Dutch brewer Heineken, the world’s second-largest beer maker, said its full-year organic operating profit is expected to come in at the lower end of its 4% to 8% guidance range, citing continued weakness across several key markets.
After years of sluggish volume performance, the company has struggled to regain consistent growth, underscoring the persistent challenges facing global brewers as consumer demand remains uneven across regions.
The company and its peers have resorted to increasing prices to compensate for the decline in sales, but investors are now paying more attention to the actual volumes of beer sales that are still pressured.
The economic volatility became more pronounced in the third quarter, with demand trends inconclusive and consumer sentiment uneven, Chief Executive Dolf van den Brink said.
“We expect demand to recover when conditions normalise.”
Shares recover slightly after expected weakness
The latest warning comes following a dramatic market reaction earlier this year.
Heineken’s shares fell more than 8% in July after the brewer predicted that yearly volumes would stay roughly unchanged, abandoning earlier growth forecasts.
On Wednesday, the business said it now expects beer volumes to “decline modestly” next year, reinforcing the belief that a lasting recovery is out of reach in the near future.
Analysts polled by the company had already predicted a 1.8% fall in volumes and a 3.9% increase in yearly earnings, implying that the lower prediction had been widely expected.
According to Barclays analyst Laurence Whyatt, the company’s cautious view may not concern investors as much as it did previously.
“Every negative thing was predicted. In fact, it was predicted to be worse,” he explained.
Heineken stock increased roughly 1% in early trading.
Industry faces structural headwinds
The brewer has warned of a slowdown in sales, highlighting difficulties facing the brewing industry as a whole.
Global brewers have faced shrinking demand for a while, due to changing consumer tastes, public awareness of health issues, and competition from alcohol substitutes.
They also sow doubt about the fate of discretionary spending in important markets with the rise of weight-loss drugs.
Heineken insisted that those recent challenges were mostly temporary, although they noted all these structural headwinds remain ongoing.
Weak demand in Latin America and Europe weighed on performance during the quarter, though the company attributed the slowdown to broader macroeconomic pressures rather than brand-related issues.
Trade tensions and economic uncertainty have also undermined consumer confidence in Brazil, one of Heineken’s key emerging markets.
Emerging markets offer bright spots
Heineken placed a stronger emphasis on local execution, and a strong premium segment has contributed to its market share gains, even as broader performance in Brazil and Mexico suffered.
In Vietnam, where the brewer has previously battled headwinds, they performed better.
Despite the immediate picture remaining tough with economic and consumer uncertainty, Heineken signalled faith that demand will return once the situation normalises.
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