I am delighted to be joined on stage by Dolf van den Brink, CEO of Heineken. We're in Paris, and Paris Saint-Germain recently won the Champions League, so I think it would be remiss not to start our conversation by talking about your reflections on that event, Dolf, given your long association as a company with the Champions League.
Very good. Good afternoon, everybody. I do not know if there is a French crowd here, but congratulations on the big win. I understand the Paris Saint-Germain folks have had to wait for a long time, but it was spectacular, I have to say, in Munich this weekend. The sun was shining, good football, and a lot of beer drinking, so that makes us happy.
Great. I'll get...
Do you want a beer, by the way?
Yes, please. I was about to open them, but slightly nervous they might explode because Tristan ran them down from upstairs. Thank you. Cheers, Dolf. You have been...
It's a 0-0 in case anybody gets worried.
We'll move on to the real stuff later. So, Dolf, you've been CEO of Heineken now for five years. What do you see as the sort of key achievements over that period, and how does it make you think about the future?
Yeah, actually, this weekend was the exact five-year anniversary. It was June 1, 2020, that I started. Thinking back of that day, that was literally starting as a CEO, sitting behind a screen in the middle of COVID, and I registered my welcome video to the company from an empty pub in downtown Amsterdam. This weekend, marking the five-year, I was at the Champions League final. It for sure feels very different, you know, and a lot has happened over the years. It has not been boring, to say the least. In terms of kind of the progress that we're making and the challenges that we're seeing, I think across a couple of dimensions, we're very proud of our footprint.
We believe we have the most balanced and diversified footprint, and we're proud to have added India and Southern Africa with our Distell and Namibia Breweries acquisitions, two very important new pieces of the puzzle setting us up for future growth and value creation. We have also taken some tougher decisions on the tail end of our footprint, which historically was not really something on the radar, but we really have changed that. On the portfolio, we keep leaning in on premium. Premium remains the trend. It has been there for a long time, but we still see it across time, across markets and regions, very relevant. We always aim to lead in that regard with brand Heineken, up 50% over the last five years as kind of our leading horse in that race, low and no alk, beyond beer.
A lot of kind of portfolio transformation, the case in Brazil being a case in point. Third kind of transformation, if you'd like, is transforming our cost base. This was not necessarily something that we were known for historically, but partly out of necessity, but also explicitly by design as part of our Evergreen Strategy. We have been really addressing our cost base and taken out a lot of savings, EUR 3.5 billion over a five-year period, but also knowing that more is needed to really make sure that we set ourselves up for operating leverage. Maybe the fourth is transformation in terms of our operating mechanisms, our technology base with our digital backbone that we are implementing and rolling out to also make sure that we future-proof the company in an era of AI.
That's great. Thank you. I guess as a natural follow-up, what do you see as the sort of big opportunities and key risks over the next five years of your time?
Yeah, I was just alluding to those first five years on the job and all the kind of turbulence of volatility that the world has known: war in Ukraine, COVID, energy crisis in Europe, hyperinflation, tariffs. I think one of the notions that we try to carry forward is just to accept this is the new normal, that there's not some miracle stability around the corner, but that we really need to make sure that we keep making the company more resilient, more agile in an intrinsically more volatile world. I think we're making good progress on it. I'm very proud of our organization, how they have been doing that.
Whether it's transforming footprints, our portfolio, our cost base, our tech stack, it's all at the service of capturing value, but also being able to be more nimble and more agile in adapting to the circumstances as they appear.
Got it. You use your green diamond as a measure of success. How would you rank those four elements today, and how do you think about their contribution to driving shareholder value over the next four or five years?
Yeah. The four quadrants: growth, profitability, capital efficiency, and let's say sustainability. On growth, we have been able to generate a lot of revenue growth, but mostly from price mix. We have been really driving the quality of our volume base, and we walked away from millions and millions of hectoliters of cheap economy beer across the world, but especially in Brazil, we divested or walked away from significant volume of low-margin soft drinks. It is really about making the quality and the composition of our volume and our portfolio more healthy. We have made a lot of progress in that regard. Premium volume is up 20% over the period. Heineken brands up 50%. That is the good news. At the same time, we have not been able to generate a lot of volume leverage over the period, and that is something that really needs to be coming forward.
