Dutch brewer Heineken is warning that weak consumer sentiment and a damp European summer will depress its earnings for this year. After profits for the first half came in below expectations Heineken’s shares slumped.
The world’s third largest brewer – and the biggest in Europe – said economic uncertainty and unemployment are driving Europeans and Americans away from bars, while emerging market consumers are drinking more.
Heineken is the market leader in Greece and Italy and No. 2 in Ireland, Portugal and Spain, countries either bailed out or seen by many in the financial markets as in line for rescue.
The company’s trading conditions remained favourable in Latin America, sub-Saharan Africa and Asia-Pacific, but not in developed markets.
“We have seen a very bad summer. At the same time, we also see in a number of markets, more in Europe and the USA, weak consumer confidence. You see uncertainty reflected in lower on-premise sales,” CEO Executive Jean-Francois Boxmeer told a conference call.
Heineken has pushed into Mexico with its purchase last year of the brewing activities of FEMSA and has been buying breweries in Africa, notably Nigeria where it has some 70 percent of the market.
However, western Europe still represented 45 percent of revenue and 65 percent of operating profit in the first half of 2011.