Heineken starts to be cautious about European beer drinking

© Stocksak. FILEPHOTO: Heineken glasses seen in Hanoi, Vietnam on May 30, 2019. Picture taken May 30, 2019. REUTERS/Kham

BRUSSELS – Heineken (OTC) NV, the second-largest brewer worldwide, reported Wednesday that there has been a slowdown of beer demand in some European markets. The announcement came after it revealed that third-quarter sales were lower than expected.

Heineken shares fell 8.1% in early trading at an 81.06 Euro low seven months ago.

“We increasingly see reasons for caution on the macroeconomic outlook,” Chief Executive Dolfvan den Brink stated in a statement.

The volume of beer increased by 8.9% in the third quarter on a like for like basis. The strongest increase was in Asia, however, it is lower than the 12.0% average market expectations.

Heineken maintained its full year outlook for operating margin stability or slight increase in this year’s.

It didn’t mention the 2023 forecast it issued at August’s half-year results, which predicted that operating profit would rise by a single-digit to mid- to high-single-digit percentage.

The brewer stated that rising inflation could affect consumer purchasing power, and reduce beer consumption. Heineken, as other brewers, is also facing higher raw material and energy costs.

Heineken reported a 68% jump in beer sales in Asia-Pacific regions in the July-Sept periods, one year after COVID-19 lockdowns. This was in particular in its main Asian market Vietnam.

Heineken Europe’s market leader, the warm weather helped drive sales despite rising inflation.

The company also stated that its net income before exceptional items and amortization increased by 19.8%. This was a steeper growth than the beer volume volumes as consumers were willing to accept higher prices or trade up to more expensive products.

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