LONDON -- Dutch beer maker Heineken’s new CEO Rafael Oliveira, who will take over in October, faces the challenge of delivering a strategy set out last year that promises achieving higher beer sales with fewer resources.
The world’s second-largest brewer named Oliveira CEO and chair on Tuesday, making him a rare outsider to lead the company. He was previously CEO of Dutch coffee and tea maker JDE Peet’s since 2024.
Heineken, whose shares have slipped in recent years, said earlier this year it would cut up to 6,000 jobs from its global workforce over the next two years. It also set lower expectations for profit growth in 2026 than a year earlier.
It has been without a CEO since the start of June after Dolf van den Brink’s resignation in January after six years as CEO.
Heineken is second only to Anheuser-Busch InBev in terms of market capitalization.
As sales have stagnated across the industry, the maker of Tiger and Amstel as well as its namesake Heineken beer, has faced investor discontent for falling behind AB InBev, its biggest rival, on performance.
Its new CEO’s challenges are as follows:
Grow volumes
Unfavourable weather, political turbulence and the inflationary impact of the war in Iran have all served to set back industry hopes for a revival of slow or falling beer sales volumes.
Analysts expect volumes will remain well short of the mid-single-digit growth investors hope for until 2027.
Until people have more cash to spend, Heineken’s new CEO has few options to change this.
Competitor Carlsberg has sought to boost volumes via the purchase of soft drinks maker Britvic, which has helped the Danish company to offset slow beer sales and any broader shift away from alcohol.
Beer makers can also put more resources into non-alcoholic beer, a segment which is growing fast.
Give investors a return
Heineken has fallen behind in terms of total investor returns from share price increases and dividends.
Some, such as AB InBev, have multi-billion-dollar share buyback programs.
Cut costs
Investors consider Heineken has lagged behind AB InBev on cost efficiency. Some say they want more of the €500 million (US$583 million) a year Heineken has pledged to save to flow through to its bottom line.
Oliveira will have to be careful what he cuts. Heineken needs to invest in the right places if it wants to benefit when demand returns.
Too many breweries?
Some investors and analysts say Heineken has too many breweries, especially in mature markets such as Europe where there is less scope for future growth. Some are concerned attitudes to drinking alcohol have permanently shifted and volumes will only decline.
The incoming CEO will need to decide whether to close sites or, like his predecessor, defend the company’s production footprint.
Bring back the cheer
While valuations have declined across the beer sector since 2021, Heineken’s has fallen further than some rivals.
Reviving its valuation means restoring investor optimism around sales and profits in the face of political and economic turbulence, growing evidence future generations are turning away from drinking and signs the rise of weight-loss drugs is also deterring consumption of alcohol.
(Reporting by Emma Rumney; Editing by Adam Jourdan, Alexander Smith, Joe Bavier and Barbara Lewis)
