Heineken warns it may cut beer production

Heineken is preparing to cut beer production at its European manufacturing plants if severe gas shortages take hold over winter. The brewery giant behind Amstel and Fosters said there was a growing “availability risk of natural gas” in the region. Russia has cut supplies of gas to Europe in recent weeks. Ursula von der Leyen, the European Commission president, said last month that Russia was “likely” to cut supplies further in retaliation for sanctions.

HEINEKEN is preparing to cut beer production at its European manufacturing plants if faced by a severe gas shortage over winter.

The brewery giant behind Amstel and Fosters said there was a growing “availability risk of natural gas” in the region.

Russia has cut supplies of gas to Europe in recent weeks. Ursula von der Leyen, the European Commission president, said last month that Russia was “likely” to cut supplies further in retaliation for sanctions and support for Ukraine in the war. The EU last week agreed plans to voluntarily reduce gas usage by 15pc over winter in preparation for a possible shut down.

Dolf van den Brink, Heineken chief executive, said the brewer would curtail its output in “extreme scenarios” but said he was “moderately confident” production would continue as normal.

“The recent softening in some commodities is being offset by the unprecedented price levels and availability risk of natural gas, most notably affecting Europe, our biggest region,” he said.

Heineken has been raising prices and encouraging drinkers to more upmarket, and high margin, drinks, which has “effectively offset these inflationary pressures,” Mr van den Brink said.

The Dutch company has lifted prices on drinks by 8.9pc over the past six months in comparison to the same period last year, and Heineken said the price of a pint was likely to rise further as it is forced to pass on escalating costs.

Mr van den Brink added: “Whilst consumer demand in aggregate has been resilient in the first half, there is increasing risk that mounting pressure on consumer purchasing power will affect beer consumption.”

Heineken’s performance beat analyst expectations with revenue up by more than a third to €16.4bn (£14bn) over the six-month period. Profits climbed by a fifth to €1.3bn. The company is in the middle of a huge cost-cutting drive that aims to strip €2bn out of the business by next year, with €1.7bn worth of savings expected by the end of 2022.

Shares in the company were flat yesterday at €96.02 on the Euronext Amsterdam stock exchange, valuing the business at about €55bn.