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Brewer Heineken Uncertain About Year-End After Summer Recovery

Published on Oct 28 2020 8:19 AM in Drinks tagged: Trending Posts / Beer / Heineken / Netherlands / Dolf van den Brink

Brewer Heineken Uncertain About Year-End After Summer Recovery

Heineken NV performed better than expected over the June-September quarter, with a surprising increase in beer sales in the Americas, but said the COVID-19 pandemic was still too uncertain to provide a reliable 2020 outlook.

The world's second-largest beer maker said it expected a volatile final quarter of the year as new restrictions were imposed by many countries in Europe, including closures of bars and restaurants.

In Asia, new restrictions are in place in Malaysia, Myanmar and Sri Lanka.

The brewer of Europe's biggest selling lager Heineken, along with Tiger and Sol, withdrew its 2020 guidance in April, as the pandemic spread. On Wednesday it said it would only provide a general overview of the rest of the year.

"Our performance during the third-quarter continued to be impacted by the COVID-19 crisis," commented Dolf van den Brink, Heineken chief executive. "As many lockdowns eased, our volumes improved sequentially compared to the last quarter.

"We outperformed the category across most of our key markets, with Heineken showcasing a stellar performance. We continued strict cost mitigation actions whilst balancing investments behind our brands and future growth opportunities."

Store Purchases

Heineken said it would earn less money for a given volume in a shift from bar to store purchases, while costs were likely to be higher than a year earlier, with kegs cheaper to produce, re-use and ship than cans and bottles.

The brewer has already reduced discretionary spending and some capital expenditure.

It said it would start restructuring its head and regional offices in 2021 with the aim of cutting personnel costs by 20%.

Overall, Heineken's beer volumes declined by 1.9% on a like-for-like basis in the third quarter. That compared with an average expected drop of 5.9% in a company-compiled poll.

All regions fared better than expected, except for Asia with drinking down in its second most important market, Vietnam.

In the Americas, beer volumes were up 2.5%, with low teen percentage growth in the United States, where distributors replenished inventories, and Brazil, where Heineken is expanding after a 2017 acquisition made it the second largest player.

'Volatile Situation'

"The situation remains highly volatile and uncertain," commented van den Brink. "We expect rolling outbreaks of COVID-19 to continue to meaningfully impact many of our markets in addition to rising recessionary pressures.

"As we navigate the crisis, we are deliberately shaping how to adapt and emerge stronger from the pandemic. I am proud of the relentless drive of our employees and the agility they continue to demonstrate, taking care of one another, our customers, suppliers and communities."

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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