Heineken's Irish sales down 6.8%

IRISH PEOPLE drank less beer as the recession bit deeper last year, cutting sales and profits at multi-national brewer Heineken’s businesses in this country.

The brewer said that in Ireland, the “severe effect of the recession meant beer consumption declined by high single digits”. The company said it increased its share of the Irish market. Volume sales were down 6.8 per cent, but still outperformed the market, allowing it to grow its share.

During the year, Cork-based Heineken Ireland completed the takeover of former rival Beamish Crawford. It subsequently closed down its competitor’s brewery, which was also based in the city, with the loss of 120 jobs.

Heineken acquired Beamish when it bought its owner, Scottish Newcastle, in 2008 for €7.8 billion. The group’s Irish subsidiary is expected to publish more complete figures for its operations in this country next week.

Its parent, the world’s third largest brewer, warned yesterday that recession-conscious consumers will continue to cut down on beer drinking. “The global economic environment will continue to lead to lower beer consumption and down-trading in a number of regions in 2010,” Heineken said.

The Dutch company, whose chief brands are Heineken and Amstel, said it was committed to maintaining or increasing prices and would continue to pass on excise-duty rises to consumers.

However, it said that price increases would not be as steep this year as they were in 2009.

The likely fall in raw material costs per hectolitre due to a temporary decline in the price of brewing barley would be offset by higher energy costs, rising advertising rates and increased marketing costs.

It will continue to drive through its three-year total cost management plan, which yielded €155 million in savings to operating income in its first year in 2009.

Heineken said that earnings before interest, tax and one-offs rose by 14 per cent on a like-for-like basis to €2.095 billion in 2009. The average forecast in a Reuters poll of 14 analysts was €2.1 billion. That came despite a 5.4 per cent fall in underlying consolidated beer volumes. A 4.5 per cent improvement in pricing and sales mix translated into a 0.2 per cent drop in revenue. Cost cutting then explained the profit increase.

Heineken’s pain has been greater than its peers given that some 70 per cent of the Dutch brewer’s operating profit comes from the more sluggish European and North American markets. – (Additional reporting: Reuters)