• by Erik Oster , July 31, 2023

Heineken shares fell sharply today after the company reported financial results for the first half that failed to meet expectations, and updated its 2023 outlook.

While Heineken reported organic revenue growth of 6.6% (impacted by inflationary pricing) for the first half of 2023, its operating profit fell by 22.2% with operating profit organic growth declining 8.8%, and its net profit fell by 8.6%. Heineken shares were down more than $4 from its  previous closing price of $53.25, or more than 7.5%.

In a statement, Heineken CEO and Chairman of the Executive Board  Dolf van den Brink acknowledged the company’s first half financial performance was “below expectations,” adding, “This was primarily driven by challenging results in our most profitable APAC region. At the same time, we increased our investment in marketing and sales by €0.2 billion globally to drive future growth.”

He added that “In Europe, the region with the highest inflationary impact, volume declined in line with our expectations, yet demand in APAC was considerably softer than foreseen, due to an economic slowdown and our own underperformance in Vietnam,”” he explained in the statement.

Heineken reported an organic growth net revenue decline of 6.9% and an operating profit organic growth decline of 34.4% on the first half of the year. “In Vietnam, the economic slowdown, felt more acutely in our city strongholds, has continued into the second quarter, disproportionately affecting the premium beer segment,” the company noted in its report.

Given the results, Heineken updated its projected results for 2023 as a whole. Van den Brink claimed that the company’s operating profit would improve in the latter half of 2023, anticipating “a strong turnaround” in operating profit growth for the back half of the year and “stable to a mid single-digit” operating profit growth for the year in full.

Heineken’s first half-year woes coincide with difficulties facing the beer industry as a whole, with beer shipments down 4.7% year-over-year through May, according to Beer Insights.

It’s no surprise, then, that beer alternatives represent a significant part of the company’s strategy. Heineken championed itself as the leader in “beyond beer alcohol” outside the US, following its acquisition of  Distell in South Africa.

The company said was introducing “several innovative product concepts locally” in the category – both expanding core brands and introducing “new brand propositions," citing the launch of  “Tiger Soju, a soju-infused beer in Vietnam and Singapore” which it plans to expand to 5 markets across APAC by the end of 2023.