Heineken is set to cut 8,000 jobs and seek €2bn of savings over two years as new chief executive Dolf van den Brink reshapes the world’s second-largest brewer in a pandemic that has dealt the drinks industry its worst blow in decades.
Van den Brink, who took charge last year, said on Wednesday, that he would slash almost 10 per cent of the Dutch brewer’s 85,000 staff as part of a programme to restore margins and push up productivity.
The plans follow Heineken swinging to a loss for 2020. The brewer of Amstel, Tiger and Moretti on Wednesday reported a net loss of €204m for the year, down from €2.2bn profit a year earlier, after the closures of pubs and bars in the pandemic pushed revenues down 17 per cent to €23.8bn.
Heineken is the first of the three big global brewers to announce sweeping job cuts since the pandemic began, though larger rival Anheuser-Busch InBev has suspended 550 temporary workers at its brewery in South Africa, which has repeatedly imposed alcohol bans during the outbreak.
“The impact of the pandemic on our business was amplified by our on-trade [pubs, bars and restaurants] and geographic exposure,” said van den Brink, adding that Heineken expects revenues, operating profits and margins below 2019 levels this year.
He said his strategic plan “is about future-proofing the company so we can deliver superior profitable growth . . . The world is changing, the industry is changing and we need to change accordingly.”
It will aim to bring Heineken closer to consumers, improve digital operations and “stretch beer and move beyond beer”. This will include further rollouts of no and low-alcohol beers such as the company’s successful Heineken 0.0 brand, and of hard seltzers, the newly fashionable flavoured alcoholic carbonated water drinks.
Heineken was relatively late to produce hard seltzers, but in 2020 launched the Pure Piraña and Amstel Ultra Seltzer brands. Heineken will also seek to reduce complexity by cutting product lines: in some European markets these will be slashed by as much as a third, said van den Brink, while inefficient local advertising spend will also be cut.
The job cuts include a reduction of about 20 per cent in personnel costs in Heineken’s head office by the end of the first quarter. The Amsterdam-based group will seek to return operating profit margins from 12.3 per cent during the past year to 17 per cent by 2023. The €2bn of gross savings by 2023 would enable the group to restore marketing spend, invest in technology and mitigate inflation and currency costs, Heineken said.
(Financial Times)