Heineken N.V. reports on 2020 third-quarter trading
Amsterdam, 28 October 2020 – Heineken N.V. (EURONEXT: HEIA;
OTCQX: HEINY) today publishes its trading update for the third
quarter of 2020.
- Beer volume -1.9% organically for the quarter; -8.1% for the
first nine months
- Heineken® volume +7.1% in the quarter; +1.0% for the first nine
- HEINEKEN's current strategic review aims to accelerate a return
to profitable growth in a fast-changing post-COVID world, including
simplifying and right-sizing its cost base
Dolf van den Brink, Chairman of the Executive Board / CEO,
"Our performance during the third-quarter continued to be
impacted by the COVID-19 crisis. As many lockdowns eased, our
volumes improved sequentially compared to the last quarter.
We outperformed the category across most of our key markets,
with Heineken® showcasing a stellar performance. We continued
strict cost mitigation actions whilst balancing investments behind
our brands and future growth opportunities.
The situation remains highly volatile and uncertain. We expect
rolling outbreaks of COVID-19 to continue to meaningfully impact
many of our markets in addition to rising recessionary
As we navigate the crisis, we are deliberately shaping how to
adapt and emerge stronger from the pandemic. I am proud of the
relentless drive of our employees and the agility they continue to
demonstrate, taking care of one another, our customers, suppliers
THIRD QUARTER VOLUME BREAKDOWN
Beer volume1(in mhl or %)
Africa, Middle East & Eastern Europe
Heineken® volume1 (in mhl or
Africa, Middle East & Eastern Europe
1 Refer to the Definitions section for an explanation of organic
growth and volume metrics.
From the onset of the COVID-19 crisis, our first priority has
been our people's health and safety. We have ensured that employees
follow strict hygiene and physical distancing guidelines and
receive support to do their jobs safely. To provide security to our
employees, HEINEKEN has committed to no structural lay-offs because
of COVID-19 during 2020.
We continue to support our customers, suppliers and the
communities most impacted by the pandemic. We continue to assist
our customers with advice and tools, pay all our suppliers on time
and reduce payment terms to some small suppliers. Additionally, we
provide pandemic relief to support front-line medical facilities in
the communities where we operate, including water, non-alcoholic
beverages, hand sanitiser, and monetary contributions.
The COVID-19 crisis continued to affect all geographies during
the third quarter. Beer volume declined organically by 1.9% in the
third quarter, a sequential improvement relative to the previous
quarter across all regions. The on-trade remained affected by
restrictions to operate and some important markets like South
Africa and parts of Mexico faced bans on the sale of alcoholic
beverages. Our performance was ahead of the market in most of our
- Heineken® volume continued to outperform the
overall category and grew by 7.1% in the quarter and 1.0% for the
first nine months of the year.
- Volume grew double-digits in more
than 25 markets including Brazil, China, the USA, Nigeria,
Singapore, Poland and the UK.
- Heineken® 0.0 grew double-digits with a particularly strong
performance in Brazil, Mexico and the USA. This year Heineken® 0.0
was introduced to 11 new markets, including Vietnam, and is
currently being sold in 69 markets.
Africa, Middle East & Eastern Europe
- Beer volume declined organically by 2.5% in the quarter, a
sequential improvement across all key markets versus the previous
quarter. The premium portfolio declined by a high-single-digit as
the decline in South Africa off-set growth across most
- In Nigeria, beer volume grew
in the high-teens, ahead of the market. The non-alcoholic portfolio
grew in the mid-twenties and the premium portfolio grew by more
- In Russia, beer volume
increased by a low-single-digit and cider volume by double-digits.
The low- and non-alcoholic portfolio grew by a
- In South Africa, total
consolidated volume declined in the forties due to a nearly
five-week ban on selling alcoholic beverages. Heineken® 0.0
continued to grow strongly.
- In Ethiopia, beer volume
declined in the high-teens, following the steep price increase in
mid-February after the tripling of excise duty. Premium volumes
continued to grow double-digits driven by Bedele Special.
- In Egypt, beer volume
declined in the mid-teens, driven by lower tourism.
- Beer volume increased organically by 2.5% in the quarter due to
our premium portfolio's strong performance, partially off-set by
the impact of government measures in some regions and cities.
- In Mexico, beer volume
declined by a mid-single-digit due to the dry laws, particularly in
the Southeast, and stock-outs caused by restrictions on brewing
operations at the start of the quarter. The premium and low- and
non-alcoholic portfolios increased by double-digits, led by Amstel
Ultra and Heineken® 0.0 respectively.
- In Brazil, beer volume grew
in the low-teens. The premium and mainstream portfolios grew by
double-digits, with Heineken® growing by more than half and the
continued momentum of Devassa and Amstel. The economy portfolio
grew slightly. Non-beer volume declined in the low-twenties.
- In the USA, beer volume increased in the
low-teens as distributors replenished inventories and the on-trade
showed some signs of recovery. Sales-to-retailers of Heineken® were
back to growth driven by both Heineken® Original and Heineken® 0.0.
