Heineken’s profits fell in the first half of the year as drinkers were put off by higher prices.
Profits fell by 8.6% to €1.16 billion, which the brewing giant said was partially due to the fact that it was among the first to hike its prices. On average, its prices were up by 11.8%, with the most significant increases in Europe where inflation is highest.
“This year, we front-loaded significant price increases, often leading the market, to offset unprecedented levels of commodity and energy inflation, which impacted consumer off-take,” it said.
Heineken said pressure on prices should ease next year, as “the unprecedented commodity and energy cost inflation in recent years will be partially reversed”.
Alongside the impact of price rises, Heineken also underperformed in Asia, due to an economic slowdown in the region.
The brewing giant, which is 150 years old in 2023, sold 12 billion litres of beer in the first six months, 5.6% less than a year earlier, but still enough to cover the City of London to a depth of 15 feet.
Shares are down 5% to €92.00 this morning in Amsterdam.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “Heineken’s had a wobble in the first half with a big miss versus market expectations, causing the shares to stumble in early trading. Despite this, price hikes were enough to offset lower volumes, helping the top line move to keep moving in the right direction for now.
“The group owns high-end favourites such as Heineken, Birra Moretti, Beavertown and many more. There’s been a slight shift in the mix of beers sold towards these more premium products, indicating that pub-goers drinking these pricey brands are proving more resilient to inflationary pressures. Encouragingly, non-alcoholic offerings continued to show strong momentum too. Health-conscious consumers continued the flagship Heineken 0.0 brand, which grew by double digits in key markets.
“But bumper revenues didn’t make their way down to the bottom line as inflationary pressures and increased marketing spending took their toll. That’s led the full-year profit outlook to be tempered down to mid single-digit growth. Where things move from here will depend on how well consumers can stomach further price hikes for their favourite beer brands.”
