Heineken's Commitment to Competitive Pricing Amidst Volume Decline
Heineken's CFO, Harold van den Broek, assures that despite declining volumes, the company remains committed to competitive pricing strategies while maintaining agility However, he emphasizes that Heineken will not significantly increase its promotional activities
In its quest to attract and retain customers, multinational brewer Heineken has made a commitment to ensure that its prices remain competitive. However, the company faced a decline in volume sales of 4.2% during the third quarter. This decrease can be attributed to the strategic decision of increasing prices across a significant portion of its portfolio, which aimed to counterbalance rising costs.
Heineken's chief financial officer, Harold van den Broek, informed investors that the company will make price adjustments as necessary to maintain its competitiveness. Van den Broek emphasized the importance of adapting to economic and competitive conditions, stating that internal discussions have been dedicated to evaluating the responsiveness of the company to competition.
Van den Broek does not anticipate significant price deflation in the industry. Instead, he characterizes the current situation as a "price rebalancing" as brands adapt to decreasing inflation. According to him, Heineken will modify prices on a market-specific basis.
The company will strive to maintain its competitiveness in the upcoming quarters without relying heavily on increased promotional activities and discounts, according to Van den Broek.
Heineken managed to achieve a 2% growth in revenue, amounting to €9.6bn, despite experiencing a decline in volumes for the quarter. The company's price mix, which includes adjustments to product prices and the range of products and packages sold, increased by 9.5%.
In Europe, the decline in volumes was more significant, with a decrease of 8.4% compared to the same period last year. Similarly, the UK witnessed flat sales during the quarter, as substantial price increases offset the decline in volumes.
Heineken has placed a significant emphasis on enhancing the quality of its product range. Unfortunately, its premium beer sales experienced a decline of 5.7%. This decrease was primarily due to a downturn in the Vietnamese market caused by macroeconomic factors, as well as the company's withdrawal from the Russian market.
Despite this setback, Heineken celebrated the growth of its esteemed brand, Heineken, which saw a 2.3% increase in sales. Furthermore, the popularity of its non-alcoholic offering, Heineken 0.0, experienced a notable growth of 3.5%.
Heineken's digitalization program is also a significant area of focus. According to CEO Dolf van den Brink, the company's online B2B platform has recorded a gross merchandise value of €8 billion by the end of this quarter. This represents a 22% increase compared to the same period last year.
