mexican brands like Tecate. They travel, but they travel just over the border to the Sun Belt in the United States of America.
Our latest acquisition in Jamaica, which will be more of a niche beer, but which can easily travel as a premium brand in our distribution systems across the world. For the Heineken brand, which receives always a big attention, the news of the first half is our entrance into Formula 1. A lot of people have questioned that. Of course, there was an opportunity to become a sponsor of the event. We don't sponsor a team, we sponsor an event. It reaches consumers beyond what we were classically doing with the Champions League, the soccer Champions League in Europe, which is highly viewed also in Latin America, in parts of Africa and Asia. We felt that to sustain the growth of the brand, we needed one sport property in addition to that.
If you look at all the world of properties, Formula 1 is certainly next and second to football in its international reach. It's complementary to football because it does not reach exactly the same people. For a brand like Heineken, this was a great thing to do. It has been a long process to enter it because you have to realize that classically we were always forbid ourselves to sponsor motor races, because if you drive, you don't drink. We had very much a tradition of never sponsoring motor racing. We had to overcome a few ones of our mental hurdles ourselves. At the same time that the brand fits very well the world of Formula 1, at the same time, there is nothing stronger than Formula 1 and Formula 1 drivers to make the point that when you drive, you don't drink.
That's what I'm going to show you next. You have a video, if I'm not mistaken.
I will be king. You will be queen. Though nothing will drive them away. We can be heroes, just for one day. We can be heroes, just for one day. I remember standing by the wall. The guns shot above our heads. We kissed like nothing could fall.
Drink, sir?
It seems.
No, thanks
We're on the other side.
I'm still driving.
We can beat them forever and ever. We can be heroes.
This is the kind of offspring you can make from Formula 1. I don't know if you are a generation who remembers Jackie Stewart. Who remembers Jackie Stewart? Come on. More than four times world championship of Formula 1. This is a man, if you know his history, who has done more than anybody else for the safety of the sport. He was racing at a time that every year there were people losing their lives in Formula 1. Today, you have still very spectacular crashes. Nobody loses anymore its life in a Formula 1 race, thank God. Jackie Stewart has been very, very instrumental in making Formula 1 a safer sport. At the same time, he is very, very adamant about that message of moderation and of absolute abstinence when it comes to drive.
He has been so kind to lend himself to producing a great advertising to make the point. Of course, he is much more credible than when I would say that, obviously. This is the kind of spin-off that we want to take from Formula 1. Back to the cider. Here you see a little bit the portfolio, and we are making progress in entering geographies where cider was totally unknown or not done or not produced and not proposed to the population, countries like Bulgaria or Hungary. Some are successes, like the two ones I named to you. Sometimes we try and it doesn't work out, like we have tried hard in Italy without success. We are quite successful here in the U.S., where we're the second player for cider. We are redeploying our cider operation in South Africa. Cider will take time.
Cider is a marvelous business because there is so much you can do in beer, this is an adjacent category where the technology is very much similar to beer. It's a product which is more like beer, low alcohol, refreshing product. We have great expertise in the U.K. around it, and it certainly will be one of our long-term strategic pillars to grow our business. Led by cool marketing, I showed you previously the movie of Jackie Stewart around Formula 1. I think what is important is that at the end of the day, great brands are built. Having a superior quality is always something which is, it's not always said, but it has always to be there. Beyond having a great product, you have to have a great story. That is what cool marketing is all about is having a great story.
That, over the years, has been changing in the way you communicate with people and consumers, where direct communication through social media is only ever increasing and traditional advertising always decreasing. It's an important pillar to build brands and gain market share, is to continue to be leading in marketing, advertising, and activation. Innovation is the other leg. Often it is said that it is very difficult. People are always asking, what is about the pricing? If you go in a continent like Europe, you have practically no pricing. We live in a total deflationary environment at the moment. The only way to have pricing, the only way to have revenue increase, is, of course, to invest in innovation. We have been starting that in 2011, and you see that we grew from 4%-11% of our total revenue is made out of innovations.
Innovation is not for the sake of innovation. It's for the sake of coming with new products, propositions, packaging that will stick with the consumer. I only think that an innovation is successful is when it is still growing, and it is not accounted anymore as an innovation. It's very important that the innovation per se is not what we pursue, but the innovation is more an engine to bring more diversity and variety in our category and grow our business that way. You just see a few example here, but we very much concentrate our innovation effort, again, around the cider, as you can see, but also against low and no alcohol propositions, an area where traditionally we were not paying too much attention for. 10 years ago, we were proposing an alcohol-free beer as a kind of a surface product.