On profitability, big, big progress on productivity, as I said before, EUR 3.5 billion in savings. We're also becoming more intentional in terms of resource allocation, which is actually cultural change, but we're not yet seeing the kind of margin as we would like to see it going forward. We're really subscribing to the notion to see more operating leverage going forward. By the way, the acquisition of United Breweries Limited India and Distell South Africa had about 100 basis points dilution on our margin. We believe for the right cause, because those are two critical growth pieces of the funnel, but more is needed. Capital efficiency, also with the devaluations that we have had in some of our African operation, much tougher on capital deployment, more focus on cash flow management, like we saw coming through in our full year results of last year.
I would say, yeah, also I think we are behind peak CapEx. I think you will see a moderation on CapEx as we're really focusing on spreading our assets in a better way and also adapting to a lot of the volatility that we have seen. On sustainability, I would say on the chosen metrics of carbon, water, circularity, we have made a lot of progress, but also a little bit the low-hanging fruit is gone. It is also really about prioritizing and focusing on the parts that from a technological and financial viability are possible going forward.
Okay, understood. Thank you. As we enjoy a Heineken 0.0, I would love to get your thoughts on the health of the beer category globally and your role within that as a market leader. Are you concerned at all about some of the commonly cited potential structural headwinds to beverage alcohol and beer in particular?
Yeah. Let's start. Beer is 8,000 years old. It has been there for literally millennia. It's the oldest FMCG category on the planet, and it has been extremely versatile and adaptable. The way beer looked, smelled like millennia ago, hundreds of years ago, was very different. It has been very versatile in adapting to new technologies, but also new consumers, new taste appetites, what have you. I think whether it's what we're doing, a low and no alk, non-alcoholic malt drinks, beyond beer, ready to drinks, I think there has never been so much innovation in the category over those 8,000 years. I really, and we as a company, remain incredibly bullish on the long-term potential of the category for growth and while adapting to new realities.
Now, when you look globally in our global footprint, I would say 90% of the world's population geography, the old formula of urbanization, GDP per capita growth, and population growth still holds true. Look to the growth that we're able to generate in India. Look to the growth that's resuming in Vietnam, the growth that we're having in Ethiopia. Actually, in the majority of the world, GDP per capita, population growth, urbanization is still very relevant, and we believe that we have a footprint that takes disproportionate advantage of that, given our operations like Mexico, Brazil, Nigeria, Ethiopia, South Africa, Namibia, India, Vietnam, Southeast Asia. It comes with some volatility, and there we're really adapting to a new reality.
The way we're managing those balance sheets, hard currencies, there's really kind of a shift in how we go about it, but we really believe in the category potential there. In the developed world, which is basically, by the way, around 10% of the world population, that's where it has been a bit more rocky. Big difference between North America and Europe, we feel, because in Europe, in America, there seems to be more drivers of concern. We are a relative smaller player there. Europe, we have a more direct line of sight to where there's a big difference between Northern Europe and let's say the Mediterranean. The Mediterranean, whether it's Italy, France, Spain, Portugal, Greece, where we have leading positions, there's actually still a lot of share of throat gains coming out of wine, which kind of creates an ongoing growth story for beer.
Northern Europe, a bit tougher, but there, for example, you see low and no alk really taking off. In my home country, the Netherlands, it's 10% of the market. In Germany, it is around 10%. We are more concerned, by the way, about disposable income and consumer confidence in the short term. Because of that energy crisis, the amount of pricing that was needed to be taken in 2022, 2023, we're now in 2024, 2025, we're deliberately cautious on the pricing to allow the consumer to catch their breath.
Understood. Thank you. I guess turning to this year for fiscal 2025, you've guided to organic EBIT growth of 4-8%. In Q1, you only report volumes and sales, but as expected, it was flattish with a number of known headwinds. Can you talk about the balance of the year, the puts and takes that would ultimately see you land at the top or the bottom end of that guidance range?
