While the US beer market has held up well in Corona 2020, Europeans have been hit hard. Hospitality is more important in Europe than in the United States.
Dolph van den Brink lay awake at night from his employees and customers, especially restaurant customers, as Heineken CEO revealed in his latest annual report: “Our employees are hurting, our customers are hurting, the world is hurting. Wake me up at night.” The Dutch are leading the second largest brewery in the world since June of last year. Behind the Belgian Jean-Francois Van Boxmeer. Van den Brink took the helm in a “year of turbulence, change and turbulent times”.
Dolph van den Brink lay awake at night from his employees and customers, especially restaurant customers, as Heineken CEO revealed in his latest annual report: “Our employees are hurting, our customers are hurting, the world is hurting. Wake me up at night.” The Dutch are leading the second largest brewery in the world since June of last year. Behind the Belgian Jean-Francois Van Boxmeer. Van den Brink took the helm in a “year of turbulence, change and turbulent times”. Heineken has been particularly affected amid the gloom in Central and Western Europe as a result of the Coronavirus crisis and lockdowns in the hospitality industry. The group is the market leader in Europe. Volumes and sales are down sharply. Operating profit decreased by no less than 69% to 447 million euros. The hospitality industry is of great importance to Heineken. In the UK, for example, the group has its own network of 2,500 bars. Volumes in the hospitality industry fell by more than 40 percent, and even more than 60 percent in the fourth quarter. Although volumes in the retail sector increased by more than a tenth, this could not offset the decline in internal trade. The European Beer Brewing Association in Europe does not have exact figures for 2020, but other breweries have also suffered. The catering sector represents a third of the volumes, while the restaurant sector accounts for two thirds of the volumes. However, breweries account for two-thirds of their sales in the catering industry, because retail chains have more purchasing power than catering companies. “We expect volumes to decrease by roughly a fifth in 2020,” said Simon Spiel, a spokesperson for Brewers Europe. “The higher sales in stores did not compensate for the loss in trade. Moreover, there were no major events. The ban on gatherings with family and friends also contributed to the decline.” So European breweries are left with a big hangover, the Corona crisis. Heineken even recorded a net loss of € 204 million last year. This is mainly due to the costs associated with the pandemic: 1.64 billion euros, worldwide. Molson Coors lost more than $ 1.6 billion in Europe alone. The North American brewery is mainly active in Central Europe and the United Kingdom. This mainly concerned the formerly owned breweries of AB InBev. In England, for example, Molson Coors owns Carling, the market leader in beer, and Molson Coors also relies heavily on the trade. In 2019, the hotel and restaurant sector accounted for 40 percent of sales volume and 50 to 55 percent of group sales. In 2020, there was a volume reduction of 17 percent and a loss of revenue of 28 percent. The huge loss is mainly due to a vulnerability loss of $ 1.484 billion as a result of the pandemic. Molson Coors is not entirely sure about the duration and severity of the pandemic. Covid-19 will have long-lasting effects on the European fermentation world. Moreover, the recovery in the hospitality industry is expected to be slow. 2021 will also be a difficult year, but there are still optimists in the European brewing world. The strikes were less severe in the Dane Carlsberg. Beer volumes decreased by less than 5 percent to 45 million hectoliters. This is significant for a group as the catering industry provided a quarter of volumes in 2019. It decreased 13 percent of turnover, 17 percent of operating profit. In so doing, the Danish group surpassed Heineken and Molson Coors. Cees’ t Hart, Carlsberg’s CEO since 2014, was very optimistic in an interview with the Financial Times on February 8th. The Dutch are preparing to repeat the tumultuous 1920s, or at least the beautiful aspects of the 1920s. “After World War I and the Spanish flu, the nightlife experienced incredible growth, with jazz clubs and dance parties. Our business will continue to enjoy the good times after COVID-19.” Summer of 2021 will be normal summer again. A hospitality industry that has survived the crisis will do very well. “We will appreciate the freedom, going to the coffee shop and meeting the friends. It won’t be for a few weeks or a month. No, it will take longer.” How do you score AB InBev? The global market leader will announce its annual numbers on Thursday, February 25th. Admittedly, Europe is less important to AB InBev. In the first half of 2020, the group generated approximately 9 percent of its turnover and profits.