Beer giant behind Edinburgh's Caledonian Brewery eyes bounce-back after lockdown plunge

Heineken, the global brewer that owns Edinburgh’s historic Caledonian Brewery and has its UK corporate headquarters in the city, has said UK sales by volume plunged by about 30 per cent in the first three months of 2021 as pubs remained shut during the lockdown.

The Dutch brewer said UK on-trade sales were close to zero in the three months to the end of March, which even surging off-trade sales – up by a “low-30s” percentage – could not offset. This contributed to an overall 9.7 per cent fall in beer sales by volume across Europe in the quarter.

But Heineken, which also brews brands including Birra Moretti, Sol and Amstel, said that, across the wider group, beer volumes were in line with a year earlier when the pandemic first struck, thanks to strong growth in Africa and Asia.

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The result was 2.1 per cent below the first quarter of 2019.

Heineken is present in Scotland with the historic Caledonian Brewery, and its UK corporate base in Edinburgh’s Gyle area, which is also home to its Star Pubs & Bars arm. Picture: Ian Georgeson

Net profits jumped 79 per cent to €168 million (£144.9m) year on year in the first quarter, but were 44 per cent lower than the same period in 2019.

Chairman and chief executive Dolf van den Brink said: “We had a solid start to the year, despite facing severe restrictions across many markets and the closure of the on-trade in Europe due to the pandemic.”

The group is axing 8,000 jobs globally – almost 10 per cent of its 85,000 staff – as part of efforts to save cash in the face of the pandemic. That figure includes up to 100 in the UK.

The swingeing cuts were announced in February as the group revealed it swung to a net loss of €204m in 2020, compared with a €2.2 billion profit the previous year.

In its latest update, Heineken said less than 30 per cent of the European on-trade market was operating at the start of April.

But, with English pubs reopening their beer gardens on April 12 and other countries beginning to follow suit, including Scotland from this coming Monday, it said trade should begin to bounce back.

The group told investors: “Our business continues to be significantly impacted by the consequences of the Covid-19 pandemic.

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“We expect market conditions to gradually improve into the second part of the year, depending on the rollout of vaccines.”

The group said its flagship Heineken brand had a better first quarter, with sales up 12.1 per cent and double-digit growth seen in 40 countries.

It added that it has continued to support pubs affected by restrictions, waiving some £16.4m of rental payments for UK customers.

William Ryder, equity analyst at financial services group Hargreaves Lansdown, noted: “Heineken’s first quarter paints a mixed picture, which is to be expected as Covid-19 is still having a varied impact around the world.

“Some regions have done well and recovery is well underway, others are still struggling under government imposed trading restrictions.

“Despite this caution, trading looks to be picking up and with luck conditions will return to normal soon. Growth across the premium portfolio, and the flagship brand in particular, is especially promising.”

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Brewing giant Heineken eyes pub reopening boost but margins remain in sharp focu...

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