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RBC downgrades Heineken on falling marketing spend

Investing.com - Heineken (AS:HEIN) is set to suffer from its unwillingness to raise marketing expenditure, according to RBC Capital Markets, as it downgraded its investment stance on the brewing giant.

RBC downgraded its stance on the Dutch brewer, the second largest in the world, to ‘underperform’ from ‘sector perform’, cutting its 12-month price target to €75 from €85.

“Heineken’s perennial unwillingness to raise marketing is damaging its brand equity, particularly when combined with category leading price increases,” the bank said, in a note dated Feb. 20.

RBC added that Heineken’s volumes materially undershot those of major rivals Anheuser Busch Inbev (EBR:ABI) and Carlsberg (CSE:CARLb) in 2023, with the bank citing consistent and sustained reductions in marketing. 

Marketing spend fell by 4% between 2018 and 2022, the bank said, quoting figures obtained by AdAge, and fell again in 2023 as Heineken under-delivered on its commitment, made in July 2023, to spend the same in the second half of the year as the first; in the event, 2H marketing spend fell by almost 10%.

Heineken stock fell by 1.6% Tuesday to €88.06.

 

   

 

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