Heineken NV pointed to signs of weakness in consumer demand after beer sales missed estimates amid growing inflationary pressures. 

The world's second-largest brewer said beer volumes rose 8.9 per cent on an organic basis in the third quarter, below the 11.8 per cent average analyst estimate. Rising costs dented margins and higher prices discouraged some customers from drinking more. The stock fell as much as 10 per cent in Amsterdam trading, the most since 2003. 

“We increasingly see reasons to be cautious on the macroeconomic outlook, including some signs of softness in consumer demand,” Chief Executive Officer Dolf van den Brink said Wednesday. 

Brewers have managed to largely protect margins this year by raising prices to cope with soaring costs. But there's a limit to how much customers may be able to handle that as rampant inflation and higher food and energy costs destroy discretionary purchasing power.

An employee carries out quality checks on a Heineken beer bottle on a packaging conveyor at the Heineken NV brewery in Zoeterwoude, Netherlands, on Wednesday, May 30, 2018. Heineken has acquired Stellenbrau, a beer maker based in South Africa's western Cape, submitted a bid for a local Coca-Cola bottler and built a brewery in Ivory Coast to take on market leader Castel.

Heineken in a statement noted “early signs of demand slowdown at the end of September and into October” in some parts of Europe.

The Dutch brewer maintained its outlook for modest growth this year. The company said its price mix grew 13 per cent in the quarter, driven by increases in response to accelerating inflation.

Shares of Carlsberg AS also fell, declining five per cent, the biggest drop in seven months for the Danish brewer, which will report quarterly sales and revenue on Thursday. 

What Bloomberg Intelligence Says

Heineken is still benefiting from the recovery from lockdowns in Asia, but the first signs of consumers quelling consumption due to high pricing is happening in Europe. Given it needs further pricing to offset input-cost inflation in 2023, and Europe accounts for over 40 per cent of revenue, management must invest its advertising and promotional spending wisely.

- Duncan Fox, consumer-products analyst

Heineken's net profit for the first nine months dropped 29 per cent from a year earlier to €2.20 billion (US$2.19 billion). Last year included an exceptional gain of €1.27 billion from the re-measurement to fair value of the previously held equity interest in United Breweries in India.

Last week, Heineken's shares came under pressure after Danish brewer Royal Unibrew A/S said it's experiencing unprecedented inflation and will pass on rising prices to customers as fast as possible into next year. The Dutch brewer's shares are already down about 17 per cent so far this year.