Heineken to increase marketing to quicken ‘strong’ Western Europe growth

Heineken is to up marketing spend for the rest of the year as it looks to capitalise on growth in Western Europe after announcing marketing investment in the first half of 2014 delivered revenue growth in nearly all regions.

Heineken says current fiscal year marketing spend will be bigger than the last.

The brewer said it expects an increase in its marketing and sales budget as a percentage of revenue in 2014, which would push it past the 12.6 per cent spent last year. This will likely be focused on growth in the Heineken masterbrand and its Tequila-flavoured Depserados beer with the brewer citing both for the upturn in demand worldwide.

Sales dropped 0.9 per cent in the first six months of 2014 but improved in the second quarter. Demand was lifted by gains in Western Europe, where volume was up by double digits driven by strong underlying brand performances in the UK, France, Spain, Ireland, the and Portugal, the brewer says.

Overall, beer volumes for the group climbed 3.1 per cent during the first half, buoyed by gains in Africa, the Middle East and the Americas.

Attempts to widen the appeal of its premium portfolio appear to be paying dividends as volume of the global brands Desperados, Affligem and Sol all jumped by double digits. Volume of cider grew in the mid-single digits spurred by growth of the Strongbow brand.

Jean-François van Boxmeer, chief executive of Heineken, says the company’s emphasis on innovation has enabled it to exceed revenue targets.

He adds: “With revenue and profit growth in nearly all regions, this is a very good first half performance. This progress is the result of a continued disciplined strategic focus with sustained investment in our brands and strengthened commercial execution.

“The economic outlook remains mixed and we expect some moderation in top-line and profit growth in the second half of the year. We are confident that our strong brand portfolio, geographic breadth and focus on cost control will result in healthy top and bottom line growth in 2014 and beyond.”

In a statement also posted today (20 August) rival brewer Carlsberg also announced gains in Western Europe but signaled tougher times lay ahead for the beer industry as it revealed escalating political tensions in Eastern Europe had forced it to slash its full year earnings.

Sales in the region plummeted 13 per cent year-on-year in the second quarter causing it to lose market share. The performance stunted global growth with revenue in the period dropping  slightly to 19.2 billion kroner from 19.06 billion kroner a year-earlier. It was in contrast to growth in Western Europe, the brewer claimed, where “solid topline performance and continued execution on an ambitious efficiency agenda” delivered “another set of strong results”.

Jørgen Buhl Rasmussen, chief executive of Carlsberg, said the results were “satisfying” despite the ongoing losses in Russia. A focus on “key priorities” and “strong execution in our markets and central functions have strengthened our business commercially and increased profits and cash flow”, he adds.

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