Cost savings and price rises fuel Heineken growth

Significant cost savings and higher prices helped brewer Heineken deliver profit growth in the UK last year.

Announcing its full year figures for 2010, Heineken said Earmings Before Interest and Tax (EBIT) "grew strongly" in the UK driven by higher pricing and "significant cost savings" despite a beer market down 4% overall.

Its cost savings included the sale of Waverley TBS, the restructuring of Scottish & Newcastle Pub Company and the closure of breweries in Reading and Dunston.

It said that "lengthy price negotiations with certain off-trade customers in the first half of the year adversely impacted volume and market share in the off-trade channel" — part of which was recovered in the second half of the year.

Although Heineken, does not break out UK specific results, beer volumes across the Western Europe region fell 3.6% to 45.7m hectolitres with revenue down 6.4% to €7,894m. EBIT grew 14% to €914m — up 17% on an organic basis.

Efficiencies​

"2010 has been a challenging year for many in the brewing and pub trade, but I am very pleased with the progress we have made within our business and indeed with our brands," said Heineken UK managing director Stefan Orlowski.

"The sale of Waverley TBS; and the restructure of the S&N Pub Company have brought increased focus on what we do best.

"This, together with improved efficiencies, has enabled us to deliver both profit growth and new marketing investment behind our main beer and cider brands — Heineken, Foster's, John Smith's, Kronenbourg 1664, Strongbow and Bulmers. We have also begun to realise the potential of the newer brands in our portfolio such as Amstel and Tiger."

Heineken was also recently announced as the official lager sponsor of the Olympic Games in 2012. "This puts us in a strong position to work with our customers, over the next 18 months, to realise the opportunities for beer and cider as the world begins to set its sights on 2012 Olympics events across the UK," he said.

Globally, Heineken announced a 21% increase in beer volume to 192.3m hectolitres with revenue up 9.7% to €16,133m and organic net profit up 19.7% to €1,445m.