COVID-19 Impact on Heineken, H2 2020 Update

Summary

COVID-19 Impact on Heineken, H2 2020 Update reports key findings as of 1st September, 2020 based on market analysis and brand diversification by industry and geography.

Sales of alcoholic and non-alcoholic beverages in H1 2020 were impacted by COVID-19. Although the outlook for second half of the year could be better, Heineken’s strong brand portfolio and global reach will possibly help it rebound in the near future. The company is rationalizing its product portfolio up to 30%  in some markets to cope up with the decline in output as its breweries are operating at reduced capacity with social distancing measures in place as well as slowdown in customer demand. Retail channels are focusing on well-known brands and larger pack sizes as customers have reduced their beer purchases owing to COVID-19. The company’s decision to continue to pay its suppliers and not lay off employees will ensure high morale, which will benefit the brand once the market recovers. Also, the company’s strong innovation development ability should contribute to its recovery.

Scope

– On-trade channels operating at reduced capacity, and the spread of virus in key regions for the company such as Latin America and Africa, will hurt the company’s prospects of recovery.
– Beer and cider, and energy drinks and sports drinks, are projected to be the most affected categories in 2020.
– A decline in on-trade channel sales will hurt the company’s volumes in 2020.
– Heineken’s Latin American volumes are at high risk as the region grapples with rising COVID-19 cases.
– Carbonates category volumes will contract across regions, with Africa being most heavily hit.

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