Heineken: UK beer market tough

The UK beer market remains "tough" with Heineken reporting beer volumes down 6% to 22m hectolitres in the fist half of 2009.

However, the Dutch brewing giant, which took over Scottish & Newcastle's UK business last year, said the on-trade (-5%) had out-performed the off-trade (-7%).

It said revenue had more than doubled due to the first-time consolidation of four months of S&NUK and "healthy pricing". Consolidated beer volumes have also more than doubled.

It said that the S&NUK turnaround strategy was progressing well with a planned reduction in jobs to 750 due by the end of the first quarter of 2010.

In terms of brands, Heineken "developed well" with margins improving and Foster's volumes grew marginally while gaining market share. Cider volumes, including Strongbow and Bulmers, grew by almost 4%, gaining small market share in both the on and off-trade.

"The integration of Scottish & Newcastle and our other newly acquired businesses is now completed," said chairman of the executive board Jean-François van Boxmeer. "There are clear signs that our specific plans to improve profitability in each of these businesses and to strengthen our long-term market position in the UK are bearing fruit.

"The economic and trading conditions remain difficult, and there will be continued pressure on volumes in the second half of 2009. However, our focus on brand building, prioritised investment and rigorous cost reduction will continue to deliver value in the second half of the year."

Overall, Heineken reported an organic net profit growth of 12% to €483m despite lower volumes, driven by "robust pricing and cost reductions". Net profit was 20% up at €489m.