Today, we propose it as a full product or low-alcohol product with or without addition of fruit and flavors, like the Radlers, have been very successful throughout Europe. Those are all kind of initiatives which fulfill a consumer need on the one hand, but also are margin accretive for us. Craft and variety is another very important leg of our innovation. You have seen here in the U.S., the craft market is 12% of the volume and more than that of the profits. It is a growing category also in Europe, and it's our response to the rise in craft. It's not only in the U.S. and Europe, you see it also popping up in emerging countries, in big cities, in emerging countries like Rio or São Paulo or Mexico City. You see it in Shanghai. You see it everywhere.
There is an appetite for other tastes and for diversity. The answer of Heineken is, on one hand, we have craft brewers. On the other hand, we have acquired and we will continue to acquire some craft breweries, but we will also, with existing brands, propose some line extensions which are crafty. Craft brewers, most of the time, are very expensive, and by doing the line extension of mainstream brands, we can also propose affordable craft beer to a larger number of consumers. We do that a lot in Europe. In countries like Italy or Spain or the Netherlands or Austria, we are heavily investing. Or Poland, we are heavily investing in line extensions of existing brands with a craft appeal, making an IPA, an ale, a weissbier under the name of an existing beer brand, and we do that with success.
The last one is the innovation in draft systems. It's a specialty of Heineken. We continue to develop ourselves, home draft systems, one-way kegs, which we use now for the U.S. It's good for the freshness of the beer, but it's also good for the economics because a keg was rotating every nine months. That's not a very good investment if you have such a low rotation. You better use a one-way keg. It's where economics and quality work hand in hand. Those are the four pillars on which we build the innovation policy at Heineken, which allows us to grow our top line. That slide should have been related to the previous one, but that's what I told you about the importance of social media.
More and more, our marketing campaigns are in the hands of people who are ever younger and who understand how this works. We decentralize a lot more of the creative work today, and it's done a lot on the spot. We used to produce a few movies, like you saw with the one Jackie Stewart. Those are big productions made with an agency and actors and Jackie himself, and those are mega productions. Next to that, we do a lot of small, short, little commercials that are done with very low budgets, EUR 5,000, and they are spread on the internet, and their lifespan is very short. You create hundreds of them, and that is what changed. You have a total different governance of how a brand is operated than what you had 10 years ago. That's a bit the direction in which we go.
You see the part of direct communication is only and will only continue to increase. Commercially assertive, it's the excellent outlet execution. We have had for decades and decades a very strong discipline in the supply chain to measure productivity and always want to improve that productivity. All breweries benchmark themselves. There is an internal contest, and those are people from breweries who audit other breweries. That is how the system internally works and kind of produces internal improvement of productivity. The same reasoning you can apply to the sales system. After all, sales tasks are very repetitive. They are incredibly boring, like supply chain is. There is not a lot of fantasy. Its execution is about doing every day the same thing absolutely perfectly.
What is important is to give to the people who do that recognition, and from time to time, they should be able to celebrate. It is important that the commercial operations are trained and formatted like the supply chain operations are, with a rigorous discipline. That is what the end-to-end is doing, and we have been developing a whole method, which I'm not going to explain. To kind of bring all our sales forces to a higher level and then create an emulation between the countries to ever increase the productivity of the sales forces and thus making progress. The end-to-end productivity means that we start from the purchasing all the way down to the administration surrounding all our processes. We continue in the supply chain, in distribution, in admin, to invest in standardization and in productivity in improvements.
New financial shared service center we mentioned here in Mexico, China, Singapore, Brazil. We have learned that in Europe we have 22 different country administrations that we put in Krakow. In one administration, now we can do that in other countries, and we roll these things out. Where technology can serve to have lower costs of execution. In the breweries, it is productivity of our equipment, of our labor. It's zero waste, it's water consumption and energy consumptions. Those five factors having constant attention to make improvements. Finally, I end with the Brewing a Better World. You have here the six strategic pillars of our sustainability policy. Of course, we start with water because we use a lot of water. When I started my career in Heineken, we were using around 12 to 15 liters of water to make a liter of beer.
