Top story

Sales and profits at Heineken have grown in the high double digits as consumers drank more beer despite prices rising.

Net revenues jumped 24.3% to €16.4bn in the first half, driven by continued demand for premium drinks, with its organic beer volumes up 7.6% and premium volumes 10.2% higher.

The Heineken brand grew volumes by 13.8% in the half, making double-digit gains in more than 50 markets worldwide. It put Heineken 32.9% ahead of 2019 volumes and beer volume overal 4.2% ahead of pre-pandemic levels.

Heineken benefitted from an ongoing recovery in the on-trade across Europe and Asia-Pacific following the end of Covid restrictions.

However, higher prices also played a part in the larger sales, with Heineken reporting a 15.3% increase in “underlying price-mix”, which it said was driven by pricing across all markets to cover input cost inflation.

Operating profits at the Dutch group increased 24.6% to €2.2bn in the half, while organic net profits rose 40.2% to €1.3bn.

CEO Dolf van den Brink said he was “encouraged” by the results.

“We benefitted from the recovery in Asia Pacific and the on-trade in Europe as consumers returned to the bars, with demand resilient until now despite mounting inflationary pressures on consumers’ disposable income,” he added.

“We grew ahead of the industry in more than half of our markets and the Heineken® brand again showed strong momentum, boosted by stepped up brand support. Our actions on pricing, revenue management and productivity offset significant inflationary pressures in our cost base.”

However, Heineken warned there was an increasing risk that mounting pressure on consumer purchasing power would affect beer consumption going forward , with “significant” inflationary pressures on the cost base to continue and impact the second half of 2022 and into 2023.

“The recent softening in some commodities is being offset by the unprecedented price levels and availability risk of natural gas, most notably affecting Europe, our biggest region”, the group added.

“Our pricing and revenue management actions have effectively offset these inflationary pressures so far in absolute terms, and we remain committed to continuing to do so.”

Shares in Heineken opened 2.7% down this morning to €93.52.

Morning update

Cranswick has boosted sales in its first quarter as UK pig prices soared.

Revenues in the 13 weeks to 25 June increased 7.6% year in year, with like-for-like sales up 5.8% as strong growth in the UK was offset by slower trading overseas.

The group said it cotninued to “proactively” manage and mitigate “substantial and widespread” cost inflation through tight cost control and ongoing recovery.

UK pig prices increased 27% during the period, which Cranswick said reflected the rapid response to the sharp rise in feed prices with wheat and soya reaching all-time highs. Cranswick reflected the higher input costs in the price paid to its farming operations and third-party producers.

Far East export sales were, as expected, lower than the same quarter last year as market prices fell from the elevated levels experienced over the previous two years and the ongoing suspension of its Norfolk primary pork processing facility’s China export licence.

The China pig price had strengthened in recent weeks, but was still below the highs of 2019 and 2020, Cranswick added.

CEO Adam Couch said: “We have made a positive start to the year notwithstanding the challenging operating conditions we continue to experience.

“Our capital investment programme remains firmly on track as we build the platform to deliver our long-term growth strategy and we continue to make meaningful progress in delivering our group-wide ‘Second Nature’ sustainability strategy.”

Alternative meat investor Agronomics has led a £1.7m seed funding round in cultivated food ingredients business Clean Food Group.

Founded in 2021, the business focuses on producing an alternative to palm oil using microbial fermentation.

Clean Food is currently identifying partners to work with and intends to submit a novel foods dossier for market approval of its palm oil alternative product to the European Food Standards Agency and UK Food Standards Agency in 2022.

Agronomics executive director Jim Mellon said it was “an important and exciting development” and the investment would help Clean Food to achieve “R&D milestones” and prepare regulatory dossiers for approval.

“The technology has huge scale potential and we look forward to being part of the company’s next stage of growth,” he added.

The FTSE 100 started the week up 0.3% to 7,447.92pts.

Shares in Cranswick fell 1.1% to 3,302p on this morning’s first-quarter update.

Elsewhere, risers included Science in Sport, up 6.5% to 33p, Bakkavor, up 5.3% to 92p, Nichols, up 3.6% to 1,248.2p, and Virgin Wines UK, up 2.7% to 68.8p.

McBride and PZ Cussons joined Cranswick among the early fallers, down 2.8% to 15.6p and 1.4% to 207.5p respectively.

This week in the City

It’s looking a little calmer on markets this week, but there is still plenty going on.

High street bakery chain Greggs reports interims tomorrow, while Domino’s Pizza also files first-half results and Starbucks updates in the US.

Delivery service Just Eat Takeaway files interims on Wednesday, with Yum! Brands reporting in the US.

High street bellwether Next provides an update on its first half on Thursday, while Coke bottler Coca-Cola European Partners publishes interims and Bayer and Nivea owner Beiersdorf are the latest conglomerates to provide Q2 figures, and, in the US, DoorDash and Kellogg’s also update the market.

The Bank of England’s Monetary Policy Committee will also announce its latest decision on interest rates on Thursday.

Pets at Home gives an update on its first quarter on Friday