Heineken Falls 2.1% in 1st Quarter. 14% in March

Heineken NV said organic beer volume fell 2.1%.  But that’s the good news.  In March, organic growth was down 14%.  In the Americas, shipments were off 2.5% and organic volume was down 13.8%.

In the USA, beer volume declined mid-single digit, with Heineken growing low-single digit driven by Heineken 0.0. Lagunitas declined high-single digit. Together with our distributors, we held inventory to supply around two months of our Mexican brands portfolio at the end of March.

The initial impact of the Covid-19 crisis is visible in the volume performance of this quarter and is expected to worsen in the second quarter of 2020, the company said. The second half of the year is also expected to be impacted, as lockdowns may be lifted but the impact on the economy is likely to remain. Our results in 2020 will be impacted by lower volumes and other effects, including:

The increased risks on credit losses from customers, business continuity of small suppliers, impairments and non-effective hedge contracts.

Since the beginning, crisis management teams have been in place at a global, regional and local level, to ensure a coordinated response in regards to the health & safety of our employees, business continuity and the implementation of mitigating actions.

International travel, corporate events and hiring for all positions have been suspended, the company said. All non-committed CAPEX has also been suspended, unless absolutely necessary for the immediate business continuity or safety. Projects and technology upgrade programs are being temporarily paused or scaled down and will be revaluated. Furthermore, bonuses for 2020 will be cancelled for Senior Managers, including the Executive Board and the Executive Team.

Operating companies are reducing and reallocating marketing expenses and continuously assessing effectiveness under the current environment. Consumer communication is being adapted to support activities that help on-trade customers and reflect social distancing.

Teams are quickly reacting to business changes. Service levels to modern retailers have increased, focusing on key SKUs and shelf replenishment, including outside-store hours service and direct store delivery. Business-to-consumer initiatives are accelerated to capture the growth of e-commerce channels.

The lack of visibility on the end date of the Covid-19 pandemic and the duration of its impact on the economy has led Heinken to withdraw all guidance for 2020.

 

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