Heineken, the world’s second-largest brewer by volume, has revised its profit growth expectations for 2023 following a challenging economic environment in Vietnam, which led to lower-than-anticipated earnings in the first half of the year.
The Dutch company, known for its popular brands like Tiger and Sol, now anticipates growth in operating profit before one-offs to be in the range of zero to a mid-single-digit percentage. This is a downward adjustment from its previous forecast, which projected mid- to high-single-digit percentage growth.
During the first half of 2023, Heineken faced a decline of 5.6% in beer sales compared to the previous year. Despite experiencing higher revenue due to increased prices, the company encountered an 8.8% like-for-like drop in operating profit, which exceeded the average 4.8% decrease projected in a poll conducted by the company.
The adverse impact on Heineken’s results in Asia was mainly attributed to an economic slowdown, notably in Vietnam, which is one of the company’s key markets. Vietnam’s exports faced reduced global demand, causing a significant downturn in the beer industry.
Beer volumes in the region plummeted by 13.2%, with sales of premium beers experiencing an even steeper decline. Consequently, the operating profit saw a sharp reduction of approximately a third.
Still Heineken remains optimistic about a strong recovery in the second half of the year, expecting an overall turnaround of profit. Despite the challenging market conditions, the brewer believes its namesake brand, Europe’s top-selling beer, will continue to show resilience in the face of these obstacles.
As the year progresses, the company will closely monitor market dynamics and implement strategic measures to navigate through the uncertainties caused by the ongoing economic slowdown in Vietnam and other affected regions.