Equity research in the alcoholic beverages industry - valuation of Heineken

Abstract

The Heineken N.V. is a multinational brewery operating in 4 regions worldwide. Being the 2ndlargest company operating in the Beer Market, it is expected to continue to follow the global trends that characterize the industry, mainly the shift towards low and non-alcoholic beers, expanding the premium and the craft segments. However, there are some factors that can restrain this growth, especially in the short-term. Despite the world economy is slowly recoveringfrom Covid-19, some markets arestill being affected, such as China. The inflationary environment and the current conflict in Eastern Europe are rising operating costs, and reducing consumers’ disposable income. These factors were taken into consideration when developing expectation about Heineken’s future performance in each region where it operates. It was performed a DCF valuation for Heineken in December 2022, reaching a price per share of 97.77€.As such, a HOLD recommendation is the outcome of the valuation.