A festival goer with a Desperados beer, which is brewed by Heineken
(Picture: Heineken)The world’s second biggest brewer has warned drinkers to expect big price rises this year as costs continue to soar.
Heineken said it expects to be “significantly impacted by inflation and supply chain resilience pressures”.
The cost of producing its beers, which include brands like Sol, Amstel and Birra Moretti, is set to increase by a percentage in the “mid-teens” due to “the sharp increase in the prices of commodities, energy, and freight”.
UBS analyst Nik Oliver said costs were likely to rise by around 14% due to rising prices of everything from barley to glass and cardboard.
The Dutch company plans to protect its profits by hiking prices but admitted this “may lead to softer beer consumption.” It gave no guidance on how high prices might go.
Pub bosses in Britain have warned that rising wages and energy bills could add as much as 40p to the price of a pint.
The warning from Heineken came as it reported strong results for the year just gone. Revenue rose 11.8% to €26.5 billion (£22 billion) and operating profit surged 476% to €4.5 billion.
The reopening of bars and restaurants across Europe helped beer volumes sold around the world rise by 4.6% to 231 million hectolitres, or over 40 billion pints.
Chairman Dolf Van Den Brink said: “We delivered a strong set of results in 2021 in a challenging and fast-changing environment. We made a big step towards recovering to pre-pandemic levels, and in parts going beyond.”
Sales of the marquee Heineken lager surged 17% to pass 2019 levels. There was strong demand for its Heineken Silver beer in China and Vietnam, as well as sales growthof around 30% for alcohol free Heineken 0.0.
Van Den Brink said: “Looking ahead, although the speed of recovery remains uncertain and we face significant inflationary challenges, we are encouraged by the strong performance of our business.”
The company announced a €2 billion cost cutting plan at the start of last year and said it had stripped out €1.3 billion of costs already, putting it well on track to complete the plan by next year.
