Heineken Pukes As Cost-Of-Living Crisis Hammers Drinkers

Dutch brewer Heineken NV shares plunged after third-quarter beer sales missed, suggesting there are signs of waning consumer demand in Europe amid the worst inflation environment in decades. 

Bloomberg reported that the world’s second-largest brewer fell as much as 10% in Amsterdam trading, the most since 2003, after 3Q beer volumes grew by 8.9%, missing the 11.8% average analyst estimate. 

“We increasingly see reasons to be cautious on the macroeconomic outlook, including some signs of softness in consumer demand,” CEO Officer Dolf van den Brink said Wednesday. 

Heineken warned there are emerging “signs of demand slowdown at the end of September and into October” across Europe. It reported a 68% increase in beer sales in the Asia-Pacific region for the quarter. 

The brewer managed to cushion margins this year by hiking prices to match inflation, though rising prices have created demand destruction in some parts of the world where there’s a cost-of-living crisis. 

Heineken said it maintained its full-year outlook for operating margin to be stable for this year. However, there was no update to a 2023 forecast issued in August that operating profit would increase by a mid to high single-digit percentage. 

Here’s what Wall Street analysts are saying about Heineken (list courtesy of Bloomberg): 

Citi (buy), in a note, refers to a disappointing 3Q, expecting Heineken shares to be weaker today 

Analyst Simon Hales writes that “worryingly, although the CEO reiterated guidance metrics for 2022, he has not confirmed the 2023 guidance range laid out at the H1 results” 

RBC (underperform) analysts led by James Edwardes Jones, in a note, say they were surprised to see Heineken miss expectations “quite so dramatically”

Notes that volume growth and revenue per hectoliter were disappointing

Morgan Stanley (equal weight) says while the weakening consumer demand in Europe shouldn’t come as a surprise, “demand seems to be deteriorating faster than what most investors had expected” 

Analyst Pinar Ergun writes that this increases downside risks to Heineken’s 2023 estimated earnings, owing to its more premium portfolio and more profitable on-trade exposure, according to a note