Heineken warns of higher prices due to higher costs

Heineken warned that the price of a pint will continue to rise over the next year as the Dutch brewer expects to pass on higher costs to consumers.

The beverage company, which beat revenue and profit estimates in the first six months of the year, said on Monday it was selling more beer than it was before the pandemic, as consumers across Europe shrugged off higher prices and returned to pubs.

“High [costs] The ones we see now and the ones we’ve seen over the past half year haven’t found their way yet [consumer] Harold van den Broek, Heineken’s chief financial officer, told the Financial Times.

The average price of a pint of beer in the UK was 4.09 pounds in June, an increase of 13 pence since January, according to the Office for National Statistics.

Brewers increased beer prices as the cost of aluminum cans, bottles, and malts rose rapidly.

Van den Broek said high inflation and natural gas prices in Europe, which are now 10 times higher than the average over the past decade, have also prompted Heineken to raise prices. The average cost of Heineken drinks has increased by 8.9 percent in the past six months compared to the same period last year.

Its rival Anheuser-Busch InBev, the world’s largest brewer, said in July that rising sales volumes and prices had pushed revenue to grow faster than profits, but added that the beer industry remained “resilient” despite inflation.

However, Heineken CEO and President Dolph van den Brink said it was not clear how rising inflation would affect consumer demand in the future. “No one knows,” he said, “to be honest.” “Immediately . . . people are there and they spend money but we certainly don’t take that for granted.”

Rising energy costs have prompted Heineken to move away from gas at its European plants.

Van den Brink told the Financial Times he was “fairly confident” that the company would not have to cut production in the next few months, but did not rule out that option in the case of “extreme scenarios”.

Heineken’s revenue rose 37 per cent to 16.4 billion euros in the six months to July, which van den Brink called “unprecedented”, compared to a shutdown that marred the previous year.

Operating profit jumped by a fifth to €2.1 billion, driven by “restore volume, pricing and revenue management actions”. The volume of beverages sold increased by 0.8 percent compared to the pre-pandemic year of 2019.

Heineken shares were down 1.6 percent late Monday morning.

Analysts at Jefferies note that revenue derived from more premium beers, such as Heineken Silver, has continued to grow and now accounts for nearly half of the company’s organic growth in beer sales.

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