A lot of technology, but a lot of practices have been going into that to reduce our usage of water and trying to go to a water neutral balance. We work specifically in areas where we have water constraints. In some parts of Africa and in Mexico, there is water scarcity. We have been working with UNIDO to learn how to even go beyond what we do today. Water is absolutely a high priority for us. At the same time, we have the reducing our CO2 emissions. The 2020 target is to reduce by 40% in our direct production, our carbon footprint. We are well on track to do that. In the fridges, we have the same target by using better, more energy efficient technology.
You have to realize that we put a lot of fridges into usage across our system everywhere in the world. We have millions of fridges, I think, and they are replaced every five to seven years. Every time you replace them, you go for a better technology. You have to do that with a rigorous discipline, but there is a lot of money and carbon footprint to be saved there. The last challenge is distribution. That's one of the most difficult to realize, I have to admit that. As your business grows, your footprint in distribution grows naturally. That's the hardest nut to crack. It's the amount of miles that you drive to bring your product and to optimize that is perhaps the biggest challenge that we will have, because we will have to continue to source our product from skilled plants.
Distribution will always be an integral component of our business. Sourcing sustainability, it is all the problematic about, A, in specifically for Africa, where we have a target to source 60% of our raw materials from Africa, but also our commitment to sustainable agriculture all over the world, where we have an objective to have 50% of raw materials supplied from sustainable source. It's a whole adventure. It's going to take decades to come there. A commitment of a company like ours will move things. We are not alone in these kind of fields. Other companies are doing also great efforts. It's a collective effort, I realize that. We play our part in our own industry here. Health and safety, very important for us. We still have rate of accidents which are too high. In our plants, it's now pretty good.
We strive in our own plants for zero fatalities and zero accidents. You will never reach the zero, but you have to strive for that. Because we are a company that employs a lot of people in distribution, road traffic accidents are still a very important part of our universe. We devote, since a few years, a lot of energy and attention into education and prevention for all our distribution activities in order to make it a safer place. We will continue to advocate responsible consumption. We make an alcoholic product. Abuse is not good. We should not be shy of saying that, and we should play our role for responsible consumption. There is only a limited amount that you can do. A lot has to do with education and with culture.
There are lots of differences in the world about perception of how bad or good, and the attitude towards alcohol consumption and alcohol abuse is. That is difficult to change. What you can do is advertising the correct behavior with your brand in a way you want to say, actually bring the message that it's not very cool to be drunk. All right. When people like Jackie Stewart say that it is actually totally ludicrous to drink when you're going to drive, it makes more impact.
I think we have to put our money where our mouth is and deploying, I would say, advertising spots, which are good for the brand, but also make the point that actually alcohol abuse is not a good thing and it's actually not cool to abuse it. It's a long way, though. It's a long way, Heineken, with the main brand, we have started to do that. It's not the first commercial we do in that vein. We have had the campaigns with celebrity DJs about the Dance More, Drink Slow . I have even big rows with my own commercial organization because when you have to choose between drink less and dance more, you will sell less. I'm saying, yes, then we choose to sell less. That is what we have to do. The customer will not be happy.
If we lose a customer, I better lose the customer than doing the wrong thing in these big dance parties. It's a whole cultural evolution, I tell you. It's not a simple thing. There is not one simple recipe. Heineken wants to be very committed to making progress in that field. Finally, inclusive growth, that's a theme that many companies today embrace. Ours, too. Growth is not inclusive, is not going to be sustainable. We all realize that. How you do that, this is more obvious in the developing world, certainly in countries or areas like Africa, where it is obvious that when you make growth more inclusive, you will also, as a business, benefit from it. It's all our investments in Medicare in Africa, around the places where we produce and sell.
It's also our investments into local agriculture that bring all that more inclusive economy. It's a sum of little things rather than big declarations, at the end of the day, they're also good for business. Now, is the strategy delivering? Here you see that because we focus a lot on the margin improvement and the commitment we made to improve the margins year-over-year, this is delivery, and we think that we can continue to deliver margin improvement in the near future. I have to caution that margin improvement is not the ultimate goal. If I always say that if I could keep my margin stable and having my revenue growing by 5% a year instead of 3%, I would might perhaps choose that one.