Lagunitas declined in the low-teens due to its high exposure to the
- Beer volume declined organically by 12.3% due to lower volume
in Vietnam and the continued declines in other key markets affected
by recurring lockdowns, the lack of international tourism and
increasingly negative consumer sentiment. The premium portfolio
declined in line with the overall portfolio in most markets.
- In Vietnam, we continue to
outpace the market while beer volume declined by a
high-single-digit following the second wave of COVID-19
restrictions and the price increase at the end of June. We have
reached the position of market leader this year, driven by the
success of our expansion strategy and the solid momentum of our
innovations including Heineken® Silver, Heineken® 0.0 and local
beer brand Bia Viet.
- In Cambodia, beer volume
declined in the high-thirties following a steep increase of
promotional activity in the market and by economic conditions
affected by the rise in unemployment from the tourism, garment
export and construction industries.
- In Malaysia, beer volume declined in the
mid-teens, an improvement versus the previous quarter as the
on-trade gradually recovered. Since mid-October the government has
imposed new movement restrictions and closed part of the on-trade
- In Indonesia beer volume declined in the
mid-double-digits as a second lockdown was imposed impacting the
on-trade and consumption from international tourism remained
absent. Beer volume in Bali declined by close to 80%.
- In South Korea, beer volume increased in the
mid-thirties driven by improved penetration and distribution of new
brands and line extensions.
- In China, we are into the second year of our
strategic partnership with China Resources Beer (CRB). Heineken®
grew by strong double-digits as it continues to be rolled-out
throughout CRB’s strong route-to-market, entering new channels and
the successful introduction of Heineken® Silver.
- Beer volume declined organically by 2.4%, driven by a decline
of around 20% in the on-trade. The off-trade grew by a
high-single-digit, ahead of the market across most countries.
Third-party volume declined by 16.1% as wholesale operations
continued to be impacted by outlet closures. The premium portfolio
continued to outperform in the off-trade. Non-alcoholic
propositions grew low-single-digit driven by Heineken® 0.0.
- In the UK, total consolidated
volume was down by a low-single-digit. Beer volume returned to
low-single-digit growth with double-digit growth in Heineken®,
Birra Moretti and Sol. Beer volume declined in the high-twenties in
the on-trade overall with a similar performance in our Pub estate.
Beer volume grew in the high-twenties in the off-trade, ahead of
- In France, beer volume was
flat during the quarter as the mid-teens decline in the on-trade
was off-set by mid-single-digit growth in the off-trade. The
premium portfolio grew in the low-teens driven by Desperados and
- In Spain, beer volume
declined in the low-teens driven by a decline in the on-trade in
the mid-twenties, partially off-set by high-single-digit growth in
the off-trade. Low tourism and regional lockdowns impacted the
- In Italy, beer volume
increased by a mid-single-digit, outperforming the market, with
high-single-digit growth in the off-trade partially compensated for
by a low-single-digit decline in the on-trade. The premium
portfolio grew around 10% with a continued strong performance from
Ichnusa and Messina.
- In Poland, beer volume grew
by a mid-single-digit, ahead of the market, supported by the strong
growth of Heineken® and Desperados.
- In the Netherlands, beer volume was down by a
mid-single-digit driven by a decline in the high-twenties in the
on-trade. The off-trade grew by a high-single-digit driven by
Heineken® and Affligem, outperforming the market.
REPORTED NET PROFIT
The reported net profit for the first nine months was €396
million (2019: €1,667 million). Continued cost mitigation actions
partially mitigated the impact from lower volume, adverse product
and channel mix and incremental expenses driven by the crisis,
including credit losses and impairments on tangible and intangible
The COVID-19 pandemic is having a significant impact on our
markets and wider business in 2020. In April, we withdrew all
guidance for 2020, given the lack of visibility on the duration of
the pandemic's impact. Consequently, HEINEKEN is only able to share
directional information for the remainder of the year.
Although we have observed a recovery over the summer, continued
volatility is expected for the fourth quarter, as many markets
experience additional waves and the corresponding restrictions,
including on-trade closures and crisis-related economic
consequences. Currently, new restrictions have been imposed by
governments across many countries in Europe, including a full
closure of the on-trade. In Asia Pacific, new restrictions are also
in place in Malaysia, Myanmar and Sri Lanka.
Product and channel mix is expected to continue to adversely
impact results, especially in Europe, as the on-trade remains more
affected than the off-trade. Input costs per hectolitre are
expected to be significantly higher than last year.
Mitigation actions will continue for the remainder of 2020. We
are reducing all discretionary expenses while providing sufficient
support behind our brands and route to markets. In the second half
of last year costs were skewed towards the third quarter, so the
benefits of the mitigation actions will be lower in the fourth
Most of our non-committed supply chain CAPEX remains suspended,
while commercial CAPEX has resumed where it is required to support
our current and future top-line growth.
The relative effect of permanent items in the income tax line
will be less adverse in the second half than in the first half due
to a higher profit before tax base.
