Vietnam to blame for Heineken profit losses
Dutch multinational brewer Heineken has attributed its profit losses in the first half of 2023 to a decline in the Asia Pacific region, largely due to weak demand from Vietnam.
Heineken, the world’s second largest brewer, announced it had cut its 2023 forecast on Monday after disappointing results in the first half of the year.
The brewer, whose brands include Tiger and Amstel, sold 5.6% less beer in the first six months, reporting declines in all regions, Reuters has reported.
Price increases were partially to blame, but over half of the drop was due to a decline in demand from Vietnam and Nigeria.
Asia Pacific is normally the company’s most profitable region, but beer volumes in Asia Pacific dropped by 13.2%, with more expensive premium beers even more negatively affected.
Heineken’s results were affected by an economic slowdown in Vietnam, one of the company’s largest markets, which is facing reduced global demand for its exports, the company has said.
Vietnam’s economic growth slowed in the first quarter of 2023 to 3.3%, down from 5.9% in the fourth quarter of last year, as high inflation and global economic challenges cut into demand for the country’s exports.
An excess of stock built up from the Tết new year celebrations in Vietnam in January exacerbated the situation, but the surplus has now largely cleared, the company has said. Tết, short for Tết Nguyên Đán, is the most important celebration in Vietnamese culture, celebrating the arrival of spring based on the Vietnamese calendar, which is mostly based on the lunisolar Chinese calendar and usually has the date in January or February in the Gregorian calendar.
According to the Financial Times, Bernstein analyst Trevor Stirling noted that Heineken could have responded more quickly to warning signs in Vietnam, being aware of the country’s economic downturn.
For the second half of the year, Heineken has revealed that it expects profits to increase again and anticipates that the costs of purchasing, transport, energy, and water will decrease and beer sales should pick up.