Heineken BV cuts 8,000 jobs to add to brewery sector woes

Pub groups have called for a clear timeline for re-opening after industry data showed sales of beer more than halved in 2020.

Sales of beer in pubs dropped by 56% or £7.8bn in 2020 said the British Beer and Pub Association (BBPA).

Boris Johnson, the prime minister, will give an update on UK restrictions on 22 February and the BBPA has warned that unless there is more financial help and fewer restrictions on drinking, hundreds of pubs will close for good.

Coronavirus lockdown restrictions have already led to a net 6,000 closures of bars and restaurants in 2020, said the BBPA,

Britain’s first lockdown in March saw sales drop 96%, it said. There was a modest recovery over the summer, but sales plunged by a further 77% in the last three months of the year.

Philip Whitehead, the BBPA’s chairman said:  “After nearly a whole year under forced closure, or open but under severe restrictions, pub trade has been decimated and sales of beer in pubs have plummeted.

“Furthermore, due to their revenue falling off a cliff in 2020, pubs are holding debt and have little to no cash left.”

In another blow to the sector, Dutch giant Heineken said it would shed around 10% of its workforce due to the impact of coronavirus on beer sales.

The job cuts and other savings would see it save €2bn over three years in an attempt to restore margins to pre-virus levels.

Heineken, which is one of the UK’s largest pub owners through its Star Pubs & Bars arm, announced the ‘EverGreen’ plan alongside results for 2020 that showed revenues declining by 17% with beer volumes down by 8.1%.

Net losses for the twelve months were €204mln compared to a profit of €2.2bn in 2019.

Heineken added that the job losses would be spread between the head office in Amsterdam, regional offices and local operations.

The overall restructuring programme will reduce the employee base by 8,000 people from a current 84,000 with a total restructuring charge of around €420mln to generate savings of €350mln.

Heineken said its UK businesses had been affected like everyone else by the lockdowns and though off-sales had improved this was nowhere near enough to offset the drop in pub sales.

Unite, Britain and Ireland’s largest union said the job losses were ‘a matter for great concern’,

“Unite understands that the job losses will fall on sales, marketing, admin and backroom staff, rather than directly impacting on manufacturing. It is reported that the cuts will affect less than 100 of the 2,300 Heineken employees in the UK.”

Long-term view 

Investors have shown themselves willing to take a long term view on the listed pub groups, with most rising money to position themselves for either a reopening timeline and also the possibility of further delays.

PLC () for example pulled in £93mln through a placing in January, which it said would provide it with additional capital but also scope to acquire assets if any attractive opportunities become available.

shares were trading at 1,265p today or close to their high following the March lockdown.