Heineken Boosted By No-Alcohol Beer

The Dutch brewer’s profit increase in the first half of 2017 was fueled by double-digit sales growth of no- and low- alcohol drinks in Europe, while its namesake brand also performed well.

Heineken joins the world’s largest brewer, Anheuser-Busch InBev BUD -1.35% NV, in reporting results that beat estimates, as it benefits from a rebounding European beer market. This comes after years of stagnation in the region, with consumers turning away from alcoholic drinks to healthier options.

“It was a really good performance of Europe, with the growth coming from a number of countries,” Chief Financial Officer Laurence Debroux said. “It was pretty balanced.”

The world’s second-largest brewer by sales said profit growth was strongest in Europe, as beer volumes rose in France, Italy, Spain and Portugal, helped by warmer weather.

In May, Heineken launched an alcohol-free version of its flagship lager and results “already look promising”, including in the U.K. and France, the company said. Brewers earn fatter profit margins from nonalcoholic beer because of the absence of excise tax and the fact that these beers often sell at a premium.

Although Europe was the standout performer, the Dutch brewer said beer volumes, revenue and profits grew on a like-for-like basis in all four of its regions, with turnarounds in Africa and the Americas after a slow start to the year.

Net profit rose 49% to €871 million ($1.02 billion) on the comparable period in 2016 when the company booked an impairment charge on its business in the Democratic Republic of Congo. Revenue rose 5.7 % on an organic basis to €10.48 billion.

Consolidated beer volumes rose 2.6% organically in the period, beating analyst expectations of a 1.7% rise.

Heineken ranks as the world’s No. 2 brewer by sales, a long way behind AB InBev, who spent more than $100 billion on a takeover of SABMiller in 2016. The company said its full-year expectations, including further organic revenue and profit growth, remain unchanged.

Credit: Sun