Rising fuel costs driving up brewing costs in Asia, Heineken says
The higher costs come as brewers globally grapple with consumers who are drinking less.
Rising fuel costs due to the Iran war are increasing Heineken's brewing expenses in Asia, according to the company's Asia-Pacific President, Jacco van der Linden. Speaking with Bloomberg TV on September 28, he explained that the company is passing on around 70% to 80% of inflation to consumers, relying on improved productivity to handle the rest.
Van der Linden emphasized that rising input costs make productivity and revenue management crucial for Heineken. The higher costs come at a time when global brewers face a shift in consumer preferences, with many drinking less and opting for healthier alternatives. Heineken has been slower than its rivals InBev and Carlsberg in recovering from the post-Covid-19 slump, with incoming CEO Rafael Oliveira inheriting sluggish sales in Europe and the US when he takes over in October.
To offset this sluggishness, Heineken is focusing on growth in emerging markets like Asia, Africa, and other developing economies. Sales in Asia-Pacific rose by 13% in the second quarter, while those in Africa and the Middle East grew by 3.5%, whereas they fell by 4.1% in the Americas. Van der Linden stated that Heineken needs to continue investing in these markets and promote premium products to counter weaker sales in its mature markets.
The company is particularly targeting key growth markets in Asia, such as Vietnam, India, and China, where consumers favor lighter beers.
Written by urgent.news from Straits Times Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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