Heineken Profits As Europe Toasts Low-Alcohol Beer -- WSJ
August 01 2017 - 3:02AM
Dow Jones News
By Nick Kostov
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 1, 2017).
Heineken NV has lifted sales in Europe -- but the extra beer
isn't all going to drinkers' heads.
The Dutch brewer posted higher profit for the first half of
2017, fueled by strong sales in Europe -- including double-digit
revenue growth for no- and low-alcohol drinks there. The lift
represents an early vote of confidence after an investment push
into the sector by Heineken and its competitors.
Heineken joins the world's largest brewer, Anheuser-Busch InBev
NV, in reporting better-than-expected results, thanks in part to a
rebounding European beer market. Last week, AB InBev said sales
grew by double digits across Western Europe -- a market that has
lagged in recent years amid a stop-and-start recovery after the
global financial crisis.
"It was a really good performance of Europe, with the growth
coming from a number of countries," Chief Financial Officer
Laurence Debroux said. "It was pretty balanced."
The world's second-largest brewer by sales said profit growth
was strongest in Europe, as beer volumes rose in France, Italy,
Spain and Portugal, helped by warmer weather.
Global beer sales have been hit in recent years by a shift among
drinkers toward wine and spirits. Consumers in the developed world
have also pivoted to healthier drinking options, putting added
strain on the market. That has led the world's biggest brewers to
invest heavily in a product that has been hit-or-miss for decades:
non-alcoholic or lower-alcohol beer.
In May, Heineken launched an alcohol-free version of its
flagship lager and results "already look promising", including in
the U.K. and France, the company said. Brewers earn fatter profit
margins from nonalcoholic beer because of the absence of excise tax
and the fact that these beers often sell at a premium. But various
products have proved tough sells, in large part due to consumer
complaints about taste.
Despite the upturn in Europe, Heineken said low- and no-alcohol
sales around the world fell slightly, to 6.1 million hectoliters
from 6.2 million last year. It blamed weakness in malt products in
Nigeria and Egypt.
However, overall beer volumes, revenue and profits grew on a
like-for-like basis in all four of its regions, with turnarounds in
Africa and the Americas after a slow start to the year.
Net profit rose 49% to EUR871 million ($1.02 billion) on the
comparable period in 2016 when the company booked an impairment
charge on its business in the Democratic Republic of Congo. Revenue
rose 5.7 % on an organic basis to EUR10.48 billion.
Consolidated beer volumes rose 2.6% organically in the period,
beating analyst expectations of a 1.7% rise.
Write to Nick Kostov at Nick.Kostov@wsj.com
(END) Dow Jones Newswires
August 01, 2017 02:47 ET (06:47 GMT)
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