Heineken is cutting 8,000 jobs as it goes “beyond beer”

Heineken is cutting 8,000 jobs as it goes “beyond beer”

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Moretti and Amstel’s brewery said in a earnings report on Wednesday that it will cut nearly 10% of its global workforce and seek savings of € 2 billion ($ 2.4 billion) in two years as part of a renovation designed to improve efficiency.

The restructuring will cost around € 420 million ($ 509 million) and will reduce costs with head office staff by 20%. Regional offices and local operations will also be affected.

Heineken (HEINY) reported a net loss of € 204 million ($ 247.6 million) in 2020, compared to a profit of € 2.2 billion ($ 2.7 billion) the previous year. Revenue fell 16.7% to € 23.8 billion (US $ 28.9 billion) amid closings of restaurants and bars in major markets, as well as other restrictions on social gatherings and alcohol sales.

“The impact of the pandemic on our business has been magnified by our trade [pubs, bars and restaurants] and geographic exposure, “said CEO Dolf van den Brink, who took office in June last year.

Heineken estimates that at the end of January, less than 30% of the bars and restaurants operated in Europe, which is its largest market. Many countries in the region re-imposed the blockades in December and have tightened restrictions since then. Heineken said it canceled € 191 million ($ 231.6 million) for several individual UK pubs.

With more alcohol consumption taking place at home, Heineken’s consumer-facing platforms, including Beerwulf, Six2Go and Drinkies, tripled orders last year. Online sales of its home systems grew by double digits.

Still, volume beer sales fell 8.1% in 2020. Heineken sold more non-alcoholic beverages, however, driven by Heineken 0.0 and Maltina in Nigeria. The company said that the segment has “a lot of growth potential” and that it intends to make non-alcoholic beer available everywhere.

Cheap beer and enriched seltzer dominated during the pandemic

The group is also investing in sparkling water with gas and alcohol. Heineken launched products in this category in Mexico and New Zealand last year, with more launches in 2021. In the United States, it partnered with the beverage brand Arizona to launch the Arizona Sunrise Hard Seltzer.

Van den Brink said that Heineken’s strategic review would leverage existing strengths and new opportunities to “chart our next growth chapter”.

“We aspire to offer superior and profitable growth in a rapidly changing world,” he added.

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