Heineken and Bavaria seek fortune outside of Europe

Even though the European beer market continues to struggle, Dutch brewery groups Heineken and Bavaria have published growing turnovers. Bavaria set a record turnover, Heineken raised its turnover 4.3 % in the past quarter.

Asia and America engines of growth

Both groups mainly saw their turnover grow thanks to expansion outside of Europe: North and South America proved very helpful to Bavaria, while Heineken can thank Asia’s late New Year for the first quarter’s growth. 

Heineken generated a double-digit growth in its second largest market, Vietnam, and Brazil in the first three months. Russians and Americans also drank more beer thanks to an early Easter. On the other hand, an early Easter proved to be a negative for Europe: the beer manufacturer said it was too cold to drink beers then.

Both companies enjoyed growth in Africa thanks to Ethiopia. Bavaria expanded local Habesha’s production capabilities, expanding its reach nationally. Government regulations hampered beer sales in other African countries though.

Increased competition and promotion pressure locally

The Dutch situation is still challenging, both said: “At home, we are faced with increased competition, continued promotion pressure in supermarkets and discount pressure in the hospitality industry”, Bavaria chairman, Jan-Renier Swinkels, said, following his brand’s market share loss. La Trappe and Cornet did perform very well in Belgium. For Heineken, Western Europe was the worst performing region: sales volumes dropped 1.7 % in 2018’s first quarter.

Bavaria generated a third straight record turnover last year: net turnover reached 659 million euro (+ 6.5 %), and its EBITDA reached 41.1 million euro, down 4.7 million compared to the year before. According to the company, brewery investments were to blame.

Heineken maintains its 2018 profit forecast: the brewery group expects to increase its profit margin by 25 points, but fears that exchange rates may have a negative 200 million euro impact.