Heineken posts strong full year results, casts doubt on 2023 margin goal due to inflation pressures 

NETHERLANDS – Dutch multinational brewing company Heineken has reported stronger than expected earnings in 2021 despite inflation and supply chain pressures having an impact on the business.  

Net revenue for the full year 2021 increased by 12.2% organically, with total consolidated volume growing by 3.6% and net revenue per hectolitre surging by 8.3%.   

Operating profit also grew 43.8% organically with a strong recovery in Europe, AMEE, and the Americas, partially offset by the impact of the pandemic in APAC.   

The swelling profits can be attributed to a 2 billion euro cost-saving program unveiled a year ago to boost margins by 2023. 

1.3 billion euros in savings has been achieved to date and its impact on the company’s profits is already visible 

Beer volume grew 4.6% organically for the full year while the fourth quarter saw a 6.2% growth, benefiting from fewer restrictions in Europe relative to last year and a continued momentum in the Americas and AMEE. 

Premiumization and digital acceleration deliver sales 

Premiumization was a major driver of growth with premium beer posting a volume growth of 10.0% and accounting for more than 60% of Heineken’s total organic growth in beer volume in 2021. 

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Heineken also accelerated investment in its Low & No-Alcohol products, managing to grow the portfolio by more than 10%, reaching 15.4 million hectolitres (2020: 14.0 million). 

During the year, Heineken also accelerated the deployment of its business-to-business digital (eB2B) platforms in all regions to take advantage of the greater opportunity offered in the digital space. 

The company now operates them in 30 markets, representing 75% of its net revenue. 

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“We captured €2.8 billion in digital sales value, a growth of 130% versus last year, driven by strong growth in Mexico, Brazil, Vietnam, Nigeria, the UK, Italy, France, Cambodia, Singapore, Egypt and Ireland, and well on-track to €10 billion by 2025,” Heineken said. 

Inflation to continue impacting the business 

The world’s second-largest brewer is however wary that the COVID-19 pandemic which is causing a protracted recovery in bar trade in Europe would still affect 2022 revenue. 

The maker of brands including Tiger, Sol, and Strongbow cider – as well as Heineken, Europe’s top-selling lager further noted that the impact of inflation and supply chain pressures would be significant. 

The Netherlands-based brewer plans to offset input cost increases with higher prices, but this could lead to lower beer consumption. 

It said it expected its operating profit margin in 2022 to be equal to or modestly above the 15.6% achieved in 2021. 

On short-term goals, CEO Van den Brink said the company was pretty confident on the outlook for the rest of the year, but was less clear on 2023. 

Heineken was still aiming for an operating profit margin of 17% in 2023, but there was “increased uncertainty” given inflation and its impact on consumer spending. 

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