Malaysia: Heineken sales could be impacted by August price hike

Heineken Malaysia Berhad is set to implement price increases across the majority of its product portfolio, ranging from 2% to 8%, effective August 1, 2025, for on-trade channels and September 1, 2025, for off-trade channels. The move, driven by persistent increases in input costs, aims to defend the group’s profit margins, Business Today reported on July 7.

This marks Heineken’s second price adjustment in just over a year, following a previous hike of approximately 5% to 8% in April 2024.

Maybank Investment Bank Research, in a recent report, highlighted that while beer consumption typically exhibits some price stickiness, the added pressure of inflation and soft consumer spending in the second half of 2025 could extend the recovery period for Heineken’s sales volume.

Given the duopoly nature of the Malaysian beer market, it is widely anticipated that HEIM’s competitor, Carlsberg Brewery Malaysia Bhd, will likely follow suit with similar price increases. Historically, industry-wide price adjustments have led to weaker sales volumes in the subsequent two to three months.

Consequently, Maybank IB Research has lowered its earnings estimates for Heineken Malaysia for the financial years 2025 to 2027 by 6% per annum. This adjustment factors in a revised FY2025 volume growth assumption to a contraction of 5% year-on-year, a significant revision from the previous expectation of a 3% year-on-year growth.

Despite the anticipated slowdown in sales volume growth, the research firm believes that the implemented price hikes will be crucial in defending the company’ group margins. Maybank IB Research also expects front-loading activities, where consumers purchase more before the price increase, to occur in the third quarter of 2025 ahead of the August and September effective dates.

Despite the lowered earnings outlook, Maybank IB Research maintained a “BUY” rating on Heineken Malaysia, albeit with a reduced discounted cash flow-derived target price of RM31.00. This valuation implies dividend yields of approximately 6%, based on a 100% payout ratio.