Heineken experienced a decrease in beer sales in the UK over the summer due to a price increase of over 7% and unfavorable weather conditions such as rain and cooler temperatures which affected barbecues and outdoor events.
The decrease in sales was observed at the company, which also holds ownership of Amstel, Birra Moretti, Tiger, and its own brand. This drop in sales can be attributed to a 7.6% decline in the quantity of beer sold throughout Europe. However, there was an increase in the average price of beer sold by 12%, driven by inflation and a rise in sales of premium beers.
In the third quarter of the year, sales increased to €9.6bn (£8.4bn) by 2% despite a 4.2% decrease in sales volumes, due to a 9.5% increase in prices globally.
Heineken’s CEO, Dolf van den Brink, attributed the decline in sales to unfavorable weather in July and August. However, he reported an improvement in September and noted that the company gained market share in pub and restaurant sales across most regions. Despite this, there is still work to be done in recovering retail sales. Van den Brink also mentioned that price inflation was slowing down, but consumer demand has been impacted by challenging economic conditions in certain markets.
According to Steve Clayton, the leader of equity funds at Hargreaves Lansdown brokerage, the numbers were a reaction to prolonged periods of cloudy and rainy weather. However, despite the conditions, Heineken performed better than anticipated.
In general, Heineken claims that they have maintained or increased their market share in more than half of their markets, even though increasing sales volumes has been difficult,” he stated. “The company is maintaining their full-year projections; they anticipate achieving stable to moderate growth in operating profit by 2023, despite the difficult circumstances.”
Reckitt Benckiser, the company behind popular brands such as Dettol, Nurofen, and Durex, reported a decrease in sales volume and an increase in prices (specifically, a 7.5% increase).
The business reported that its sales for baby formula were lower than expected, following a previous boost from competitors’ shortages in the US last year. Nonetheless, Kris Licht, the CEO, stated that Reckitt is meeting its goals for the entire year.
The corporation revealed a share buyback program worth £1 billion as a means of rewarding investors, citing a surplus of cash. Yet, analysts at Jefferies observed that the company has lowered its goal of achieving a 20% profit margin by 2025.
The performance of Heineken and Reckitt demonstrates that households are being cautious with their spending on weekly groceries due to inflation impacting the prices of essential items like butter and rice.
The quantity of products purchased in UK supermarkets has decreased, despite their sales numbers appearing artificially strong due to inflation.
The rate of inflation is slowing down, but recent data reveals that it is not decreasing as quickly as expected. It remains at 6.7% per year due to a combination of rising labor and energy expenses, which are impacting the prices of everyday household items. Additionally, severe weather patterns caused by the climate emergency are causing disruptions to global harvests.