Hard Liquor

Image source: vengerof - shutterstock

What's going on?

Heineken, the worlds second-biggest brewer, reported booming half-year results on Monday.

What does this mean?

The worlds boozehounds are doing what they do best when confronted with a cost-of-living crisis: flocking to bars across Europe and America to pretend its not happening. Heineken has sold more beers in the last six months than during the same time in the pre-pandemic glory days of 2019, with premium beers like Heineken Silver accounting for nearly half of the companys organic growth (tweet this). This, even though a night out is costing drinkers more than just a bad hangover: the average price of a pint of Heineken is now 9% higher than it was this time last year. Put it all together, then, and Heinekens revenue and profit came in ahead of analysts expectations.

Why should I care?

The bigger picture: Heineken walks a tightrope.
Heineken admitted it would be hiking prices again in the near future, which it recognizes is a ballsy move: just because it hasnt put drinkers off yet doesnt mean it wont. It also said it might be forced to scale back production going forward, with European gas prices now 10 times higher than the last decades average. Those two factors might be why Heineken gave a cautious outlook, and cut its operating profit target for 2023 too.

Zooming out: Pass Germany the liquor.
Heineken is right to be wary about demand going forward: data out on Monday showed that retail sales in Germany Europes biggest beer market fell by 8.8% in June from the same time last year. Thats the biggest annual drop since records began in 1994. Consider too that consumer confidence is at its lowest since the start of the pandemic and that the German economy didnt grow at all last quarter, and its no surprise that economists think the country is bound to slip into a recession.

Originally posted as part of the Finimize daily email.

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