Heineken: beer volumes will continue to fall
Dutch brewing giant Heineken has warned that beer consumption will continue to tumble throughout 2010 due to the global economic environment.
However, Heineken said that price increases for 2010 were likely to be "well below" those of 2009 but it will continue to pass on excise duty increases.
The cost of raw materials is likely to fall due to a temporary decline in the price of brewing barley but Heineken warned that would be off-set by higher energy costs, rising advertising rates and increased marketing costs.
Overall, beer volumes fell 1.5% on last year with revenues up 2.7% to €14.7bn chiefly due to price rises. The group made a net profit of €1.05bn — 4.1% up on last year.
In the UK, Heineken said it "significantly" outperformed the beer market, which declined 4.2%. Foster's grew 2.6% after benefiting from a new marketing campaign while John Smith's declined — but less than the market. Bulmer's also reported success in the cider market.
Organic revenue in the UK grew by low single digits thanks to "better pricing" and an "improved brand mix", which off-set lower overall volumes.
Earnings before Interest and Tax grew organically by 35% due to "realising cost synergies, aggressive further cost cutting and lower purchasing prices".
During 2010, Heineken will close the Berkshire Brewery and Dunston Brewery it inherited after the takeover of Scottish & Newcastle. The brewer also purchased most of the outstanding debt of the Globe pub estate, realising an exceptional book gain of €215m.
In addition, Heineken has lowered the value of its interests in pubs in the UK.
In Western Europes as a whole, beer volumes declined 5% organically blamed on the recession and the increase in excise duties.
"In one of the most challenging trading environments ever witnessed in our industry, we have delivered an outstanding financial performance, transformed our platform for future growth and built a more competitive business," said Jean-François van Boxmeer, chairman of the executive Board.
But he added: "The global economic environment will continue to lead to lower beer consumption and down-trading in a number of regions in 2010."
