Heineken has confirmed job losses in the Republic will be part of a plan to cut 8,000 roles across the group and seek €2 billion in savings over two years.
The moves comes as new chief executive Dolf van den Brink seeks to reshape the world’s second-largest brewer amid a pandemic that has dealt the drinks industry its worst blow in decades.
Mr van den Brink, who took charge in April last year, said on Wednesday he would cut almost 10 per cent of the Dutch brewer’s 85,000 staff as part of a programme to restore margins and increase productivity.
The company, which employs about 400 people in the Republic, confirmed redundancies here but did not disclose how many jobs will be lost.
"Like many companies, the Covid pandemic has had a material impact on Heineken Ireland, in particular given the prolonged closure of the hospitality sector in 2020 and into 2021. In the context of these challenges, we have engaged in a meaningful dialogue with staff representatives on headcount reductions," a spokeswoman said.
“This will ensure that we are in a position to manage the challenges and opportunities ahead as we continue to focus on supporting our employees, consumers and customers,” she added.
The plans follow Heineken swinging to a loss for 2020. The brewer of Amstel, Tiger and Moretti reported a net loss of €204 million for the year, down from €2.2 billion profit a year earlier, after the closures of pubs and bars in the pandemic pushed revenues down 17 per cent to €23.8 billion.
“The impact of the pandemic on our business was amplified by our on-trade [pubs, bars and restaurants] and geographic exposure,” said Mr van den Brink.
“We took diligent cost mitigation actions balanced with continued investment behind our growth platforms. We gained share in most of our key operations, a testimony to our ability to adapt and stay close to our customers and consumers in these turbulent times.”
Closer to consumers
He said his strategic plan would aim to bring Heineken closer to consumers, improve its digital operations and “stretch beer and move beyond beer”, such as with no and low-alcohol beers, including a further rollout of the company’s successful Heineken 0.0 brand, as well as hard seltzers, the company’s alcoholic, flavoured, low-calorie carbonated water.
The company will seek to return operating profit margins from 12.3 per cent during the past year to 17 per cent by 2023, while improving its “speed, agility and external orientation”.
The job cuts include a reduction of about 20 per cent in personnel costs in Heineken’s head office, with lay-offs to be completed by the end of the first quarter.
The €2 billion of savings by 2023 would enable the group to restore its marketing spend, invest in technology and mitigate inflation and currency costs, it said.
Heineken's beer volumes sold shrank 8.1 per cent, measured on an organic basis, in 2020 as socialising was curbed in the pandemic. The company said fresh restrictions in the fourth quarter had hurt its business in Europe, where fewer than 30 per cent of bars and restaurants were operating by the end of January.
It said it expected “market conditions to gradually improve in the second part of 2021 and to continue improving into 2022, with significant differences across markets and channels. In particular, we see a slow recovery of the on-trade channel in Europe”.
The company has proposed an annual dividend of 70 cents a share for 2020, down 58 per cent from a year earlier. – The Financial Times Limited
