Manuel Román, director of sales for the Heineken group in Spain, expected a better summer. “Last year there was a harsh lockdown and it was all very shocking, but there were no restrictions on hospitality. This year the fifth wave started in mid-July and some countries restricted mobility. The British are important because they drink a lot of beer. We have not recovered the level of 2019, we will stay in a 10% drop “.
Heineken and the unions reach a preliminary agreement in the ERE to pre-retire 228 workers
The worst of the pandemic is over for brewers, which for months lost millions of sales in the hospitality channel and did not compensate with consumption at home. It’s a fact: people don’t drink as much beer at home as they do on the street. But being a sector so dependent on tourism, until it returns completely they will not be 100%. In conversation with elDiario.es, Román explains how consumption has evolved and what they expect in the face of recovery.
Heineken – owner of Cruzcampo, Amstel, El Águila, Desperados, Guiness and Paulaner – returned profits in the first half of 2021: 1,034 million euros globally, compared to 290 million losses in the same period of 2020. The company announced a cut of 8,000 jobs worldwide due to the drop in sales, which in Spain translated into an ERE of 228 people. “They were not dramatic exits, but agreed exits of people of a certain age,” he points out. The group has agreed to early retirements with the unions and hopes to return to the “normal hiring rate” next year. Before the ERE, the Spanish workforce exceeded 1,600 people.
Now, the sector faces that old specter called inflation. It affects you doubly: by the rise in raw materials, which will affect the price of beer, and by its impact on consumption. We have already seen the effects of the current increases in the price of raw materials in other areas. The farmers pressured the supermarkets to raise three cents a liter of milk and thus be able to cover costs. They did it. The increase in the cost of construction materials is reflected in the prices of the renovations and, according to market voices, if this continues, it will result in new housing.
“Inflation worries us. The rise in raw materials affects supplies: our suppliers use electricity, which has risen, and transport has multiplied by ten,” he says. How much will the bottles and canes go up? The CPI has soared in Spain to 3.3%, its highest in almost a decade, due to the rise in electricity prices, although alcoholic beverages have not yet registered increases.
“Right now we are seeing internally how to handle it taking into account the projections for next year,” says the sales director. “Every year there is a rate increase closely linked to the CPI. We will see how it looks at the end of the year, how it affects our raw materials and, based on that, what increase we propose. That is the price that you see on the lines of the supermarket, because the bars adjust the price according to their particular decisions. ”
That for one thing. On the other, Román assumes that inflation will affect consumption. “The shopping basket will go up next year. The price of electricity will rise. In theory, the purchasing power of Spanish people will be reduced and this may have a contraction effect on demand in hospitality. Why go out to dinner or drink Canes is … an accessible luxury. If you raise the basket, people will focus on basic goods and services that they cannot do without, not on that, “he says.
‘Cool’ beers and sodas
Heineken, like other major brands, has long jumped on the craft beer bandwagon. In 2018, it acquired 51% of Madrid’s La Cibeles and shortly before the pandemic began, it launched a new brand, El Águila, which, without being a pure artisan, does have “a component craft “. With this launch, Heineken recovered a brand that it had eliminated from the market in 1984, when it bought the company El Águila (a brewery born in Madrid in 1900) and converted it into Águila Amstel, first, and then into Amstel.
“At that time the trend was global brands. Today that has changed: brands from here, kilometer 0 and local product are taken. We saw that it was the right time to remove that brand from the fridge with reminiscences of the past, both in his recipe as in his image “, adds the manager, without hiding that the work of the small brewers has indirectly benefited them because it has generated” culture “.
Now a new competitor is coming to the big brewers. Is named hard seltzer, which in Spanish would be “hard soda” or “hard sparkling water”. It is an American fashion for sell alcohol as if it were a soda, which raises doubts regarding its labeling because it is sometimes attributed healthy properties (and no alcoholic beverage is).
“It is water flavored with gas and with a spark of alcohol. It is what today’s consumer is looking for: few carbohydrates, few calories and little alcohol,” says Roman. Coca-Cola has launched an alcoholic beverage (Topo Chico) under this category for the first time. Heineken has also come up with Pura Piraña, very present in the Mexican market and in the process of expanding in Spain. “We have made a small, tactical launch in small neighborhood stores. We are testing to see how it goes. It may have its niche, I do not know. But at the moment it is not breaking.”