Heineken to shed 8,000 jobs in revival plan | Beverage Industry News | just-drinks – just-drinks.com

Heineken is to cut one-tenth of its staff in a bid to stem losses from a coronavirus-hit 2020.

Heineken's job cuts were announced alongside sales and profits declines for 2020

The reduction, which will affect about 8,000 employees out of a total Heineken headcount of 86,000, forms part of a EUR2bn (US$2.4bn) cost-cutting programme over three years announced today, alongside full-year results. Staff at Heineken's head office look set to be disproportionally hit by the move, with personnel costs in Amsterdam in line for a 20% reduction.

The head office changes, first signalled in October last year, will take place before the end of March.

Also included in the cost-cutting programme, called 'Evergreen', is a move to strip out SKUs to "reduce complexity", Heineken said. Commercial commitments will be reviewed to tackle "least effective spend", the brewer added.

The cuts are in response to one of Heineken's most challenging years as the coronavirus pandemic closed bars and restaurants around the world and switched consumer demand to online and grocery channels. In today's results, Heineken's sales dropped by almost 12% in calender-2020 as volumes fell by 8%. In the same period, net profits slumped by almost 50%.

Heineken said the cuts aim to revive the brewer's operating profit margins, which dropped by almost five percentage points in 2020 to 12.3%. The company has set a 17% operating profit margin target for 2023.

Meanwhile, the group will take a leaf out of Molson Coors Beverage Co's recent playbook and target areas of growth beyond beer. In 2019, Molson Coors pledged to be more than just a brewer and started launching new products in categories including hard seltzer and RTD cocktails.

Today, Heineken said it will "stretch beer and move beyond beer" with plans to expand the international roll-out of alcohol-freeHeineken 0.0 and to investigate non-beer launches. As an example, the company pointed to its launch in September last year of Pure Piraa hard seltzer in Mexico and New Zealand.

Commenting on the cost-cutting programme, CEO Dolf van den Brink said EverGreen leverages "both our strengths and new opportunities to chart our next chapter of growth".

Van den Brink added: "Firmly putting customers and consumers at the core, we aim to continually enhance and expand our portfolio and footprint. We are stepping up our focus on continuous productivity improvements and raising our environmental and social sustainability ambitions."

Bernstein analyst Trevor Stirling said the EUR2bn cost-cutting plan was larger than expected. Bernstein had forecast a cut of EUR500m.

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Heineken to shed 8,000 jobs in revival plan | Beverage Industry News | just-drinks - just-drinks.com