Heineken Sales Drops in Africa
Heineken beer, one of the brands from the stable of Nigerian Breweries has suffered in developing markets such as Nigeria, Southeast Asia, Mexico and the Democratic Republic of Congo.
Last year, sales were broadly flat in Western Europe while the only real weakness was seen in Eastern Europe.
Trouble started in 2013 when SAB Miller introduced cassava beer and increasingly penetrated Nigeria and some other African countries.
Heineken, according to Reuters, complained that its quarterly sales volumes have dropped in Nigeria. The brewer had forecasted that the rate of growth of volumes and margins would slow this year after solid expansion in 2014.
It noted that revenue would grow in 2015, but with slower expansion of beer sales than in 2014, partly because of strong increases in the first half of last year.
The beer is the top seller in Europe with brands such as Heineken and Amstel profiting from increased beer sales in Africa, America and Asia. Consolidated operating profit before one-off rose 6.4 per cent to $3.54 billion, just above the average of 3.11 billion euros in a Reuters poll of nine brokers and banks.
The company had forecast that its 2014 operating margin, excluding one-offs, would rise by over 40 basis points, its medium-term annual target.
In fact, it grew by 90 basis points. For 2015, it said that it would take a 25 basis point hit from the sale of its Mexican packaging business; meaning margin expansion would be below its 40-point target.
However, in 2012 and 2013, SAB invested $400 million, 25percent of total capital expenditure in Africa excluding South Africa, even though the region contributes only 12percent to earnings.
The slump in oil prices, the consequent devaluation of the naira and the downturn in the capital market have seen Africa’s richest man, Alhaji Aliko Dangote, lose half of his fortune, according to the latest ranking by Bloomberg Billionaires.
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