UK sales decline hits Heineken profits

Heineken sold less beer and cider in the UK in the first half of the year as economic weakness and low consumer confidence hit sales.

The Dutch company said that volumes continued to be weak in the usually high-selling season of July and early August.

Heineken, which acquired some of its UK brands through the 2008 takeover of Scottish & Newcastle, said Strongbow volumes had dropped in the UK face of increased competition - Stella Artois launched its Cidre brand in April - and the scrapping of its high-alcohol content Strongbow Black.

The warning came as Heineken, which saw shares dive 13% on Amsterdam's Euronext index, recorded a 14% decline in net profits to €605m.

Looking ahead, the company warned volume growth in the US and Europe would be challenging due to the economic climate, high unemployment and low consumer confidence.

Heineken, which was named an official partner of the 2012 London Olympics, also said it expects higher input costs in the second half of the year compared with the first half.

Due to the perceived volume weakness, Heineken said it expects full year net profit to be broadly in line with the previous year.

But the brewer saw overall group beer volumes grow 4.2%, with growth in the Heineken brand led by sales in Asia Pacific and western Europe.

Jean-Francois van Boxmeer, Heineken chief executive, said: "The Heineken brand continued to outperform our overall portfolio, driven by strong marketing and innovation propositions.

"Continuing to invest in our key brands is helping us to win with consumers."

Heineken said it achieved €82m of cost savings through its cost management programme.

Heineken and Carlsberg bought Scotland & Newcastle Pub Company for £7.8bn (€8.9bn) in 2008, carving up its operations in a move that called time on more than 250 years of history as an independent brewer.

Heineken took on the UK operation of S&N, which employed around 3,000 staff at breweries in Manchester, Reading in Berkshire, Dunston near Newcastle, and Tadcaster in North Yorkshire as well as the Bulmers cider mill in Hereford.

The group shut the breweries in Reading and Dunston after acquiring them from S&N in a far-reaching cost-cutting drive.