Heineken posts slight Q1 2017 gains with Brazil lagging behind other markets

Heineken expects that the completed acquisiton of Brasil Krin will improve its performance in Brazil in 2017. ©iStock/bizoo_n

Heineken reported 2.5% volume growth of its flagship beer brand for the first quarter of 2017, but double-digit volume declines in Brazil hampered overall growth for the second largest brewer. 

The company posted a net profit of $314m (€293m) for the quarter compared to $284m (€265m) in Q1 2016, representing a 0.6% increase.

Brazil drags down growth in the Americas

Organic consolidated beer volume declined 0.7% in Q1 2017 for the Americas, the company reported.

Mexico was able to offset some of the declines in volume sales with mid-single digit growth driven by sales of Tecate, Tecate Light, and Heineken. The US, however, saw low single digit declines in its Tecate and Dos Equis brands.

“In Americas, whilst Mexican volume was good this was more than offset by weaker volume in Brazil,” Heineken, CEO Jean-François van Boxmeer, said.

Brazil experienced double-digit declines reflecting continued macroeconomic weakness and competition in the mainstream and economy segment, the company said. However, the bright spot in Brazil was the positive growth of its premium brand portfolio along with Amstel also delivering strong growth.

Where does acquisition of Brasil Kirin stand?

Heineken entered into an agreement with Kirin Holdings Company Limited to acquire Brasil Kirin Holding S.A. in February 2017. At the time, Heineken was also reviewing its future route to market for its Brazilian operation. The decision could improve sales performance in the South American country moving forward, Heineken said.

In light of the size and requirements of the proposed future combined portfolio, Heineken confirmed in its first quarter report that it intends to leverage Kirin's existing route to market with the Heineken portfolio in the future and that completion of the acquisition is expected by the first half of 2017.

Asia Pacific sees strongest growth

Continuing on a trend of increased beer volumes in Asia Pacific, Heineken reported a consolidated beer volume increase of 5.4% in the region for the quarter, compared to last year with Cambodia experiencing double-digit growth due to the additional production capacity added last year.

“In Vietnam, earlier timing of the Tet new year (Vietnamese New Year) resulted as expected in a slower start to the year, and low single digit volume growth. The Tiger brand continues to drive growth,” the company said.

Van Boxmeer said the company expects that Asia Pacific will continue to outperform other regions in its full-year 2017 outlook.

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