Rising fuel prices drive up brewing costs in Asia, Heineken says

The rising cost of fuel, driven by the ongoing conflict in Iran, is significantly increasing brewing expenses for Heineken in Asia, according to the company's Asia-Pacific president, Jacco van der Linden. Speaking to Bloomberg TV, he noted that this issue is particularly pronounced in the region, where Heineken relies heavily on Middle Eastern oil, a resource that is somewhat scarcer.

Van der Linden explained that Heineken is absorbing 70 to 80 percent of these increased costs by raising prices, while focusing on improving productivity to offset the remainder. The brewing giant is facing a dual challenge: consumers are drinking less, and their tastes are changing towards healthier beverage options. Additionally, Heineken has been slower than competitors AB InBev and Carlsberg to recover from the post-Covid downturn.

The new CEO, Rafael Oliveira, who will lead Heineken from October, will need to navigate sluggish sales in Europe and the US. This makes expansion in emerging markets, such as Asia, Africa, and other developing economies, crucial for the company's growth. Heineken has seen a 13% increase in volumes in the Asia-Pacific region and a 3.5% rise in Africa and the Middle East during the second quarter, while sales in the Americas have declined by 4.1%.

To counter weaker sales in mature markets, Heineken is concentrating on growth in key regions, particularly in Asia. Van der Linden highlighted Vietnam, India, and China as particularly important markets, where consumers prefer lighter beers. The company is investing in these areas while also pushing more premium products to maintain market share.