Heineken cuts 8,000 jobs while it ‘goes beyond beer’

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The Moretti and Amstel brewer said in a profit statement on Wednesday that it will cut nearly 10% of its global workforce and pursue savings of € 2 billion ($ 2.4 billion) in two years as part of an overhaul that is intended to improve efficiency.

The restructuring will cost approximately € 420 million ($ 509 million) and will reduce headquarters staff costs 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. Sales plunged 16.7% to € 23.8 billion ($ 28.9 billion) due to the closures 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 was enhanced by our hospitality industry [pubs, bars and restaurants] and geographic exposure, ”said CEO Dolf van den Brink, who took the lead in a statement last June.

Heineken estimates that at the end of January less than 30% of the bars and restaurants were active in Europe, the largest market. Many countries in the region reintroduced lockdowns in December and have since tightened restrictions. Heineken said it has written off € 191 million ($ 231.6 million) in relation to several individual pubs in the UK.

With more alcohol consumption at home, Heineken’s direct-to-consumer platforms, including Beerwulf, Six2Go and Drinkies, tripled the number of orders last year. Online sales of its home reception systems grew halfway through double digits.

Still, beer sales fell 8.1% in volume in 2020. Heineken, however, sold more non-alcoholic drinks, driven by Heineken 0.0 and Maltina in Nigeria. The company said the segment has “great growth potential” and plans to make non-alcoholic beer widely available.

Budget beer and spiked seltzer dominated during the pandemic

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

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

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

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