Heineken raises prices to combat the downturn

It was the first time Heineken released first quarter figures. They showed that western Europeans drank 9.8 percent less of its brands such as Heineken, Foster’s and Amstel. Central and east Europeans’ thirst diminished by 12 percent while consumption in the Americas declined by 16 percent.

But volumes grew 16 percent in Africa, including in the key market Nigeria, and by 3.4 percent in the Asia-Pacific.

It is widely believed that Heineken’s next target for price increases will be central and eastern Europe – a region that has been hit by the global downturn with particular vengeance. Countries that profited more than many others from globalization and were previously capitalism’s rising stars are now seeing demand for exports collapse, along with their currencies. They are bracing for a hard landing. And so are their consumers.

Apparently, Heineken seems to be aware that there are limits to price hikes as an anti-crisis measure. For now at least, further price hikes are unlikely in the U.S., partly because Heineken has to be cautious about losing market share.

Grupo Modelo, the maker of Corona and Heineken’s chief rival in the U.S., has not yet raised prices in North America. SABMiller, the maker of Peroni and Grolsch, has already raised prices in Europe – for the same reasons as Heineken – as has Anheuser-Busch InBev.