Heineken Earnings Bode Badly for Beer in Europe

Photo credit: Lars Plougmann/Flickr
Photo credit: Lars Plougmann/Flickr

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Between a frigid economy and a hot war, you’d think Europeans would be chugging beer like there’s no tomorrow. But you’d be wrong.

Heineken announced Wednesday that it had missed targets on beer volume by 2.9%, citing a “demand slowdown at the end of September and into October” in some parts of Europe. Given that time period falls squarely within the bounds of Oktoberfest, it’s a pretty bad omen.

Kein Bier, bitte

Europe is home to many internationally famous beer brands…and stalwart consumers, but European markets are still nursing their pandemic hangover. Beer consumption in the Netherlands, for example, had still not recovered to 2019 levels by the end of last year. Although European drinkers are now able to freely mingle in bierkellers, the menu has become pricier as producers are now passing on the costs of rising inflation associated with beer ingredients and CO2.

Heineken’s earnings sent the company’s stock down 10%, pushing shares of their Danish rival Carlsberg down 5% even before Carlsberg disclosed its own earnings.

Europe’s prodigal child, the UK, is the second biggest consumer of beer by volume in the continent, and the country is staring down a potential beermageddon at an extremely inopportune time:

  • The chief executive of Scottish brewer Brewgooder said Tuesday rising costs could lead to a pint costing as much as £7 in some cities compared to the average current price of £3.95. Brewgooder’s CEO said CO2 now costs 3,000% more than it did this time last year — and for UK brewers there’s the added heartache that Liz Truss’ government offered to freeze duty tax on alcohol, a plan which was scrapped along with the rest of her premiership.
  • British pubs may also face a serious shortage of brands –including Heineken– in the coming weeks as drivers at a major logistics firm are set to go on strike from October 31 to November 4. GXO Logistics supplies 40% of pubs and clubs in the UK and although the strike might seem short, it’s highly targeted, as the union says it will hinder pubs stocking up on beer ahead of the World Cup, which kicks off on November 21.

Vietnam to the rescue: Europe may be sobering up, but Heineken also reported a 68% increase in sales in Asia. The company opened a new brewery in its biggest Asian market Vietnam last month, which it claims is South-East Asia’s largest. The new facility is also Heineken’s fastest brewery, capable of filling 12 million cans per day. Một, Hai, Ba, Dzô!