Dutch brewery giant Heineken’s woes in SA persist, with beer and cider sales volumes on a downward trajectory in the first quarter of this year.
The company said on Wednesday that Heineken Beverages, formed in 2023 after a merger of Heineken’s SA unit, Distell, and Namibia Breweries, grew organic revenue by a low-single-digit percentage as consolidated volume declined by a mid-single-digit.
“In SA, organic volume declined by a high-single-digit [percentage]. Wine volume decreased in the twenties, impacted by our portfolio transition towards profitable variants,” it said.
“Beer and cider volume declined by a high-single-digit, behind a market characterised by an aggressive promotional environment. In Namibia, organic volume grew by a high-single digit, led by Windhoek Lager.”
The first-quarter trade update comes just two days after Johann Rupert’s investment holding company, Remgro, said the Dutch company committed “own goals” on pricing ahead of the tie-up, leading to market share losses.
Remgro has about a 19% stake in Heineken Beverages — which excludes Heinekens’ global operations.
“We went through an 18-month dark period where we couldn’t exchange information, and we didn’t know what was happening in the business. I am talking specifically about the Heineken beer side. They scored a few own goals,” Remgro CEO Jannie Durand told investors at a capital markets day held on Monday.
“The first thing that happened is that they increased prices on some of their products ahead of the market. So they started losing market share.”
The merger between Heineken SA, Distell and Namibia Breweries brought household brands together, including Amstel, Savanna, Amarula, Windhoek Lager, Nederburg and Hunter’s.
At the time of the deal’s finalisation, Heineken said it expected the transaction to add more than €1bn in net revenue and €150m in operating profit to its African footprint.
Heineken, the world's second-largest brewer by global volumes, reported positive growth in its other operations around the world. It said it expected ongoing macroeconomic volatility that might “impact our consumers, including weak sentiment, global inflationary pressures, and currency devaluations in relation to a stronger euro”.
In the annual report published on Wednesday, the group said it had made important steps in SA to complete the integration of the Distell business.
“Strong growth in cider was led by Savanna, including the launch of a premium, whisky-flavoured cider, Savanna Neat. The launch of a new spritzer, Bernini Mimosa, reinforced the brand’s strong position with women,” it said.
“It was a positive year of growth for Namibia Breweries, which also benefited from the integration of the Distell portfolio.”
The company flagged major currency devaluations in Nigeria, Ethiopia and Egypt, and widespread inflation that put pressure on consumer purchasing power.
“Social unrest further complicated operations in countries such as Ethiopia, Democratic Republic of Congo, Kenya and Mozambique.”
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