Two of Europe’s largest brewers, Heineken and Carlsberg, have reported a surge in profits for 2009 as both companies cut their costs. However, they also reported a drop in sales volumes as a result of the economic crisis. Heineken has forecast lower beer consumption in many regions this year.
Heineken said its annual profit rose to 1.05 billion euros, a 4% increase on its profit in 2008. Revenues increased by 2.7% to 14.7 billion euros thanks to rises in prices. But beer volumes fell 1.5% overall, including a decrease of 9.3% in Central and Eastern Europe.
Carlsberg’s profit increased by 38% in 2009 to 3.6 billion Danish Kroner, driven by strong performances in Eastern Europe and Asia and due to increased prices and cost-cutting. Although beer volumes rose by 6% on the previous year, revenues fell slightly as a result of currency fluctuations. The large increase in profits is mainly due to the fact that Russia is imposing incrementally higher taxes over the next few years, including tripling the beer tax this year.
In 2008, Heineken and Carlsberg jointly acquired the UK’s Scottish & Newcastle in a 7.8 billion pound deal. The assets of Scottish & Newcastle were divided between the two firms, with Heineken taking the operations in Western Europe and the United States, and Carlsberg taking full control of the Russian venture.
Heineken has been hit harder by the consumer downturn in the west as it relies more on the European and North American markets. The group is hoping to increase its presence elsewhere, having bought the beer-making operations of Mexico’s Femsa Cerveza for $5.5 billion. According to to BBC News“, the company’s chairman, Jean-François van Boxmeer, said: “Demographics are working against us, the population is ageing and as you age you drink less beer. The other phenomenon is that with the wealth creation of the last 30 years, people diversify their consumption and try wines instead of beer.”
So based on this somewhat gloomy prediction for beer consumption, should we expect to be drinking Heineken and Carlsberg wines in the future? “Probably the best chardonnay in the world…”
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