Heineken Banks On Asia For Growth As Tiger Beer Prospers

By Publications Checkout
Heineken Banks On Asia For Growth As Tiger Beer Prospers

Heineken NV, the world’s second-largest brewer, forecast growth in sales and profit this year as customers in Vietnam and other Asia markets drink more Tiger beer.

The Dutch company made the forecast Wednesday as it reported its fastest earnings growth in seven years, driven by a 13 per cent increase in Asian revenue. The stock rose as much as 4.6 per cent in Amsterdam, the steepest intraday gain in more than a year.

Growth in markets such as Cambodia and Indonesia is helping offset slowing shipments in Europe, the Americas and Africa. In Vietnam, one of Heineken’s largest markets, higher middle-class incomes are boosting consumption. The Dutch brewer is one of several companies that has registered to bid for a stake in Saigon Beer Alcohol Beverage Corp, Vietnam’s largest brewer.

“Asia Pacific remains exceptionally strong and this has pulled the group above consensus,” wrote Eamonn Ferry, an analyst at Exane BNP Paribas. “They have some of the best marketers around, certainly in the beer industry, and they’ve put more muscle behind Tiger in Asia, a brand which hits a sweet spot in terms of price points.”

Heineken took full ownership of Tiger-owner Asia Pacific Breweries in 2012. Purchases of the lager, which has been brewed in Singapore since 1932, have grown at a double-digit pace in both 2015 and 2016, a spokesman said, as economies expand in key Asian markets such as Vietnam.


Heineken also said on Wednesday that currency swings would cut 75 million euros from operating profit and 30 million euros from net income this year based on current rates. The brewer has been hit by the euro’s strength against sterling, the Mexican peso, Nigerian naira, Russian ruble and Brazilian real.

Earlier this week, the company agreed to buy rival Kirin’s business in Brazil, where it has forecast a return to growth in the beer market after a slump caused by a currency devaluation and political upheaval. Buying the unprofitable business is likely to weigh on profitability in 2017, though the acquisition of 1,900 UK pubs from Punch Taverns will boost earnings, according to chief financial officer Laurence Debroux.

Other highlights:

Adjusted operating profit rose 9.9 per cent on an organic basis to €3.54 billion, beating the average estimate of €3.47 billion. US craft beer market is “absolutely” slowing down, CEO Jean-Francois van Boxmeer said in an interview Heineken plans to continue to expand Lagunitas brand in other markets as US growth is double-digit: CFO Brewer expects to meet mid-term forecast of 40 bps annual operating margin improvement in 2017, excluding acquisitions, unforeseen events

News by Bloomberg, edited by Hospitality Ireland