Diversifying drinkers add fizz to Heineken numbers

Strong demand for its non-alcoholic beer helped Heineken notch up the best sales growth for its flagship lager in over a decade as drinkers continue to shift towards healthier options.

UK business, which is based out of Edinburgh, performed solidly last year. Picture: Ian Georgeson

The world’s second-largest brewer said sales of its leading brand rose 7.7 per cent by volume in 2018, helped by the growing success of Heineken 0.0 as it rolled out the zero-alcohol tipple to 38 markets worldwide.

The Dutch group, which runs its UK operations out of Edinburgh and has the city’s historic Caledonian Brewery within its portfolio, also reported a forecast-beating 12.5 per cent jump in annual net profits to €2.42 billion (£2.1bn) and gave a bullish outlook for the year ahead. On an underlying basis, operating profits rose 6.4 per cent to €3.87bn.

Heineken said sales by volume of its low and no-alcohol lagers Heineken 0.0 and Radler saw “mid-single digit” growth, with a “high single digit” rise across Europe, including the UK.

The firm is planning to expand Heineken 0.0 to further markets over the year ahead, having more than doubled the brand’s global reach since 2017.

Jean-Francois van Boxmeer, chairman and chief executive, said: “In 2018 we delivered another year of superior top-line growth.

“The Heineken brand grew 7.7 per cent, its best performance in over a decade, with Heineken 0.0 now available in 38 countries. Going into 2019, we expect the environment to remain uncertain and volatile.

“Overall, we anticipate our (underlying) operating profit to grow by mid-single digit on an organic basis.”

Heineken – which also makes Tiger, Sol and Strongbow cider – said total revenues rose 5.9 per cent on an organic basis to €26.8bn, or 3.7 per cent higher on a reported basis.

Sales of its international brands such as Tiger and Desperados enjoyed double-digit growth, as did cider volumes, with mid-single digit growth in the UK.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “Heineken’s full-year results confirm a lot of what we already knew. The Americas is tough, with margins a struggle in Latin America and volumes in decline in the US as younger consumers increasingly favour spirits over beer.

“Europe’s delivered a surprisingly positive set of results thanks to Heineken’s more premium offering – through the likes of Desperados and Affligem – which has boosted both revenues and margins. Longer term, Heineken remains focused on emerging markets,” he added.