Heineken says 2008 a challenging year for beer sector

LOWER ALCOHOL consumption levels mean 2008 will prove to be “another challenging year” for the beer industry, Heineken Ireland said yesterday as it published half-year results showing a 3 per cent rise in turnover and “static” sales volumes.

The company, which employs 420 people in Ireland, increased its turnover to €156 million despite a 0.4 per cent decline in the total Irish beer market over the period.

Turnover and earnings grew as a result of price increases implemented during the period, while the performance was also underpinned by strong sales of Heineken and Coors Light lagers.

The brewer continued to benefit from a switch in consumer allegiances from stout to lager. Volumes in the lager market are up 1 per cent on 2007 while, after a decade of decline, stout volumes are close to levelling off.

“2008 will provide another challenging year for the industry with changes in consumer lifestyle and a decline in alcohol consumption. Outperforming a declining market with a strong trading performance is a very positive result for us,” said Heineken Ireland corporate affairs manager Declan Farmer.

The success of the Munster rugby team in the Heineken Cup helped boost the parent brand, which has a 17 per cent share of the Irish beer market and 28 per cent of the lager market.

Speciality beers showed double-digit growth compared to the first half of 2007. Mr Farmer said the launch of draught German beer Paulaner was “very encouraging”, while Mexican beer Sol, Italian brand Moretti and Polish beer Zywiec all performed well.

The value of the total Irish beer market now stands at €3.27 billion, with the on-trade (pubs and restaurants) accounting for 68 per cent of the market, and the off-trade (retail outlets) commanding a 32 per cent share. A shift to home drinking has seen the on-trade’s share of the market drop in recent years. However, this trend appears to have levelled off, Heineken Ireland noted.

On a worldwide group basis, Heineken NV posted a 35 per cent rise in net profit to €407 million and better-than-expected sales.

The world’s third-largest beer maker, which also brews Amstel and Tiger, was buoyed by contributions from the assets of Scottish Newcastle, which it bought in April.

Heineken lifted prices in western Europe, its biggest market, by 4 per cent in the half to recoup higher expenses for barley, aluminium and energy. But profitability still fell in the region as economies weakened and smoking bans drove drinkers away from bars. – (Additional reporting: Bloomberg)