Heineken UK profits up despite declining beer market

Heineken has reported strong profit growth for its UK operations, despite a continuing downturn in the beer market.

The brewer said this was “primarily driven by higher pricing and significant cost savings”.

In its corporate results for the past financial year, unveiled today, the company added: “This was achieved despite the overall beer market declining 4%.

“Lengthy price negotiations with certain off-trade customers in the first half of the year adversely impacted volume and market share in the off-trade channel, part of which was recovered in the second half of the year.

“The closure of the breweries in Reading and Dunston, the divestment of Waverley TBS and the restructuring of S&N Pub Company increased efficiency and effectiveness.”

Volumes of Strongbow were down in a “slightly declining” cider market, Heineken said.

In 2010, Heineken’s international beer volume was 1.7% lower on an organic basis, with strong growth in Latin America, Africa and Asia partly offsetting lower volumes in Europe and the USA.

Stefan Orlowski, managing director of Heineken UK, said: “2010 has been a challenging year for many in the brewing and pub trade, but I am very pleased with the progress we have made within our business and indeed with our brands.

"The sale of Waverley TBS; and the restructure of the S&N Pub Company have brought increased focus on what we do best. This, together with improved efficiencies, has enabled us to deliver both profit growth and new marketing investment behind our main beer and cider brands; Heineken; Foster’s; John Smith’s; Kronenbourg 1664; Strongbow and Bulmers.

"We have also begun to realise the potential of the newer brands in our portfolio such as Amstel and Tiger."

Global net profit before one-offs rose by 37% to €1.45 billion.

Heineken UK took over the marketing and distribution of the Sol and Dos Equis brands in the UK in October 2010.