Heineken: No U.S. Price Increase

Reports strong results for Femsa.

Heineken NV doesn’t plan to raise prices in the U.S. in 2008 following last year’s increase of 3.5 percent.

That’s according to remarks by Heineken chief financial officer Rene Hooft Graafland on Wednesday while discussing the company’s 2007 performance.

“Seeing that the domestic brands are not following that, we have not planned a price increase in the USA for 2008," Graafland said.

In its earnings release, the company said more than 70 percent of import growth in 2007 was driven by Heineken USA – which includes the Femsa brands from Mexico.

From the release:

Heineken USA grew volume of its combined portfolio of Dutch and Mexican import brands by 6% despite a substantial price increase of 3.5% at the start of 2007 and lower discounts which together translated into an average consumer price increase of around 5-6% in the key trade channels.

Beer sales volume excluding the Femsa brands grew 3.0% at 7.7 million hectolitres whilst depletions (sales by distributors to retailers) increased 2.3%. Sales volume for the Heineken franchise totalled 6.8 million
hectolitres. Heineken Lager and Heineken Premium Light grew sales volume 2.7% and 20% respectively and depletions by 1% and 27% respectively. Sales of both beers in DraughtKeg developed well across the USA and marketing investment in both brands were increased. ...

Sales and depletions volume growth of the Mexican brands was 14%, significantly exceeding segment growth. This excellent performance was driven by the rapid growth of the Dos Equis brand (+17%) and the Tecate franchise (+13.6%), the latter in part driven by the introduction of Tecate Light in selective regions of the USA.

The Houston Chronicle story can be seen here.

The earnings release can be seen here.