Heineken Beer Sales Fall as Price Dispute Took Longer to Fix

Mint

a day ago

(Bloomberg) -- Heineken NV saw a decline in beer volumes, as retailer disputes across Europe dragged on sales and limited its ability to take advantage of the summer heat wave.
The Dutch brewer reported a 0.4% fall in volumes during the second quarter, worse than analyst estimates. The main driver was Western Europe, where Heineken faced disputes with regional buying groups over price negotiations that lasted longer into the quarter than anticipated.
The negotiations in France, the Netherlands and Spain that escalated in March are now resolved, Heineken said in a statement Monday. France saw a 'strong recovery' in June as a result, it added.
Prices overall were up 1.2% in the first half in Europe, 'in that sense positive price mix. Which is what we were negotiating for,' Chief Executive Officer of Heineken Dolf van den Brink said on a call. A key point of contention was being able to pass on cost and wage increases, he added, declining to comment further.
Heineken expects stable volumes this year amid a decline in consumer spending the Americas and Europe. It now wants to save €500 million ($587 million) in 2025, more than previously announced, to offset the lower volumes.
'We would expect the shares better today,' Jefferies analysts Edward Mundy and Sebastian Hickman said in a note, citing the reiterated outlook and strong performance in Asia and Africa offsetting pressures in Europe and the Americas.
Organic operating profit grew 7.4% in the first half of the year, boosted by expansion in Vietnam, India and China. It maintained operating profit guidance of between 4-8% for the full year.
Heineken beer volumes fell 1.2% in Americas in the first half as the industry grapples with a downturn in US spending including among Hispanic consumers.
The world's biggest brewers have all come under pressure in the key market. Molson Coors Beverage Co. and Anheuser Busch InBev SA have seen volumes weaken, while Constellation Brands Inc, which sells the Modelo Especial and Corona brands in the US, said earlier this year beer sales were muted in states with large Hispanic populations.
Beer markets have declined at a pace Heineken has 'rarely seen any time before,' said van den Brink.
In the wake of the EU's trade agreement with the US, which will see the bloc face a 15% tariff on most of its exports, van den Brink said the amount was largely in line with what the company had been expecting.
'On the trade deal, what is important is that clarity, that escalation was avoided and it is a new reality for Europe to adapt to,' van den Brink said in a TV interview with Bloomberg. 'Beer is local for locals, so the impact is as expected.'
Heineken manufactures locally in the vast majority of its markets, he said, adding that there would be some impact on profit of US operations, which will weigh more heavily in the second half of the year.
Heineken is assessing whether to move manufacturing to the US as a result of the tariffs, he said, adding brewing was capital intensive. 'As such we really need consistency in regulation and tariffs to make a final call. We are looking at options.'
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