Why the world’s second largest brewer is trying to resurrect the British pub
Heineken, the world's second largest beer brewer, is looking to pour new life into one of the U.K.'s great "institutions" as it continues to buy up British pubs.
The company has announced proposals for a back-to-back deal with Vine Acquisitions, which, once complete, will see it acquire 1,900 British pubs within the Punch Taverns group. Jean- François Van Boxmeer, the brewer's chief executive, told CNBC Wednesday that, despite contraction in the U.K. pub sector, he believes it is still a "good business to be in" as the group forecasts further growth over the coming year.
Heineken entered the U.K. pub market in 2008 with the acquisition of Scottish & Newcastle, during what Van Boxmeer describes as a "perfect storm" following the global financial crisis.
Since then, the brewer's U.K. arm has continued to build its Star Pubs & Bars business, having invested over £20 million ($24.91 million) per year since 2014, resulting in an estate of 1,049 leased and tenanted pubs.
"We have an expertise in developing that business and hence also the proposed acquisition of part of the Punch estate would strategically add to our strength in the U.K.," explained Van Boxmeer.
The firm has received criticism over claims that it would force landlords to sell Heineken products. However, a spokesperson for Heineken on Wednesday reiterated comments made at the time of the Punch deal by Lawson Mountstevens, managing director of Heineken's pub arm, saying: "Will not impose our portfolio on them."
The pubs deal follows news Monday that Heineken is to acquire Brasil Kirin Holding, one of the largest beer and soft drinks producers in Brazil. The deal will increase the group's footprint in Brazil, one of its growing markets, particularly in the north east, where it previously lacked exposure.
"It's a bolt-on acquisition but it's built on the confidence that we can make progress in Brazil," Van Boxmeer told CNBC.
The company released its full-year earnings for 2016 on Wednesday with revenues of 20.79 billion euros ($21.98 billion) coming in slightly ahead of the company's own expectations of 20.57 billion euros.
The group noted continued growth in regions of the Americas (including Brazil), as well as Asia Pacific and Europe in it 2016 results. Overall, beer volumes grew 3 percent in 2016, having been partially dampened by weakening demand from Africa, the Middle East and Eastern Europe.
Heineken's 2016 results market a 1.4 percent increase in revenues for the year, up from 20.51 billion euros in 2015. This comes despite what the business termed a "negative impact" from currency fluctuations.
Net profit was up 8.5 percent, compared to 2015 numbers. Meanwhile, total dividends were up 3.1 percent at 1.34 euros per share, an improvement of 0.04 euros on the previous year.