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

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The Moretti and Amstel brewer said in a earnings release on Wednesday that it would cut nearly 10% of its global workforce and seek savings of 2 billion euros ($ 2.4 billion) over two years in part of an overhaul to improve efficiency.

The restructuring will cost around 420 million euros ($ 509 million) and reduce headquarters staff costs by 20%. Regional offices and local operations will also be affected.

Heineken (HEINY) posted a net loss of 204 million euros ($ 247.6 million) in 2020, compared to a profit of 2.2 billion euros ($ 2.7 billion) the year before. Revenue fell 16.7% to 23.8 billion euros ($ 28.9 billion) due to restaurant and bar closures in key markets, as well as other restrictions on social gatherings and alcohol sales.

“The impact of the pandemic on our activities has been amplified by our [pubs, bars and restaurants] and geographic exposure, ”CEO Dolf van den Brink, who took control in June of last year, said in a statement.

Heineken estimates that at the end of January, less than 30% of bars and restaurants were functioning in Europe, which is its largest market. Many countries in the region reimposed lockdowns in December and have since tightened restrictions. Heineken said it wrote off 191 million euros ($ 231.6 million) related to various UK pubs.

With increased consumption of alcohol at home, Heineken’s direct-to-consumer platforms, including Beerwulf, Six2Go and Drinkies, tripled orders last year. Online sales of its home raffle systems increased in the middle double digits.

However, beer sales by volume fell 8.1% in 2020. Heineken, however, sold more non-alcoholic beverages, spurred on by Heineken 0.0 and Maltina in Nigeria. The company said the segment has “a lot of growth potential” and plans to make non-alcoholic beer available everywhere.

Cheap beer and spiked seltzer dominated during the pandemic

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

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

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

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