Heineken’s biggest-ever price rises in the UK failed to stop its profit being slashed during its latest financial year as it battled “economic volatility”.
The Edinburgh-based division raised its prices in 2023 as it faced “significant inflationary pressure on input costs”, reducing consumer spending, higher labour costs and rising energy bills.
According to newly-filed results, Heineken UK’s pre-tax profit was cut from £165m to £106m in 2023 while its revenue increased from £2.3bn to £2.4bn.
The division also makes and sells brands such as Birra Moretti, Desperados, Foster’s, Amstel, Inch’s, Old Mout and Strongbow as well as Beavertown.
At the end of 2023, Heineken’s Star Pubs estate totalled 2,382 locations, down from 2,394.
A statement signed off by the board said: “Economic volatility continued into 2023 leading to significant inflationary pressure on input costs.
“Reduced consumer spending and increased labour costs, as well as high energy bills affecting production and UK retail. continue to provide headwinds.
“To protest margins the group delivered its largest-ever price increases to date, contributing to the off-trade share decline.
“The group also increased focus on managing our cost base to drive productivity efficiencies and deliver cost savings across the business.”
Beavertown sales surge but brand enters the red
According to separately-filed accounts, revenue at Heineken’s Beavertown Brewery increased from £71.7m – in the nine months to the end of 2022 – to £105.1m in the full 12 months of 2023.
However, the brand went from making a pre-tax profit of £5m to a loss of £831,546.
Beavertown said: “Top-line performance in 2023 improved despite a number of challenges to the trading environment impacting the UK economy; pressures of inflation, a fluctuating commodity market, uncertainty caused by the war in Ukraine and the cost-of-living crisis all presented risks to consumer demand.
“Despite these challenges, the company committed to invest in the brand, increase awareness and drive growth in the company’s portfolio via innovation.”
Revenue rises but profit continues to slide
Earlier this year, the wider Heineken group reported a revenue of €36.3bn for 2023, up 4.9 per cent on 2022.
However, its operating profit fell by 24.6 per cent to €3.2bn over the same period.
For the first half of 2024, the group posted a revenue of €17.8bn, up 2.2 per cent, but its operating profit fell by 4.3 per cent to €1.5bn.
Speaking in July, chairman Dolf Van Den Brink said: “In the second half, we will materially step-up investment in market and sales expenditures, with notable increases in key markets.
“We update our full year outlook to grow operating profit (beia) organically in the range of four per cent to eight per cent, reflecting our confidence in delivery and commitment to invest behind growth and to future-proof our business.”