Heineken has warned that the price of a pint will continue to rise over the next year as the Dutch brewer hopes to pass on higher costs to consumers.
The drinks company, which beat revenue and profit estimates for the first six months of the year, said on Monday it was selling more beer than before the pandemic as consumers across Europe reject the price increase and returned to the bars.
“The high [costs] that we currently see and that we have seen over the last six months have not yet found their way [consumer] prices, that is coming,” Heineken CFO Harold van den Broek told the Financial Times.
The average price of a pint of draft beer in the UK was £4.09 in June, up 13p. since January, according to the National Statistics Office.
Brewers have raised beer prices as the cost of aluminum cans, bottles and barley have risen rapidly.
Van den Broek said rising inflation and natural gas prices in Europe, which were now 10 times higher than the average over the past decade, had also caused Heineken to raise prices. The average cost of Heineken drinks has increased by 8.9% in the last six months compared to the same period a year ago.
Rival Anheuser-Busch InBev, the world’s biggest brewer, said in July that rising sales volumes and prices had pushed revenue to grow faster than profits, but added that the beer industry had remained “resilient” despite inflation.
However, Heineken CEO and chairman Dolf van den Brink said it was unclear how rising inflation would affect future consumer demand. “Nobody knows, to be honest,” he said. “Right now . . . People are there and spending money, but we don’t take that for granted, that’s for sure.”
Rising energy costs have led Heineken to abandon gas in its European manufacturing plants.
Van den Brink told the FT he was “moderately confident” the company would not have to cut production in the coming months, but did not rule out that option in the event of “extreme scenarios”.
Heineken’s revenue rose 37 percent to €16.4 billion in the six months to July, which van den Brink said was “unprecedented”, compared to the year before it had a blockage
Operating profit rose by a fifth to €2.1bn, driven by “volume recovery actions, pricing and revenue management”. The volume of drinks sold increased by 0.8% compared to the year before the pandemic in 2019.
Heineken shares were down 1.6 percent on Monday morning.
Jefferies analysts noted that revenue from more premium beers, such as Heineken Silver, had continued to grow and now accounted for almost half of the company’s organic beer sales growth.