Heineken shares slump 8% after missing sales targets - what does it mean for investors?

Shares in Heineken slid by as much as 8% in early trading on Monday after the Dutch brewer posted lower-than-expected sales, which it blamed on wet weather.

The company reported a 12.5% rise in operating profit for the first six months of the year, but this was below analyst forecasts of 13.2%. The hope was that Heineken would have been able to benefit more from the start of Euros football tournament in Germany, which kicked off in June. 

The brewing firm, which also makes Birra Moretti, said beer volumes across Europe came under pressure from wet weather in June. At the same time, the alcohol company said sales of low and no-alcohol beers rose, with a 14% increase for its Heineken 0.0 brand.

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Dolf van den Brink, chairman and chief executive officer of Heineken, says: "We delivered a solid first half of the year. In the second half, we will materially step up investment in market and sales expenditures, with notable increases in key markets."

Aaron Chiekrie, equity analyst at Hargreaves Lansdown, says: "Heineken's first-half results were slightly weaker than markets were hoping for, despite the Euros drawing in plenty of thirsty supporters this summer.

"And, although the group gained share across most of its markets amongst increased competition, volumes were softer than expected. That meant price hikes had to do most of the heavy lifting in the first half."

What is the outlook for Heineken shares?

The company's share price has not only been under pressure today, it has also fallen consistently over the last year. 

Hargreaves Lansdown says the company's premium drinks offering should help it going foward but that its fortunes in the Asia Pacific market will be key.

The broker says: "The group owns high-end favourites such as Heineken, Birra Moretti, Beavertown and many more. The ongoing shift by consumers towards these more premium brands remains strong and should help to boost profitability going forward.

"[But] a sustained period of growth in the key Asia Pacific market is needed to help put the wind back in Heineken’s sails. Until more concrete signs of that begin to emerge, we don't see many catalysts for a material uplift in the valuation."

Carlsberg to buy soft drinks maker Britvic

Heineken's results come after UK soft drinks maker Britvic recently agreed to an improved £3.3bn takeover offer from the Danish brewer Carlsberg. Britvic, which is based in Hertfordshire, said it received a proposal from Carlsberg for the whole business on 11 June. 

In a statement issued to the London Stock Exchange at the beginning of July, Carlsberg said Britvic’s board would unanimously recommend the offer, which is made up of £12.90 in cash for each Britvic share and a special dividend payment of 25p for every share. The tie-up would establish a new enlarged group called Carlsberg Britvic.

The bid comes four years after Carlsberg significantly expanded in the UK through its £780 million joint venture deal with Marston's, creating the Carlsberg Marston's Brewing Company, which makes brands including Hobgoblin and Pedigree.

Britvic was founded in the UK in the 1930s. It sells its drinks in Britain, Ireland, Brazil and other international markets such as France, Middle East and Asia. 

In 2020, Britvic reached agreement with PepsiCo for a new and exclusive 20-year franchise bottling agreement for the production, distribution, marketing and sales of its carbonated soft drink brands in the UK - including Pepsi, 7UP and Mountain Dew.

Carlsberg said in a statement: “We believe that the potential transaction would enable the company to capture appealing long-term growth opportunities from Britvic's comprehensive portfolio of leading brands.”