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Heineken advances steadily in Spain

Teresa Sánchez

Heineken advances steadily towards becoming the beer industry leader in Spain as Mahou-San Miguel loses ground. According to data from industry association Cerveceros, Mahou-San Miguel had a market share of 36.9% and produced 12.2 million hectoliters in 2012. It was guaranteed the top position because its Dutch rival, which owns Cruzcampo, was more than seven percentage points behind, with 29% of the market and production totaling 9.8 million hectoliters.

But Mahou has seen its market share slide continuously since 2012. Production fell to less than 12 million hectoliters in 2013, and to 11.8 million in 2014. This contrasts with the situation at Heineken, which has been able to increase production to more than 10 million hectoliters and continues to close in on its rival.

According to data for the last year from Cerveceros de España, Mahou-San Miguel has 34.3% of the market and Heineken is close behind with almost 30%. 

Damm ranked third it at the end of 2014, with production at 8.3 million hectoliters, i.e. slightly more than 2013 figures, and a market share of 24%. It too is closing in on Mahou-San Miguel, which hasn’t been able to make the Cervezas Alhambra acquisition at 2006 year-end profitable and has returned to similar production and sales levels seen prior to that purchase.

Heineken and Damm aside, another company on the rise with spectacular growth in the last two years is Estrella Galicia, which has increased production from 1.2 million hectoliters to 1.77 million, which enabled it to grow its market share from 3.6% in 2012 to 5.2% in 2014. This is especially notable as the situation has been very complicated for the sector in general due to the slide in consumption, especially because of the crisis in the hospitality sector and the closure of bars and restaurants.

Mahou-San Miguel increased profits by 1.8% in 2014, to 168 million euros, but reduced its profitability indices with growth in sales that was slightly higher (3%), to 1.153 billion euros. Mahou-San Miguel expanded profits by 1.8% in 2014, to 168 million euros.

In May, during its earnings presentation, the company's CEO Alberto Rodríguez Toquero underlined that those figures were driven by growth across all business lines. However, he also said that the beer business in Spain saw its revenues rise by just 1.5%. In fact, the company's growth is attributable to sales outside Spain, which increased by 12%, and by its water and soft drink area (Mahou owns the brand Solán de Cabras), which saw a 10.6% improvement.

Heineken's Spanish subsidiary earned 59 million euros in 2014, compared with 25 million euros the previous year (i.e. more than double, up 136%). As a result, it was able to return to the black following the 142 million euro loss booked in 2012 due to an accounting issue related to depreciation in the value of assets owned by Portuguese company Sagres, which it had acquired.

It also exceeded Mahou's growth in sales, expanding revenues by 4.4%, to 907 million euros. For the company, the most important aspect is to break past the 900 million barrier again, as sales slipped to 869 million in 2013. It obtained 906 million euros in 2012, and 919 million in 2011.

There is every indication that 2015 will be a good year for the sector, with growth across the board due to the recovery in the hospitality sector which, despite the closure of bars, continues to see sales rise due to growth by the leading food chains.

In this context, Heineken may close in even further on Mahou-San Miguel. Although definitive data won't be available until next year, this is one of the reasons behind the latter's decision to accelerate growth outside Spain.

Along these lines, it announced that it had acquired 100% of Indian company Arian Breweries & Distilleries (it has owned 50% since 2012), and that it was also working to grow the San Miguel brand internationally. The goal is to offset the loss of market share in Spain, as it's leading position is more up in the air than ever.

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30/10/2017