Customers refuse higher cost of Heineken beer

Stocks in the Dutch brewer fell by 6.5% this week as Heineken revealed a significant drop in volume sales of its beer, largely due to hiking up its prices.

Announcing its latest results this week, Heineken appeared to hedge its bets by giving a vague and disconcertingly wide forecast range for its 2024 earnings.

It said it expects its operating profits throughout the year to see a “low to high single digit increase”.

Analysts called the full year forecast “underwhelming” and stocks slid in the wake of the announcement.

“We feel good about where the company is going, but we continue to do that in a turbulent world so that’s why we have deliberately chosen a relatively wide range,” said Heineken chairman and chief executive Dolf van den Brink.

He added that raising the prices of Heineken beers last year had undoubtedly “impacted volumes”, which fell by 4.7% (more than the estimated 4.4% decline) in 2023, but van den Brink didn’t rule out further price increases in 2024.

Instead, he said he expects “the pace of price increases to moderate this year” but pointed out that “input costs are still rising”.

Heineken raised its beer prices by double digits in the first half of 2023, and again, by single digits, in the second half. The hikes saw Heineken’s average prices increase by 10.2% worldwide.

“Strong pricing to offset very high input and energy cost inflation and volatile macro-economic conditions in some key markets affected our volume momentum,” van den Brink confirmed.

The second largest brewer in the world blamed a disappointing performance in Nigeria and Vietnam for much of the decline, with the two regions responsible for more than 60% of the volume drop in 2023.

New tax laws in Brazil (Heineken’s second biggest market) are also likely to impact the company’s bottom line in the coming years, as Heineken will see its global tax rate jump from 26.8% to 29% in 2025.