Cider boost gives Heineken the edge in Ireland

Heineken’s expansion into the cider market helped boost its Irish revenues and market share last year.

Cider boost gives Heineken the edge in Ireland

Heineken Ireland grew its share of the total long alcohol drinks (LAD) market by 0.8%, with like-for-like revenues growing by 4%.

This was helped by the introduction of Heineken Light boosting sales of the group’s eponymous lager label, and Coors Light maintaining its position as the number one bottled beer in the Irish on-trade sector. Furthermore, the group’s Orchard Thieves cider brand — unveiled in April of last year — is now the second biggest cider brand in the country, behind C&C’s Bulmers label, with a 10.3% slice of the category.

“2016 saw growth for Heineken Ireland across both the on-trade and off-trade channels,” Heineken Ireland managing director Maggie Timoney said yesterday. “Our share of the long alcohol drinks market grew by 0.8%, driven by growth in Heineken and a strong innovation performance led by Orchard Thieves,” she added.

Goodbody Stockbrokers’ Patrick Higgins said Orchard Thieves’ impact suggests the Irish cider market remains competitive.

“While we anticipate Bulmers volumes to [have grown by] 6% in 2016, we expect the brand will have continued to lose share in the cider market,” he said.

Strong growth in Asia and Mexico led to an increase in Heineken’s overall global beer sales in 2016 as the world’s second-largest brewer yesterday said it edged above earnings expectations and forecast even better margins this year.

The Dutch brewer sold 3% more beer last year, with the sharpest increase in Asia. Sales also grew in France, Italy, Poland, Spain and Mexico, but fell in Nigeria, one of the group’s top four markets, as well as in the Democratic Republic of Congo and in Russia.

Chief executive Jean-Francois van Boxmeer said margin expansion should be in line with the group’s target of 40 basis points, excluding major unforeseen economic and political developments and the impact of recent acquisitions in Brazil and Britain.

Heineken’s 2016 operating profit excluding one-offs rose by 9.9% on a like-for- like basis to €3.54bn, with total revenue up 1.4% at €20.8bn.

“It’s a good set of numbers ... and margin expansion this year. You couldn’t really ask for better than that,” said Trevor Stirling, beverage analyst at Bernstein Research.

Heineken said it assumed a similar negative impact from currencies as last year, including a €1.1bn hit on revenue. Chief financial officer Laurence Debroux said, for example, another devaluation of the Nigerian naira was likely later this year.

One further uncertainty would be the impact on Mexico, Heineken’s largest market, of US President Donald Trump, who has talked about imposing duties on imports from its southern neighbour.

Mr. van Boxmeer said for the time being it was “not yet legislation”.

“How that all will pan out we don’t know. We are prepared for that. We’re going to surf the wave as it comes, but I think specifically for the tax situation, the NAFTA situation, this is a lot of speculation,” he told Reuters.

Heineken shares rose by up to 4% yesterday, making them the strongest performers in the FTSEurofirst 300 index of leading European stocks.

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