JOHANNESBURG â Amsterdam-headquartered Heineken has always been regarded as producing a slightly more expensive beer and one whose market is tailored more towards the developed world. But that’s starting to change as the Dutch brewer is pushing into more emerging market territories and competing head-on with giant AB InBev. Of course, AB InBev in many ways is still re-establishing itself following the mega-acquisition of SABMiller. It will be interesting then to see how AB InBev responds to the 154-year-old Heineken’s freshest challenge. – Gareth van Zyl
By Thomas Buckley
(Bloomberg) –Â Heineken NV is throwing down a gauntlet to Anheuser-Busch InBev NV in some of the emerging markets the Budweiser maker has long dominated.
The Dutch brewerâs shares rose as much as 5.1% early Wednesday in Amsterdam, the most in more than three years, after it reported full-year earnings that beat analystsâ estimates. Shipments of Heinekenâs flagship brand rose 7.7%, the fastest pace in more than a decade.
The worldâs second-largest brewer is challenging the market leader with acquisitions in China and Latin America, giving it access to new distribution networks that are lifting volume. Heineken says itâs gaining ground in countries that have been dominated by AB InBev, which is grappling with a mountain of debt from its takeover of SABMiller Plc.
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âWeâve been reinforcing our position in new markets – for example Mexico and Brazil – where weâve made strategic acquisitions to deploy the Heineken brand through larger, better and more efficient distribution systems,â Chief Executive Officer Jean-Francois Van Boxmeer said in a phone interview.
Heineken became Brazilâs second-biggest brewer in 2017 when it bought Kirin Holdings Co.âs business there for about $600m, giving it control of a roster of brands including Schincariol, Devassa and Eisenbahn. Last year the Amsterdam-based company bought a $3.1bn stake in China Resources Beer Holdings Co., the countryâs top brewer, in a bid to challenge AB InBevâs position as the largest foreign beermaker in the worldâs biggest market.
âSweet spotâ
âThey are in a sweet spot of growth given attractive footprint and market-share momentum,â Jefferies analysts led by Ed Mundy wrote in a note to investors.
Heineken reported that profit growth was partly due to running its business more efficiently as commodity expenses rise. Higher input costs have hampered consumer-goods companies reporting this quarter, including Unilever and Carlsberg A/S.
The Dutch brewerâs flagship label was also lifted by the rise of low- and no-alcohol beers, including Heineken 0.0.
In October, AB InBev said that growing demand for the companyâs brands in Europe and Africa was offset by declines in Brazil and Argentina due to macroeconomic setbacks. The company is set to report full-year results at the end of the month.
As Heineken beefs up its China presence, AB InBev is considering an initial public offering of its Asian operations in a deal that could raise more than $5bn, according to people with knowledge of the matter.
