Global brewers’ light relief in third quarter not enough to stop cost cutting

Three of the world’s largest brewers had some light relief just over halfway through the year as they recorded sales figures far better than expected.

Close up of bartender pouring draft beer in glass

Budweiser owner AB InBev, Danish brewer Carlsberg and Netherlands-based Heineken all reported revenues above their predictions earlier in the year, mitigating some of the damage global lockdowns have had on profit margins.

Heineken’s organic volume sales fell only 1.8% in the third quarter, but the company is still planning to slash jobs at its head office in a bid to cut costs and return to profitable growth as the Covid-19 pandemic continues to damage the hospitality sector.

Despite some light relief, widespread on-trade closures have hit the brewer harder than most. Net profit for the first nine months was €396 million, down more than 75% on the €1,667 million that had been recorded by this time last year.

The brewer confirmed it will cut staff costs by 20% in its head and regional offices, including the UK.

“The situation remains highly volatile and uncertain,” Dolf van den Brink, Heineken’s chief executive, said in a statement.

“As we navigate the crisis, we are deliberately shaping how to adapt and emerge stronger from the pandemic.”

AB InBev, meanwhile, has announced it will scrap its interim dividend because of the impact of Covid-19. The brewer recorded 4% revenue growth in the third quarter, far better than the 4.2% drop predicted by analysts.

The group attributed the revenue rise to a slight increase in volume sales, driven by its decision to launch new products such as Bud Light Seltzer this year to recruit new consumers to the portfolio. Normalised profit for the quarter was US$1.6bn, down 34.5% from the same period in 2019.

Carlsberg has raised its full-year outlook after posting its own better than expected results on Wednesday (28 October). Growth most most evident in the group’s craft and low/no alcohol brands, which experienced three months of revenue growth of 12% and 29% respectively.

Carlsberg posted overall revenues of 17.3bn DKK (£2.1bn) in the period, down 6.8% in the previous year.

In terms of regional markets, eastern Europe saw the strongest recovery, with organic revenue up 6.4% and volumes up 12.6%.