Heineken Beer Volumes Hit on Downturn
Organically, consolidated beer volume declined 6.3% as lower volumes in Europe and the Americas were only partly offset by continued strong volume growth in Africa and, to a lesser extent, Asia-Pacific.
22/04/09 Heineken has said in a trading update that first quarter revenue increased 24% compared with the first quarter of 2008 owing to first-time consolidations (+27%) and better pricing (+6%). This was partially offset by the financial impact of lower volume (-7%) and unfavourable exchange rate fluctuations (-2%). Organically, revenue decreased 1%.
Heineken’s full-year results and volumes are far more dependent on the performance in the peak-selling season (May-August). The first quarter is the least significant in terms of volume and profitability. In 2007 and 2008, the first quarter accounted for 20% and 18% of annual consolidated beer volume respectively.
Consolidated beer volume grew 12%, due to the first-time consolidation of Scottish & Newcastle and other acquired businesses. Organically, consolidated beer volume declined 6.3% as lower volumes in Europe and the Americas were only partly offset by continued strong volume growth in Africa and, to a lesser extent, Asia-Pacific.
Organic volume was adversely impacted by a combination of factors including the global economic downturn, unfavourable weather, the continued effect of smoking bans, distributor destocking, excise duty increases and selling price increases. Consistent with its long-term strategy on building brands, Heineken will continue to maintain the price positioning of its key brands.
Volume of the Heineken brand in the international premium segment declined 5.8% to 5.3 million hectolitres mainly due to the recession in Europe and down trading in the USA.
In Western Europe, volumes declined organically across all markets. In particular, volumes in the Netherlands were affected by a substantial excise duty increase from 1 January 2009. In Italy, performance was impacted by temporary delisting by several retailers during price negotiations. Spain, France and Ireland performed relatively well versus the regional average.
The UK beer market continued to be under pressure, but cider volume grew strongly.
In Central and Eastern Europe, organic volume growth was negative across most markets. Volumes in Russia, Romania and Greece developed in line with the regional average. Poland performed better than the regional average, whilst Austria performed below the regional average.
Volume in Africa and the Middle East grew 16%. All key markets showed ongoing robust growth with strong performances in Nigeria, Egypt and the Democratic Republic of Congo.
Volume in South Africa continues to grow strongly.
In the Americas, total consolidated beer volume fell 8.9%. In the USA, volumes of the Dutch brand portfolio were lower whilst volumes of the Mexican brand portfolio grew slightly. Depletions (sales by distributors to retailers) were slightly better than sales volume. Volume across the Caribbean dropped due to lower tourist numbers whilst volume in Central America grew strongly.
Organically, consolidated beer volume grew 3.4% across the Asia Pacific region. Multi Bintang Indonesia, New Caledonia, exports and licensing all enjoyed good growth. The joint ventures, Asia Pacific Breweries and UBL (India), performed well.
