People seem to be drinking less during the corona crisis: Heineken's sales volume decreased by 14?% in March, resulting in a volume decline of 2.1?% for the quarter as a whole. And still, the beverage group believes the second quarter will be even tougher.
Full impact yet to come
In its first quarter, Heineken sold 2.1?% less beer, mainly due to the closure of pubs and restaurants and the cancellation of events in March. As a result, volume fell by 14?% that month. In total, the Dutch brewing group sold 51.6?million hectolitres of beer in the first three months of the year.
In the United States, which was not yet affected at that time, sales still rose sharply, while in Europe sales fell the most (-?13.5?%). In Asia the drop was limited to 10.6?%. However, the full impact of pub closures is not yet included in the figures, the Dutch group warns.
Hospitality industry and suppliers at risk
The volume decline also led to a drop in net profit: Heineken posted a net profit of 94?million euros during the first quarter, compared to 229?million euros a year earlier. Earlier this month, Heineken also withdrew its projections for the full year due to the uncertainty created by the pandemic. In addition, the Executive Board and management agreed to a 20?% salary reduction between May and December. They will not receive any bonuses either.
Moreover, the second quarter will be even worse, the company believes. Not only will demand drop much more sharply in the current quarter (due to the cancellation of festivals and large events, for example), the brewer also fears that smaller suppliers may run into financial problems and pubs and restaurants customers may go bankrupt. The entire second half of this year will be dominated by economic weakness, Heineken fears.