Heineken Accelerates Emerging-Markets Challenge to AB InBev

(Bloomberg) -- Heineken NV is throwing down a gauntlet to Anheuser-Busch InBev NV in some of the emerging markets the Budweiser maker has long dominated.

The Dutch brewer’s shares rose as much as 5.1 percent early Wednesday in Amsterdam, the most in more than three years, after it reported full-year earnings that beat analysts’ estimates. Shipments of Heineken’s flagship brand rose 7.7 percent, the fastest pace in more than a decade.

The world’s second-largest brewer is challenging the market leader with acquisitions in China and Latin America, giving it access to new distribution networks that are lifting volume. Heineken says it’s gaining ground in countries that have been dominated by AB InBev, which is grappling with a mountain of debt from its takeover of SABMiller Plc.

Heineken Accelerates Emerging-Markets Challenge to AB InBev

“We’ve been reinforcing our position in new markets -- for example Mexico and Brazil -- where we’ve made strategic acquisitions to deploy the Heineken brand through larger, better and more efficient distribution systems,” Chief Executive Officer Jean-Francois Van Boxmeer said in a phone interview.

Heineken became Brazil’s second-biggest brewer in 2017 when it bought Kirin Holdings Co.’s business there for about $600 million, giving it control of a roster of brands including Schincariol, Devassa and Eisenbahn. Last year the Amsterdam-based company bought a $3.1 billion stake in China Resources Beer Holdings Co., the country’s top brewer, in a bid to challenge AB InBev’s position as the largest foreign beermaker in the world’s biggest market.

‘Sweet Spot’

“They are in a sweet spot of growth given attractive footprint and market-share momentum,” Jefferies analysts led by Ed Mundy wrote in a note to investors.

Heineken reported that profit growth was partly due to running its business more efficiently as commodity expenses rise. Higher input costs have hampered consumer-goods companies reporting this quarter, including Unilever and Carlsberg A/S.

The Dutch brewer’s flagship label was also lifted by the rise of low- and no-alcohol beers, including Heineken 0.0.

In October, AB InBev said that growing demand for the company’s brands in Europe and Africa was offset by declines in Brazil and Argentina due to macroeconomic setbacks. The company is set to report full-year results at the end of the month.

As Heineken beefs up its China presence, AB InBev is considering an initial public offering of its Asian operations in a deal that could raise more than $5 billion, according to people with knowledge of the matter.

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