Heineken commits to ‘competitive’ pricing as its volumes decline

While pledging to be ‘competitive’ and agile in its pricing, Heineken CFO Harold van den Broek said the company would not be stepping up its promotional activity.

heineken uefaMultinational brewer Heineken has committed to ensuring its prices are “competitive in its fight for the customer and consumer” as it reported lower volumes in its most recent quarter.

The business, which owns brands like Birra Morreti and Desperados, as well as flagship brand Heineken, saw its volume sales decline by 4.2% in its third quarter. This came as the company continued to increase prices across much of its portfolio in order to offset high costs.

Chief financial officer Harold van den Broek told investors Heineken will look to adjust its prices where necessary to ensure it is competitive.

“We need to adjust to economic and competitive realities,” he said, adding that many internal discussions have been focusing on whether the business is responsive enough to competition.

However, Van den Broek said he does not expect to see any major price deflation across the industry. Instead, he described what is currently taking place across the industry as a “price rebalancing” as brands adjust to inflation.

For its part, Heineken will make any adjustments to price on a market-by-market basis, he said.

Heineken CEO: Brand power today is pricing power tomorrow

While the company has pledged to ensure competitiveness in its upcoming quarters, it will resist the temptation to do this through majorly stepped up promotions and discounting.

“There’s only so many promo slots that you can have in a given point in time,” Van den Broek said.

Despite falling volumes for the quarter, Heineken did grow revenue by 2% to €9.6bn. Its price mix – changes to prices of products as well as the mix of products and packages sold – was up 9.5%.

Volume declines in Europe were steeper at an 8.4% fall for the period versus the same time last year. The UK also saw flat sales for the quarter, as high-single digit price increases offset volume declines.

Premiumisation of its portfolio has been a key strategic focus for Heineken. Its premium beer volumes, however, declined 5.7%. The company largely attributed this to a decline in Vietnam driven by macroeconomic factors, in addition to its exit from Russia.

The company did tout success for its premium name brand Heineken, which grew volumes by 2.3% in the period. Non-alcoholic product Heineken 0.0 grew by 3.5%.

Another focus for Heineken is its digitalisation programme. CEO Dolf van den Brink said the company’s online B2B platform had generated €8bn in gross merchandise value by the end of this quarter, which represents a 22% increase versus the same period last year.