Heineken’s profits double but fears higher beer prices
HEINEKEN has warned beers prices will have to rise due the sharp increases in energy, freight, and commodities costs.
Chairman Dolf van den Brink said the company expects trading this year to be “significantly impacted” by inflation and supply chain issues.
To compensate, Heineken plans to increase prices, despite fears that doing so will hamper sales. Additionally, he cast doubt on hopes whether the brewer will hit 2023 margin targets.
He added: “We will offset these input price increases through pricing in absolute terms, which may lead to softer beer consumption.”
The warning from Heineken comes after the Office for National
Statistics said inflation, as measured by the consumer price index, had climbed to a near 30-year high of 5.5 per cent.
At its annual results, the brewer said that aside from inflation, it expects that Covid-19 will continue to have an effect on sales and that the recovery at pubs and bars in the UK and Europe will be protracted. Heineken made a net profit of £3billion for 2021 against a £73.7million loss in 2020, when its trading was clobbered by virus disruption and the shutdown of pubs, bars and restaurants.
The company’s revenues rose 11.8 per cent to £22.2billion, thanks to a strong performance from its namesake lager, which grew 17.4 per cent last year. The Birra Moretti brand saw 20 per cent plus growth, as did Amstel, while tequila flavoured lager Desperados had growth in the mid-teens.
Cider, principally Strongbow, grew by around five per cent while Tiger Beer sales fell due to lockdowns in Asia. The low and no-alcohol drinks brands have grown 10 per cent, led by a 30 per cent plus surge in sales of Heineken 0.0.
Matt Britzman, analyst at Hargreaves Lansdown, said: “Management warned of significant impact from inflation and supply chain pressures – it’s bad news for beer lovers as that means prices are only heading one way...up.”