Yeah. To be clear, our guidance stands as of Q1. From a process point of view, at the half year, it will be the first formal moment to express ourselves on that. Just to paint a little bit the picture by looking at the key components, for example, APAC really doing well, probably a little bit ahead of our expectations. We see India, I refer to that. We see good market share and volume growth and market share growth at the market size growth in Vietnam, which to us is a very critical component. APAC looking good. Europe tough. We also signaled that in the Q1 statement. We are having a couple of very big disputes with these regional buying groups, which are concerning fundamental principles that we believe are important to stand our ground on.
That impacted pretty severely our Q1 and actually lasted longer into Q2 than we originally anticipated. That kind of more than offsets the impact of Easter. Again, we believe this was very fundamental to the health of the category in our portfolio in this part of the world. I am very happy that about a week ago, late May, we were able to resolve the key one, which was in France, which was a bit at the center of this. Actually, going forward, that should look better. The Americas, we have had incredible strong performance, in particular from our Mexico, Brazil operations in 2023, 2024. Last year was a very strong year on the top line, but especially also the bottom line. We had a somewhat slower start to the year.
Market share sell out in Brazil still looking very good, but the region is not immune to what's happening north of the border, so to say. In the second quarter, Easter came in as we expected, but we are a bit concerned about the short term. I don't know if you picked up on the news, but yesterday the remittances coming out of the U.S. going into Mexico fell by a larger percentage than ever before over the last 20 years or so. We are deliberately cautious a bit in the short term given the effect there. The U.S. operation, it's not our largest operation, but of course being impacted. A bit more caution, I would say, on the Americas. The Africa Middle East actually doing pretty well.
We've had to manage through massive devaluations in a couple of key markets like Nigeria, Ethiopia, Egypt. We're really coming out strongly. We stabilized last year. We see a market like Egypt, market like Ethiopia really getting back to solid growth. I also think the hardest part of the integration in South Africa is behind us. That's really stabilizing, setting us up for what we really need to do, which is the growth and the value capture in that important market.
Okay. Thank you. It's a really quick tour of the world. Maybe we should dive into a couple of those geographies specifically. I guess you started with Western Europe, where you said there's been some tough price negotiations. Are you seeing any change in the consumer environment, any dynamics by channel that we should be aware of? I guess longer term, what is the right way of thinking about the growth opportunity for you as a business in those more developed markets like Western Europe?
Yeah. Look, it's good to remind ourselves that in 2019, right before COVID, Europe was growing. And so we really believe, and we don't accept the mental model that Europe should not be growing. Europe should be growing. COVID was disproportionately impactful because the on trade in Europe is much bigger than the on trade in North America. That had, of course, its effect. I think the on trade didn't fully recover yet. It's still about 10-15% down. That is one factor. By the way, if you go back 10-15 years ago with the big financial crisis, it also took 5 to 10 years for the on trade to come back from the financial crisis. Also there we believe that midterm that will return, but that might take a couple of years.
Our key concern is disposable income after the kind of pricing that had to be taken on the back of the energy cost explosion that we suffered in 2022, 2023. Therefore, as I said earlier, we deliberately had very moderate pricing last year. Also in Q1, I think we reported online 1.5% pricing. We are keeping that modest in order for the consumer to catch up. I think we are seeing salary increases ahead of inflation last year, this year. We do believe that we are getting closer to the point where, let's say, from an affordability point of view, the category is back in a good position. Overall consumer climate is not the best, but yeah, let's see how that plays out.
The on-trade is having a double whammy because they kind of get the supplier pricing, but then they in particular have a lot of personnel cost inflation that they need to deal with. We are a bit concerned on the on-trade. We are gaining market share, but short term, hopefully that inflation starts coming down there.
Okay. Thank you. Maybe let's move to Vietnam, which has been a phenomenal success story in the long term, but has seen some peaks and troughs.
