Heineken remains more cautious (HEIA)
For the full-year, revenue decreased 11.9%, with beer volumes down 8.1%. Revenue in Europe decreased 18.8%, Asia Pacific decreased 11.5%, the Americas decreased 2.9%, and Africa, Middle East, and Eastern Europe decreased 9.5%. Beer volumes fell 8.2% in Europe and 7.5% in the Americas. The Heineken brand volumes only declined 0.4% for the year, driven by double-digit growth in 25 markets, mostly in the Americas and the Asia Pacific regions. In the US company, beer volumes declined MSD% due to the production shutdown in Mexico and on-premise closures, but the Heineken brand had its best performance in more than a decade with +LSD% growth. In Mexico, beer volumes declined in the mid-teens. In South, Africa volumes declined in the 30% range.
Heineken announced plans to cut its global workforce by 8,000 full-time employees as part of the reorganization announced in October. The layoffs will cost $509M. The company also recorded impairment charges totaling more than $1.1B, including €230M for Lagunitas and €191M for various pubs in the U.K. One of the company's initiatives is to expand the availability of its non-alcoholic beer 0.0 and extend the offering across its portfolio. 0.0 is the top-selling non-alcoholic beer in the U.S. Another initiative is to focus more on hard seltzers with Amstel Ultra Seltzer, its partnership with AriZona for SunRise Hard Seltzer, and Pure Pirana in Mexico and New Zealand. Management expects a gradual improvement in market conditions in 2021 with a slow recovery in European bars and restaurants. Only 30% of on-premise establishments were open at the end of January. Management’s outlook for the year is for revenue, operating profit, and margin to stay below 2019 levels. Many of Heineken’s biggest markets, including Western Europe, Brazil, and Mexico, are lagging in the recovery in part due to a slower vaccine rollout. The world’s second-largest brewer’s plans for 2021 are more cautious, cost-cutting focused and playing catchup in hard seltzer.
Mexican beer imports accelerate in Q4 (STZ)
Total alcohol beverage imports decreased 3% in 2020. The rolling 12 months is depicted in the chart below. Q4 imports grew 8%, accelerating from 1% in Q3, while exports decreased 4%. Imported beer grew 1% by volume and increased 3% by value in 2020. In Q4, beer imports rose 22% by volume and 23% by value, accelerating from Q3. In Q3, beer imports grew 10% by volume and 14% by value. 72% of imported beer comes from Mexico. Constellation Brands represents a majority of Mexican beer imports and 60% of imported beer. Exported beer declined 27% by volume and 5% by value in 2020.
Imported packaged spirits grew 2% by volume and declined 7% by value in 2020. In Q4, volumes increased 8% and by value grew 2%. 30% of all imported packaged spirits came from Mexico, while 23% of all exported packaged spirits are destined for Panama. Imported packaged wine grew 13% by volume in 2020 but declined 5% by value. In Q4, volumes grew 16%, and value increased 4%. 35% of all imported packaged wine by value came from Italy. Exported packaged wine decreased 13% by volume and 8% by value in 2020. In Q4, volumes grew 10%, and value fell 4%. 41% of all exported packaged wine by value is destined for Canada, while 58% of bulk wine exports are destined for the U.K.
CPI for restaurants outpaces grocery in January (KR)
According to the BLS, U.S. consumer prices increased 0.3% in January on a seasonally adjusted basis, accelerating from 0.2% in December. Over the last 12 months, the all items index rose 1.4%. Food prices rose by 0.1% in January and rose 3.8% for the trailing 12 months on an unadjusted basis. Food at home prices decreased 0.1% month over month while food away from home rose 0.3%. The trailing 12-month price increase for food-at-home of 3.7% was the second-lowest since the pandemic began in March. Food-at-home prices declined 0.8% in cereals and bakery products, fell 0.4% in dairy products, declined 0.3% in other food items, and declined 0.2% for fruits and vegetables. The index rose for meats, poultry, fish, and eggs by 0.5%, driven by a 1.1% increase in beef. The food away from home index continued to increase in January, driven by a 0.6% increase in limited service meals while full-service meals increased 0.3%. Food away from home prices were 3.9% higher YOY, a 20bps differential compared to food at home prices, which were 3.7% higher YOY. Over the last three months, food away from home prices have outpaced price increases at home, as seen in the following chart. The change in pricing is a slight headwind for restaurants at the margin, but the pace of vaccinations will matter much more. Component price pressure in food from higher grain prices and fuel has not started to be seen in groceries' prices yet.
