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Beerworkers Archive


Post date: 02/18/2011 - 13:43

Heineken Profits Rise in the UK

BREWING giant Heineken has reported strong growth in operating profits from its UK business despite a 4% decline in the beer market.

Profits rose after it increased its prices and benefited from cost savings after the closure of breweries in Reading and Dunston in Gateshead and the restructuring of its Scottish & Newcastle Pub Company. The company, which brews Foster’s, John Smith’s, Kronenbourg 1664 and Bulmers, reported sales of Strongbow were lower in a slightly declining cider market.

BREWING giant Heineken has reported strong growth in operating profits from its UK business despite a 4% decline in the beer market.

Profits rose after it increased its prices and benefited from cost savings after the closure of breweries in Reading and Dunston in Gateshead and the restructuring of its Scottish & Newcastle Pub Company. The company, which brews Foster’s, John Smith’s, Kronenbourg 1664 and Bulmers, reported sales of Strongbow were lower in a slightly declining cider market.

Heineken did not disclose figures for the UK but said the group’s western European arm reported a 3.6% decline in volumes in 2010, while operating profits were up 14% to £761.6m.

Heineken, recently named an official partner of the 2012 London Olympics, said lengthy negotiations with some major off-trade customers adversely impacted its market share in the first half of 2010, although its share partly recovered in the second half.

Heineken UK managing director Stefan Orlowski said: “2010 has been a challenging year for many in the brewing and pub trade, but I am very pleased with the progress we have made within our business and indeed with our brands.”

He added Heineken was beginning to realise the potential of its newer brands such as Amstel and Tiger.

Heineken’s profits were boosted by its move to market and distribute Mexican beers Sol and Dos Equis.

The brands were distributed by its rival Molson Coors but passed to Heineken after last year’s acquisition of Mexican brewer Femsa Cerveza, which owns both brands, for £3.4bn.

The deal consolidated Heineken’s position as the world’s second largest brewer by sales. Global sales increased 10% to £13.5bn in the year, while operating profits rose 41% to £2.1bn as the group saw sales up in emerging markets in Latin America, Africa and Asia.

In the UK, beer sales are in decline because of the weaker pub trade and above inflation rises in alcohol duty and VAT. Heineken will focus on increasing the amount of beer it sells in western Europe this year and warned its profit margin may suffer as it ramps up investment in marketing.

Heineken closed its Dunston Brewery, Gateshead, in May transferring production to the John Smith’s Brewery, in Yorkshire.