If you allow me, maybe two more things, because that's the external perspective on Europe. The two, three things that we really focus on for value creation is premium beer. A market like the U.K. is a good case in point where with the Birra Moretti brand, with Heineken brand, with the Beavertown brand, with Inch's and Old Mout Cider, we really have a strong premium portfolio. U.K. being our largest market, we see share gains and actually positive volume. There's still a huge productivity agenda in Europe. The external world is as it may be, but it doesn't mean that there's not a lot that we can do to actually make sure we create value. Sorry, you were going to Vietnam.
No, that's all. We can keep talking about Europe if you want to. Vietnam, so it's been a great market long term, clearly a market with huge potential going forward, but there's been some volatility over the last couple of years. Can you maybe unpack some of that volatility and then give us some context on how you see the growth opportunity going forward?
Yeah. So indeed, Vietnam has been a growth market for, I think, 30-odd years. And 2023 was really a shock because the economy went into a recession. There was a big political crisis. There was a real estate crisis, which hit us as a market leader disproportionately because we really skewed premium. I think the team was very agile to adapt to new reality where we have been rebalancing within premium. We have been rebalancing between premium and mainstream. We have brands like Bia Viet and LaRue that we have been investing in that are now becoming a more important part of the portfolio. Because of COVID and the crisis, there was also a shift from the on-trade to the off-trade that we have been adapting to. I think last year you already saw the market slowly but surely stabilizing. In the back half of the year it was stable.
Q4, the market returned to growth in both channels. In Q4, we started to stabilize our share. Now year to date, we really see market growth across the channels and we see market share growth for the company. I think we have well adapted to the new reality in terms of the channels and the segments. One thing, we never took our marketing investments or our sales force dramatically down because we really believed that this is a long-term growth engine and we did not want to compromise our ability on the swing back. That is literally what is happening right now. By the way, nice to say because Vietnam is really known for the Tiger brand and the Tiger brand remains somewhat challenged, but the Heineken brand is absolutely on a tier. It is now the number four market for the Heineken brand globally after Brazil, China, US.
At current growth rates, it will overtake the U.S. as the number three market globally. The Heineken brand in Vietnam is actually becoming a very important part, which is a bit counterintuitive given what was going on in the country.
Thank you. Let's move to Mexico. You already talked about the pressure on remittances, but you've clearly got a very strong footprint in the north and the south of the country. What do you see as the key drivers of growth given already relatively high per cap consumption? Where are you going to generate growth from within Mexico?
Yeah. First of all, super proud, as I said, about the performance of the business and what has been done since we acquired this from FEMSA back in 2010. It is the most important operating company in the group. Very proud of the channel mix, the brand portfolio, the geographical mix. Brands like Tecate, which is an absolute powerhouse, but we also have high single-digit growth on Dos Equis, on Indio, on Miller High Life, which we are playing in affordable premium. OXXO, we always knew the OXXO mixing had to happen, would be disruptive, but I think we are now beyond that. I think the team should be very proud of how we have been able to do it without affecting profitability because throughout the period, actually we have been able to expand our profit. The OXXO retail channel, incredibly important, 17,000 stores.
When I left as a Managing Director, I used to operate, be the General Manager in Mexico. In 2018, we have 11,000 stores, now 17,000. It is one of the biggest retail chains in the world and absolutely key in our commercial strategy. We still see a lot of opportunity there. There are big parts of the country where we are really below fair share and where we believe with our brand portfolio, we have a right to play to a larger extent. We still see a lot of future growth opportunities.
Okay. Staying in the Americas, let's go to Brazil. You have talked in the past about there being a healthy level of competition within Brazil. Is there any change to the competitive environment there? You have had some new capacity come on stream. How are you leveraging that capacity to drive additional growth?
Yeah. Now, I've said the story many times, very proud of the transformation of a business that until six, seven years ago was not making money, was skewed highly cheap economy brands. Now we have a company that makes significant profit contribution, double-digit margins with the majority of its volume sitting in premium with the Heineken brand, with super premium craft brands and the Amstel brand. The Amstel brand is much less commented on, but there were zero hectoliters a decade ago and it's now 11 million hectoliters and growing. We still feel we're significantly below fair share in mainstream. Again, we have sacrificed millions and millions of hectoliters in economy. I think we have been very disciplined in our capital deployment because we didn't want to put hundreds of millions in new CapEx in building breweries to fill it with cheap economy.
