"Beer to become more expensive"

20th February 2008, Comments 0 comments

The Dutch brewer is boosting prices by 3 to 4 percent this year.

20 February 2008

AMSTERDAM – Beer drinkers in Europe will have to pay more for Heineken. The Dutch brewer is boosting prices by 3 to 4 percent this year.

Heineken says this is necessary because of rising costs for raw materials (malt) and packaging (aluminium for tins). The company expects prices for raw materials and packaging to rise by 15 percent this year.

Heineken, the fourth largest beer brewer in the world in terms of turnover, announced this on Wednesday at the presentation of its annual figures.

How consumers will respond to the price increase is the big unknown for the company. CEO Jean-François van Boxmeer did not want to say whether Heineken would lower prices if consumers started drinking less of the company's beers (which include Amstel).

The price increase will not be effected in the US. The brewery, which puts Heineken on the market there as a premium beer, still wants to increase market share. "We have to be cautious about raising the price there," said financial director René Graaf Hooftland.

Partly because of uncertainty about the European consumer's response, the company does not want to issue a concrete profit prognosis for this year.

The company saw net profit before incidental items rise by 23 percent to EUR 1.12 billion. The company had expected growth in profits of between 20 and 25 percent. Turnover grew 6 percent to EUR 12.56 billion, less than analysts had predicted.

The operational profit (EBIT) came to EUR 1.53 billion last year, just over 16 percent less than a year earlier. Heineken attributed this to the millions in fines it had to pay the European Commission because of price fixing violations.

The company also expects positive net profit growth for 2008. The market responded with disappointment to the lack of a concrete prognosis. The share price fell on the Amsterdam stock market, losing almost 6 percent in morning trading.

Heineken saw a drop in sales volume in Western Europe, its largest market, last year compared to 2006. This was partly due to poor weather in the second half of the year. Heineken's business went well in the emerging markets of Africa and Asia, where it sold 18 and 11 percent more beer, respectively.

Heineken shareholders can expect to see a dividend of EUR 0.70 per share.

[Copyright Expatica News + ANP 2008]

Subject: Dutch news

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