A Tale of Two Beer Companies
Varied Responses to Changing Customer Habits
The pandemic has upended consumers’ drinking habits. Bars and restaurants have been shuttered and events have been canceled. Meanwhile, online alcohol sales and retail alcohol sales have climbed.
These trends have impacted beer brewers in different ways. Amidst so much uncertainty, companies have taken a variety of approaches to staying afloat during COVID-19. Recent data from Heineken (HEINY) and Carlsberg (CABGY) show the outcomes of different responses to pandemic conditions.
Heineken Makes Plans to Restructure
Heineken, the second-largest beer brewer in the world, recently reported that its sales fell by 8% during the three months ending in December 2020 compared to the same period a year prior. Though sales for the company beat expectations over the summer, they plummeted as the weather turned colder and new restrictions were put in place in important markets like the UK.
The Dutch company says it will likely take until 2023 for its operating margins to return to pre-pandemic levels. In order to survive this period of gradual recovery, Heineken is currently in the process of redesigning its structure in order to reduce overhead costs by about $2.4 billion. This plan will include cutting about 9% of its workforce—roughly 8,000 jobs.
Carlsberg’s Early Cuts Help Lift Margins
Carlsberg (CABGY), which is the world’s third-largest beer brewer, has taken a slightly different approach to dealing with pandemic conditions. Though it also saw a drop in sales, the Denmark-based company was able to increase its operating margins in 2020 compared to 2019 by restructuring early. China is Carlsberg’s largest market. After the company watched COVID-19 impact its sales there in early 2020, it quickly slashed its overhead costs.
Anheuser-Busch InBev (BUD), the largest beer brewer in the world, will share its results later this month, giving another view at how the beer industry has weathered the pandemic and what the coming year could bring for the sector.
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