We have been converting cheap economy volume to profitable mainstream and premium. We are now at the back end of that. That is why we are opening a big new brewery in Minas Gerais in October of this year. We still see new opportunities. We still see growth for brand Heineken, Heineken Zero. We still see a lot of upside on Amstel. We are also seeding some new brands. We are there to stay. Yes, you have a couple of big players in the market and it is competitive, but again, nothing different from what we have been dealing with over the last decade or so, I would say.
Okay. Thank you. Another market that has seen some volatility is Nigeria. Clearly.
Some volatility. That's a nice understatement.
Perhaps I've understated, but clearly huge volume growth potential long term. You've also seen some real success from your premium portfolio there. How do you think about the growth opportunity in Nigeria and your opportunity to grow those premium brands within that market?
Yeah. First of all, the volatility you referred to, the big devaluation of 2023, 2024, we have been in Africa for 100 years. This devaluation was probably the worst in 40-50 years. There was not just the kind of volatility that you have every now and then. This was a very bad one. Again, very proud of how the team has been adapting. We have completely cleaned up our balance sheet. We have converted hard currency debt into equity. We're addressing debt levels in general. We've been addressing the cost structure of the company. We have completely changed the break-even point in the business. In the meantime, we didn't lose share. We actually grew a bit of share. Premium beer keeps on growing.
We're really having a beautiful portfolio of premium beer, mainstream beer, some more affordable beers where we want to play with that and malt drinks. I think the business is set up now to take advantage of the bounce back when it comes. We had very good growth last year. Now it's a bit more subdued as the consumer is reacting to the inflation over the last years. From a country point of view, I feel way more confident about the country now than I did probably three, four years ago. That's because countries like Ethiopia, Egypt, Nigeria are now forced to take very tough medicine, cleaning up the balance of payment issues, cleaning up government spending, et cetera, which actually makes me believe that the countries will be on a more sustainable path going forward than they were.
It reminds me a little bit what happened in Europe, where right now Greece and Portugal are the fastest growing economies, while 10 years ago they were the worst affected. In that sense, mid-long term, I'm actually feeling better about those markets than I did.
Another market with a big volume growth opportunity is India. You've recently, in the last couple of years, gained full control. Can you talk about the opportunity to grow in India, in particular, given that it's historically been more of a spirits market? What can you do to make your business in India continue to grow and exploit that per capita consumption opportunity?
Yeah. No, I think it's by far the biggest opportunity in beer that is out there. There's hundreds of, yes, there's a part of the population who are abstaining. There are hundreds of millions of people drinking alcohol. I think what you're seeing with the rural population moving to the cities, education levels going up, you now have a large and very young, high-educated professional class that is allowing themselves much higher social freedoms. You really see consumer behavior changing. I used to sit on the board while we were having a minority years ago. If we would go out for a drink in Bangalore, it would be not a nice experience, dark, very masculine, not a positive experience. Now you see rooftop bars, you see restaurants, it's lighter, it's more premium, it's more multi-gender.
You really see it in the outlet footprint, really a change in the culture around those beverages where moderation and moderate beverages actually fit in the lifestyle of that young professional class. We believe the trend is absolutely there. We see it in our numbers, high single-digit growth last year. We see the same for this year. We have about 50% market share. We have by far the broadest supply chain footprint across the country, which is a huge strategic asset given how difficult it is from a regulatory point of view to get things done. From a portfolio, Kingfisher is the legendary brand in the market. We're now having these premium line extensions with a lot of growth. We're just scratching the surface of brand Heineken and Amstel.
In that sense, yeah, we believe that we will see not just a couple of years, but 10-20 years of very strong growth coming out of India. The choices that we're making are at the surface of that.
Thank you. We've talked about a bunch of big markets. Maybe let's go back to some sort of group level thoughts. You mentioned Evergreen earlier. You're up to EUR 3.2 billion of cost savings that that program has achieved. How has bringing in Evergreen affected the cost focus and the discipline around cost and reinvestment within the business? Does it become incrementally harder to find savings given that you've already achieved so much?
