‘Off the charts’ inflation will force up beer prices, Heineken warns
Heineken has said beer prices will go up as it faces “crazy increases” in the cost of ingredients, energy and transport.
The brewer said inflation was “off the charts” and its costs would increase by about 15%, forcing it to charge more – which could lead to lower beer consumption.
Dolf van den Brink, the brewer’s chief executive, told the Financial Times: “In my 24 years in the business I’ve never seen anything like it, not even close. Across the board we are faced with crazy increases. There’s no model that can handle this kind of inflation. It’s kind of off the charts.”
He said the company’s speed of recovery from the pandemic remained uncertain as it was difficult to judge what impact the price increases would have on the amount of beer it sold, and that Covid-19 was expected to continue affecting trade.
The latest warning on inflation comes as Heineken said the price of beer it sold rose an average 4.3% in Europe in 2021, partly because of a shift to more premium beers and the reopening of bars and pubs, as well as likefor-like price increases.
In the UK, beer sales rose by about 5%, driven by the group’s premium Birra Moretti and Desperados brands. Low- and non-alcoholic drink sales increased by more than 30%, led by the continued success of Heineken0.0.
Overall, Heineken reported an 11.3% increase in sales to €21.9bn (£18.4bn) in 2021, while its net profit jumped by 80% to €2bn. The volume of beer sold increased by 4.6% over the year, buoyed up by a 6.2% rise over the final three months as it benefited from reduced restrictions in Europe.
Van den Brink said Heineken had produced a “strong set of results” in “a challenging and fast-changing environment”.
He said: “Looking ahead, although the speed of recovery remains uncertain and we face significant inflationary challenges, we are encouraged by the strong performance of our business.”