Heineken is letting go of 8,000 employees, representing around 10 per cent of the entire workforce. After all, the brewing giant still expects little recovery from the Covid crisis in 2021.
No improvement so far
According to Heineken’s expectations, the first half of this year will still be dominated by the coronavirus pandemic, with all its negative consequences for beer sales. CEO Dolf van den Brink only expects a “gradual improvement” in the second half of the year. Thus, 2021 will not be a ‘grand cru’, as revenue, operating profit and profit margin are expected to be lower than in 2019.
Heineken is therefore pushing ahead with its cost-cutting plans that got announced in October. The beer producer wants to reduce personnel costs by 350 million euros and is consequently cutting 8,000 jobs. That is almost 10 per cent of the total of around 85,000 employees worldwide. Initially, the company even feared having to let go of up to 20 per cent of its employees.
Below zero
Over the past year, turnover fell by 17 per cent to 23.8 billion euros. As margins in the currently mainly closed hospitality industry are higher, operating profit also plummeted by almost 80 per cent to 778 million euros. The net profit even ended up at 204 million euro below zero. The fact that at the end of January, barely 30 per cent of Heineken’s hospitality clients were back at work shows just how miserable the situation continues to be.
Cuts are being made primarily at the head offices, both in Amsterdam and regionally. Also, it is the company’s intention to put a focus on more efficient production, more digital sales and an update of the offer. The brewery group wants to position itself more strongly within the premium segment and in the emerging non-alcoholic beer category. Last year, Heineken also embarked on introducing a new beverage, the popular ‘hard seltzer’. By 2023, the group wants to save 2 billion euros.
Competitor AB InBev also announced a smaller restructuring at the same time: the group is removing the production of Stella Artois from the Jupille factory as the employees strike too often.