One have to see it in a dynamic that 40 basis point is also made on a guess that you have to also to grow your top line. We have made that commitment a few years ago. There is no reason to walk away from it, but it's only a partial measurement of the success of the company, I have to say. That is how we create value. One has to, and that's to my point, we call it the Heineken Golden Triangle, but that is where all the people in all operations are accounted for. A good business and a growing business is one that grows its revenue and market share, has a good return on sale, and a good return on its invested assets. That's where our people are measured to. Of course, one or the other operation will be measured.
Some will have to improve their return on sales, other their return on assets, and others will have to work on their growth, or on all three. That is how we steer, and we give objectives to all our operating companies so that we can continue to make the Heineken business growing in the future. It's not rocket science, but if you keep the discipline, and we have been keeping the discipline now for quite a number of years, you can make progress. Investor Relations like summaries. I think I've said enough, and I thank you very much for your attention. If you have questions, feel free to ask them.
Maybe I could just ask one more. People are perhaps thinking, Jean-François, you talked a lot there about responsible drinking, and highlighted the work you're doing with Formula 1 now. Can you talk a little bit about the innovation playing into that? You put up on the slide the low alcohol or no alcohol category being part of your innovation agenda. How do you think about that over the long term? Could you become a significantly more meaningful player in that low or no alcohol segment versus where you are today?
The answer is absolutely. We have had that experience in Spain. There, where non-alcohol beer has become a significant category part of our business in Spain. Why is that? Because people, after work, they go to eat tapas. They like beer with tapas, but they're going to drive, so they don't drink alcohol. That's how it emerged. It's looking after these occasions, people conscious of health, conscious of the moments where they cannot take alcohol, and as an alternative to carbonated soft drinks or just water. With malt-based beverage, you can do a lot. That has not yet been exploited. It takes various ways and forms. It's not only your classic non-alcohol beer, but it's also malt-based beverages. Like we have the Maltina in Nigeria, which are vitamin drinks, if you will, unfermented wort.
It covers an array of categories as well as low-alcohol proposition. People are more open today for light beers than they were 10 years ago. 10 years ago, in Europe, you say, "This is a light beer." They say, "Oh, this is not a good beer." Today, people understand that. The fact that we launched light beers with lemon juice, make it a little bit more refreshing and having it a bite, it's been a huge success. I think there is a lot to be done in the development of no- and low-alcohol. It will certainly grow at a much faster pace than the regular beer category. Therefore, we want to invest there.
Just a quick question. More strategically, the beer world is getting smaller and smaller. Your competitors are getting bigger and bigger. I guess it's a family decision on the future of Heineken, how does Heineken fit into a consolidating global beer landscape now that your competitors are even bigger? Even in the U.S., with Miller getting bigger and ABI and whatnot, how do you guys fit in, and what's the thought process going forward?
You say competitors, I'm taking away the S there. There is one guy who went much bigger. We were number 3. It takes number 1 to buy number 2, then you are number 2. Arguably, your point is about the gap that there is between number 1 and number 2. That's rarely seen in any given industry that the gap is as big as that. It's in the food and beverage industry, I mean. That is quite intriguing. What it is in our business is that the sum of the local leadership positions weigh more than the global leadership. Your local dominance is more of significance than your global significance in our type of business. Still, if we specialize in bringing international brands and global brands, the world of beer is largely still a local one.
In the developed markets, Europe and the U.S., it takes the opposite direction. Everybody want to have local. On the one hand, the competitive pressure comes from a much bigger group than we are that has a lot of firepower. I admit that. At the same time, you have to keep your head cool and look at every individual competitive situation in any given market. The other competitive game and danger comes really from the bottom, that is all the smaller actors that eat your lunch, and you have little space to move against them because they don't want to have 15%, 20%, or 40% returns. They're happy with 5%. They claim they're local, you can't claim it, and so forth. This is kind of a new competition that you have in parts of the world, which is difficult to combat.
Now, I don't believe that having an absolute, the bigger is a thing that you should pursue. We have to look at our competitive situation and the possibility of growing our business in the decades to come. There, we still believe that with the size we have, the presence we have, the brands we have, and the people we have, there is nothing to be afraid of. Over the last 20 years, we have been delivering a dividend per share increase, compounded increasing 10% a year. Also, the last 10 years. From time to time, you have flux, but that's more or less the profile. I think it is not necessarily required to be as big as the bigger guy to continue to have a profitable and growing business. It's a thing that we could debate for one more hour.