Heineken to cut 8,000 jobs as pandemic hits brewing giant

Heineken is axing 8000 jobs — nearly one in 10 of its 85,000 strong workforce — in the latest sign of the desperate situation facing the hospitality sector.

The British Beer & Pub Association has warned that pub sales are at their lowest since the 1920s after plummeting by 56% in 2020, and urged the Government to provide a date for reopening.

On Wednesday Heineken, the world’s second biggest brewer behind brands such as Amstel and Birra Moretti, said it plans to make €2 billion (£1.75 billion) of cost savings by 2023.

Around 4% of Heineken’s 2300 UK staff will be made redundant, across both its Star Pubs and Bars — which has an estate of approximately 1900 sites in England and Wales — and its UK offices.

It is the largest jobs cull at a major drinks firm since the pandemic broke out and a warning sign of how many more could go, say analysts.

Timelines for job cuts “will vary depending on the specific circumstances of each of our local operations,” the company said.

A Heineken UK spokesperson told the Standard redundancies had been “kept to a minimum”. The Star Pubs and Bars arm was fined £2 million last year by the industry watchdog after forcing its tenants to sell “unreasonable levels” of own-brand beers and ciders.

The jobs announcement came as the firm reported a net loss of €204 million (£178 million) in 2020, down from a €2.2 billion (£1.93 billion) profit in 2019. Revenues decreased by nearly 17% to €23.8 billion in the year as pandemic-induced lockdowns shut bars and pubs around the world for long periods, and organic beer volumes sold shrank by 8.1%.

Beer sales have been hit particularly hard since the pandemic broke out.

Carlsberg revealed on Friday that its full-year organic revenues were down 8.4% in 2020 to their lowest levels since 2007 as the brewer felt the impact of lockdowns. Just yesterday English winemaker Chapel Down said it was selling off its beer business, Curious Drinks, to Luke Johnson’s Risk Capital Partners.

Company boss Frazer Thompson told the Standard that the company saw volume sales for wine increase by 38% in 2020 despite the pandemic, but that the beer business - which had made 90% of sales in hospitality pre-pandemic - was "draining resources from a business that is spectacularly successful". 

Heineken launched a review into operations in October, and said today that its cost-savings programme will “be key to restore our marketing and spend levels” and to mitigate costs.