Caledonian Brewery owner Heineken sees sales lose fizz in Q3

Brewing giant Heineken – which owns Edinburgh’s historic Caledonian Brewery – has seen sales in the third quarter fall more than expected following the impact of lockdowns in Asia, while its UK operations were affected by supply disruption.

The Dutch firm, which also has its UK corporate headquarters in the Scottish capital, and brews Birra Moretti and Amstel, said like-for-like volumes of beer sold dropped by 5.1 per cent.

Chairman and chief executive Dolf Van Den Brink said this came after the business was "deeply” affected by the Covid-19 pandemic in its Asia Pacific operations.

The group said this area saw sales slide by 37.4 per cent as lockdown restrictions dampened socialising in Cambodia, Indonesia, Vietnam and Malaysia.

The group says its expectations are unchanged, with its full-year results set to remain below 2019's. Picture: Ian Georgeson.

Heineken also told investors that its European operation saw beer volumes decline organically by 2.3 per cent for the quarter. It said this was due to the impact of poor weather across most of the period, with high single-digit declines in its off-trade division, which covers supermarket and retail sales.

In the UK, total volumes declined by "low single digits", in line with the rest of the market, it said.

The group added that UK trade was "impacted by logistics disruption" although its premium portfolio of brands, which includes Desperados, continued recent growth.

Mr Van Den Brink added: "We see first signs of recovery and I admire the resilience and solidarity of our people as we navigate these challenges. Yet the macro environment remains volatile and we are responding accordingly.

"We are taking an assertive approach to pricing and cost across all of our markets to meet this challenge. Therefore, our expectations stay unchanged, with full-year results remaining below 2019."

Matt Britzman, equity analyst at Hargreaves Lansdown, commented: “Beer volumes dropping in the two biggest regions, the Americas and Europe, coupled with ongoing restrictions in the Asia-Pacific region did the group no favours. With the wider environment remaining volatile, it’s expecting full-year profits to come in below 2019 levels.

Trends

“In most regions, the premium brands saw positive growth with the flagship Heineken brand up 8 per cent overall. It’s not unexpected either, as demographics evolve, we’re drinking less or shifting to more premium brands. Sales of Heineken 0.0, coming in with over 20 per cent growth and outpacing the wider Heineken brand, could be a sign of things to come.

“With that in mind, it’s good to see Heineken focusing on premium brands and the ever-popular non-alcoholic option. Whether that’s enough to overcome changes in consumer demand remains to be seen.”

Heineken in February announced plans to cut some 8,000 jobs, but this was expected to affect less than 100 of its 2,300 or so employees in the UK.

The group also owns Edinburgh-based pub operator Star Pubs & Bars, which in April confirmed that half of its 230 Scottish venues – about a tenth of its total across the UK – were to reopen imminently after lockdowns. It said at the time that its rent reduction support for the UK stood at £62 million.

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