• Thursday, June 13, 2024
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Heineken dividend increase fuelled by Nigeria, other emerging markets success

Heineken inspires Nigerian youth to greatness with tour of UEFA champions’ trophy

Heineken increased its dividend by a quarter after a rise in profits in 2014, although the manufacturer warned growth would flatten out in 2015 due to a tough trading environment, reports Financial Times.

The world’s third-largest brewer by market capitalisation and revenue said total net profit grew 11 percent to €1.8 billion as emerging markets performed strongly and the soccer World Cup in Germany lifted sales in the first half.
Emerging markets have been the holy grail for brewers in recent years success as sales have stagnated in mature markets. Heineken has successfully diversified and generates about two-thirds of operating profit from these fast-growing markets, which made it a target for larger British rival, SABMiller, although the Dutch brewer brushed off the overture.

The beer maker saw sales grow 10 percent in emerging markets, with notable contributions from Mexico, Nigeria, Brazil and Vietnam, although this was pared back by lower profitability in Poland and the fallout of Russia’s economic woes. “Our strong performance reflects the success of our strategy. We continued to invest in our portfolio of brands and we have significantly improved our commercial execution,” said Jean-François van Boxmeer, chairman and chief executive.

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However, he warned: “We expect further volatility in emerging markets and deflationary pressures in 2015” and that growth would be “more moderate”.

The brewer increased its dividend 24 percent to €1.10 per share, up from €0.89 last year.

Heineken saw particularly strong performance from certain niche beers. Desperados, the tequila-flavoured beer, saw volumes jump 19 percent, with the UK, France, Poland and Brazil consuming especially large quantities.

Affligem, the 1,000-year-old beer still brewed by Belgian monks, delivered volume growth of 16 percent, while Sol Premium also performed well.

A spokesperson highlighted the rapid rise of craft beers as a boon for the industry, although it has been perceived as a potential threat to the larger players.

“Craft beer is good for the market because it is reigniting consumers’ interest in the market…. What it shows is consumers are prepared to pay more for beers which excite them. It gets away from the commoditisation of beer,” he said.
The brewer’s total revenue rose 0.1 percent to €21.2 billion, while operating profit grew 5.2 percent to €3.4 billion.

In an attempt to gain an edge over competitors, the brewer has launched innovative marketing campaigns. In March, it staged an immersive film shoot that saw unwitting participants walk into a fantastical cocktail party with mobsters and dancing Russians. One man was forced to tattoo a hulking brute and steal a key from a hairy sleeping man as the company looked to create a viral video and boost its social media presence.

François van Boxmeer praised the “compelling consumer marketing”, which will receive a further boost from the James Bond bonanza that will follow the release of the new Bond film, Spectre, later this year. The British spy character switched to drinking Heineken in the film Skyfall in 2012.