Yeah. Now, you alluded to me starting five years ago. Five years ago, when I was speaking to investors and analysts to kind of inform myself, I heard people say, "We like the company, we like the brands, we like the footprint, but you guys do not do productivity, you do not do savings." There was a lot of skepticism about it outside, but also inside the company. That I think we have really addressed head-on with Evergreen, also out of necessity, never waste a good crisis. I think it is profound culture change in the company where it just is part of how you create value. We delivered that EUR 3.2 billion and counting over the last years. Yes, low-hanging fruit is gone, but we also see now more systemic opportunities. We are still very early in the journey to regionalize our supply chain footprints. We did that in Europe.
That unlocked a lot of savings. It allowed brewery closures, but more importantly, it allowed for bottle harmonization, recipe harmonization, input harmonization. On business services, we are also really kind of early in. I always joke internally, the bad news is how behind we are on shared services. The good news is how behind we are because a lot of the opportunity is still ahead of us. We believe that it's still kind of early days, but the most important accomplishment is not just the number, but it's actually the cultural acceptance that this is now just part of the mix. In Europe, we like soccer, we like football, we like Champions League, and always said, you can't just say, "I like to attack, but I'm not going to be bothered by defense." If you want to play and win Champions League, you attack and you defend.
The same on the company. You need to grow, but you also need to do productivity. That is now really part of the mentality of the company and knowing that there is still a lot to be done and also a lot that we should do because we are not satisfied, as I say, about the amount of the savings hitting the bottom line, translating to operating leverage. There we really need to step up further.
Okay. One of the obvious areas of investment has been marketing. I think marketing grew organically ahead of sales in fiscal 2024. I think you've indicated that it will do so again in fiscal 2025. What are the areas that you're focusing that investment on and what are the results you're expecting that to bring?
First of all, maybe zooming out, I was getting concerned when I became CEO that beer as an industry potentially was underinvesting compared to spirits, for example, in the category. I really believe that we need to step it up in that regard. I think that's happening. We will do our part in that regard. We need to make sure that the category is healthy, not just today, but also tomorrow and the day after tomorrow. We need to make sure that we invest not just in our historical footprint of mainstream brands and premium brands, but also in low and no, like we were shaping the Zero Zero or the Beyond Beer, leveraging the Distell portfolio.
There is a notion that is relatively new to the company, the company being historically quite local, but therefore quite fragmented, that we were supporting in aggregate way too many brands. With Bram Westenbrink, our new Chief Commerce Officer, we are really subscribing to this notion of fewer, bigger, better, where we are really prioritizing five global brands, 25 big power brands that are getting the bulk of the investment. That is relatively new because we did that in a more democratic way historically. Actually, with data and AI, there are opportunities to manage ROI, return on investment, in increasingly more sophisticated ways. It is about making sure we keep the category healthy, that we shape the category across the different taste segments, that we do it on fewer, bigger, better brands while driving return on investment.
Because yes, we are investing ahead of revenue, but we need to make sure that every euro of that counts.
Okay. You just mentioned using AI to help with your marketing investments. I guess one of the areas where you've made big investments is your digital platforms. I think in your eB2B, you're at EUR 13 billion of gross merchandising value. I think you're capturing 700,000 active customers. How far along are you with the integration of your eB2B platforms and what does that initiative bring you?
Yeah. It is also interesting how time gives you a different perspective. Three, four, five years ago, we were incredibly worried that Alibaba and Amazon and tech players would come and disrupt our fragmented trade. That has not really happened. I think indeed beer is heavy, it is bulky. You have reversed logistics with returnable. In that sense, that part has not come to fruition. Digitizing order capturing just makes sense, but there is a means to an end of ultimately serving our customers better, cheaper, faster. At some point, there was a bit of a race, how much revenue can we digitally generate? It is now EUR 13 billion in gross merchandising value. That is no longer the key metric. The metric is, do we serve our customers faster, better, and cheaper?
