MarketScreener's team of analysts has been following the beer sector, and Heineken in particular, for some time. Our last note on the subject - reserved for members - dates back to the summer of 2021.

At that time, the Dutch brewer was completing a cycle of unbridled growth under the leadership of the inflexible Jean-François van Boxmeer. It had largely emancipated itself from its European bases to conquer emerging markets including China, Mexico, Brazil, Ethiopia, Nigeria and Vietnam, among others.

Financed by almost EUR30 billion invested in acquisitions, this unprecedented expansion led to a doubling of sales during Mr. van Boxmeer's term of office. In the light of his succession, it left the Group with a substantial but manageable level of debt, in stark contrast to the excesses seen at world number one AB InBev.

Above all, profitability was preserved - and even significantly optimized - as integration progressed. Here too, Heineken stood out from AB InBev, which has seen its profitability plummet since the takeover of SAB Miller in 2016.

At the time, we predicted - two years ahead of time - that Heineken would succeed in getting its hands on South Africa's Distell. Completed this year, the deal expands the Dutch company's position in southern Africa to EUR36 billion in sales. So much for the main good news.

As for the less good news, the Group is facing the same "pincer effect" as its peers: on the sales side, volumes are down - again by 4.7% this year; on the cost side, inflation in raw materials, equipment and labor is squeezing margins hard, with no sign of a turnaround.

Heineken is adapting to this context by deploying different strategies in each market. Price rises have enabled Heineken to absorb very sharp falls in volumes, for example in Africa and Europe; on the other hand, aggressive price cuts have enabled Heineken to win new market share in the Americas and Asia.

This management strategy will enable the Group to preserve its cash flows in 2023, but unfortunately not to mitigate the impact of rampant inflation on capital expenditure. Two years ago, we concluded our note by pointing out that, with its financial leverage, an enterprise value of EUR75 billion, EUR2 billion in free cash flow and a meagre dividend, Heineken did not seem to offer a particularly attractive investment opportunity.

The parameters have not changed as we enter 2024.