Heineken’s earnings soared in 2024, bumping its shares and competitors' shares as premium and nonalcoholic beers held supreme.
The Dutch brewer, which makes Amstel, Sol, and Birra Moretti beers, reported an 8.3% increase in operating profits to €3.5 billion, surpassing analyst estimates of 5.3%. Although beer volumes grew by just 1.6% year over year, the nonalcoholic Heineken 0.0 drinks grew 10%.
Heineken announced a two-year share buyback worth €1.5 billion, a positive sign for the company's future earnings. CEO Dolf van den Brink said Heineken would continue to invest in marketing as part of its “EverGreen Strategy” that aims to future-proof the brewer.
“The company is ticking the box on volume growth and profit delivery,” Jefferies analyst Edward Mundy wrote in a note. He added weak beer volumes in Europe towards the end of 2024, and the timing of Easter this year could impact Heineken.
Heineken’s shares were up 12.6% as of 12 p.m. London time, while AB InBev’s shares rose 3.6%. The European STOXX 600 index, which closed Tuesday at a record high, continued to rise following Heineken’s earnings.
Premium beer has helped drive Heineken’s growth even during spells of poor weather, depressing beer consumption, and reluctant consumer spending. Following the pandemic, supply-chain disruptions and higher raw material costs made beer more expensive.
On the demand side, people have also been shunning alcoholic beverages, which has forced drink giants to invest more in low- and no-alcohol segments.
Take Carlsberg, for instance. The Danish company, the third-largest brewer after AB InBev and Heineken, also beat analyst expectations for its 2024 earnings, thanks to the traction of its non-alcoholic drinks. Carlsberg acquired a soft drinks company to expand its bet across beverages beyond beers and ciders.
“In a world where we’re seeing more moderation…having a larger soft-drinks exposure gives us the ability to cater to any consumer occasion out there,” Carlsberg’s CEO Jacob Aarup-Andersen told Fortune in an interview last week.
The changing landscape for alcoholic drinks created new challenges and opportunities for Heineken. It has a mature 0.0 beer market in markets like the Netherlands, with double-digit growth in markets like the U.S. and Brazil last year.
One of the company’s focus areas under its EverGreen Strategy is premium and alcohol-free drinks. Heineken said on Wednesday that it plans to make nonalcoholic draught beers available in Spain, France, the U.K., and beyond.
Possible tariffs by the Trump administration pose a new threat to European companies, which Heineken doesn’t expect to affect its business directly.
So the “results and share buy-back announcement should be reassuring and received well after various disappointments on results from Heineken,” Bank of America analyst Andrea Pistacchi wrote in a note Wednesday.