There we are making a lot of progress, also really making sure that your eB2B digital order capture links into a digital system with your distributor with the handhelds of Salesforce doing merchandising. It is more really managing the ecosystem at the service of our customers being served cheaper, fatter, faster, and better. Yeah.
Do you think that that's a competitive advantage?
First of all, you need to make sure it's not a disadvantage. We have proven in Mexico and Brazil with our market share gains that our solution in direct delivery, because it is much easier to do in direct delivery markets, and therefore Mexico and Brazil, which are predominantly direct delivery, we move very fast. We have proven, and I think there we have been really creating competitive advantage in places like Nigeria and Vietnam by digitizing an indirect route to market where you have distributors and wholesalers sitting in between. That is more challenging, but if you crack it, there's also more competitive advantage to be had. I think we're really a bit ahead.
Okay. Maybe let's turn to capital deployments. You announced a EUR 1.5 billion buyback with your fiscal 2024 results. How do you think about the balance of cash use going forward, I guess, between investing organically in your business, buying back shares, paying dividends, and maybe M&A as well?
Look, our capital allocation principles have not changed for years. We will always make sure we first and foremost invest in the organic business to the extent needed for long-term value creation. That remains the priority. We do believe that we're a bit behind peak CapEx and that we can be smarter about that. You will see that come forward. We also, by the way, believe that on cash flow management, like we showed last year, there's more to be done on working capital management, payment terms, those kinds of things. Harold, our CFO, is really leading the charge on that. We are also becoming much more deliberate and in a way, I would say tough on capital allocation to different market typologies. Heineken was a bit the company when you ran out of capacity, you would get new capacity. That's no longer per se the case.
In this more volatile world that we're living in, we need to be much more conscious about hard currency need, weighted average cost of capital in those local markets. We are setting a higher bar. We make operating companies work and pedal much harder to get incremental capital. Big cultural change, by the way. Again, Harold's playing a critical role in that regard. We always will remain on the outlook of good bolt-on acquisitions, strengthening our growth footprint, like what we did in India, like what we did in Southern Africa. I think we're also showing we will be very disciplined that after those top priorities, if our leverage is structurally below 2.5, we will return cash. Therefore, we announced our EUR 1.5 billion share buyback program, which is the first time that we have kind of a multi-year program.
We do see that as part of, yeah, our capital allocation going forward.
Thank you. You just mentioned bolt-ons, and I guess Distell was more than just a bolt-on, but I appreciate you can't tell me what you will do going forward. Do you think convergence, do you think the blurring of the boundaries between beer and spirits and soft drinks will be a driver of your bolt-on acquisitions going forward, or is that not really something that you're?
No, maybe let me answer it in two parts. The reason why we did Distell is that South Africa and Southern Africa, if you include Namibia, Botswana, is by far the biggest profit pool in the Africa-Middle East region. We had an organic strategy with the Heineken and Amstel brand and the brewery, and we were having good growth, but zero value creation. There was simply no path to sustainable value creation. Looking at the options, the only available option of scale was Distell. What we in particular liked was that 60% of the business was cider and flavored malt beverages like Bernini and Extreme, which sit very close to beer and how you operate beer. In a way, we got the wine and spirit business to go with it.
Because the route to markets are aligned, actually, that's not necessarily a bad thing in that market. We really believe that we have now a much better chance of taking a part in that profit pool. What's happening outside of South Africa, Namibia, Botswana, Zambia, Eastern Africa, there's a lot of value that we're already managing to capture. Beyond South Africa, it really is market by market. Right now, going into adjacent categories where that soft drinks or spirits and wine would take a lot of incremental capital deployment because you can't make soft drinks or wine in a brewery. We are really focused at leveraging our installed capital base and making that work harder by selling more premium beer, by selling more low and no alcohol, by selling more cider, more ready-to-drinks, and what have you.
At least that's our priority at this moment in time.
Okay. That's very clear, Dolf. I'm afraid we're actually out of time. Thank you very much for your time. Thank you for your perspectives. I hope you'll still be coming here in five years' time to share with us your thoughts on Heineken as a business.
Thanks, Mitch. Thanks, everybody. Have a good afternoon.