Heineken NV’s Brazil expansion is apparently pressuring its profit margins.
Last year, the Dutch brewing company bought the Japanese firm Kirin Holdings Co.’s Brazil business – an acquisition that established Heineken as Brazil’s second-largest brewer. Heineken is now apparently going hammer and tongs at bolstering its Brazil presence and competing with Anheuser-Busch InBev in the country.
Heineken’s marketing strategies and focus on sales growth is pushing up costs and squeezing its margins. The company expects its operating profit margin for the full-year 2018 to decline by about 20 basis points, amid its business expansion in Brazil and adverse moves in currency. Adjusted operating profit increased 1.3 percent to 1.75 billion euros ($2 billion) in the first half of the year, falling short of analysts’ estimates.