Given the uncertainty in profit estimations for this year it is
not possible to provide a reliable estimate of the translational
currency impact. This year many currencies have depreciated versus
the Euro, most notably the Mexican Peso and the Brazilian Real.
Our current strategic review efforts are focused on shaping the
company to emerge stronger from the COVID-19 crisis. We aim to
increase adaptability with a clear focus on customers and consumers
to regain and sustain future growth. We are exploring how to
accelerate and expand our sources of growth while simplifying and
right-sizing our cost base. To improve agility and speed in an
increasingly dynamic environment, we are reviewing the
effectiveness and efficiency of our organisations at head office,
regional offices and each of our local operations.
As part of this ambition, while maintaining our commitment to no
restructuring related to COVID-19 in 2020, we will streamline our
head office and regional offices with an expected reduction of
around 20% in related personnel costs. Implementation will begin in
the first quarter of 2021. The impact and
timelines of restructuring in our local operations will vary
depending on the specific circumstances of each operating company.
The process will be in close collaboration with our Employee
Representatives (HEINEKEN's Group Works Council and Labour
On 9 September, HEINEKEN announced its entry into the Peruvian
beer market by acquiring local beer brand Tres Cruces and
incorporating its local operating team in Lima. To support its
strategy in Peru, HEINEKEN entered into a strategic partnership
with AJE Group to be its local sales and distribution partner in
the traditional channel.
On 17 September, HEINEKEN announced it is exploring the Hard
Seltzer category with the launch of Pure Piraña in Mexico and New
Zealand. It will be available in a range of up to nine different
flavours to test local preferences. HEINEKEN is also exploring
additional market introductions into this category.
Earlier today, HEINEKEN announced the acquisition of cider brand
Strongbow from Asahi Group Holdings Limited (Asahi) in Australia,
along with two other cider brands, Little Green and Bonamy’s. The
company will also gain the perpetual licenses on beer brands Stella
Artois and Beck’s in Australia. The acquisition is subject to
regulatory approval and comes after a successful bid for these
brands when Asahi put them up for sale as a condition from the
Australian Competition and Consumer Commission for their
acquisition of Carlton & United Breweries. The acquisition
brings the Strongbow brand in Australia home to HEINEKEN and scales
up our beer and cider portfolio in one of the world’s leading beer
and cider markets.
|Tim van der Zanden
||José Federico Castillo Martinez
|Director of Global Communication
||Director of Investor Relations
||Janine Ackermann / Robin Achten
|Corporate & Financial Communication Manager
||Investor Relations Manager / Senior Analyst
Editorial information: HEINEKEN is the world's most
international brewer. It is the leading developer and marketer of
premium beer and cider brands. Led by the Heineken® brand, the
Group has a portfolio of more than 300 international, regional,
local and specialty beers and ciders. HEINEKEN is committed to
innovation, long-term brand investment, disciplined sales execution
and focused cost management. Through "Brewing a Better World",
sustainability is embedded in the business. HEINEKEN has a
well-balanced geographic footprint with leadership positions in
both developed and developing markets. It employs over 85,000
employees and operates breweries, malteries, cider plants and other
production facilities in more than 70 countries. Heineken N.V. and
Heineken Holding N.V. shares trade on the Euronext in Amsterdam.
Prices for the ordinary shares may be accessed on Bloomberg under
the symbols HEIA NA and HEIO NA and on Reuters under HEIN.AS and
HEIO.AS. HEINEKEN has two sponsored level 1 American Depositary
Receipt (ADR) programmes: Heineken N.V. (OTCQX: HEINY) and Heineken
Holding N.V. (OTCQX: HKHHY). Most recent information is available
on HEINEKEN's website: www.theHEINEKENcompany.com and follow us on
Twitter via @HEINEKENCorp.
Market Abuse Regulation This press release contains inside
information within the meaning of Article 7(1) of the EU Market
Disclaimer: This press release contains forward-looking
statements with regard to the financial position and results of
HEINEKEN's activities. These forward-looking statements are subject
to risks and uncertainties that could cause actual results to
differ materially from those expressed in the forward-looking
statements. Many of these risks and uncertainties relate to factors
that are beyond HEINEKEN’s ability to control or estimate
precisely, such as future market and economic conditions,
developments in the ongoing COVID-19 pandemic and related
government measures, the behaviour of other market participants,
changes in consumer preferences, the ability to successfully
integrate acquired businesses and achieve anticipated synergies,
costs of raw materials, interest-rate and exchange-rate
fluctuations, changes in tax rates, changes in law, change in
pension costs, the actions of government regulators and weather
conditions. These and other risk factors are detailed in HEINEKEN's
publicly filed annual reports. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only of
the date of this press release. HEINEKEN does not undertake any
obligation to update these forward-looking statements contained in
this press release. Market share estimates contained in this press
release are based on outside sources, such as specialised research
institutes, in combination with management estimates.
- Heineken NV Q3 2020 Trading Update (28_10_2020).pdf
Grafico Azioni Heineken (EU:HEIA)
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