Marketing takes froth off beer profit

DUBLIN - Heineken, the world's fourth-largest brewer, said first-half profit dropped 8.2 per cent as the company spent more on advertising to halt a decline in European and US sales.

Net income dropped to 345 million ($609 million), from 376 million a year earlier, the Amsterdam-based company said.

Heineken is spending about 100 million this year on marketing, including a commercial starring Brad Pitt, to help counter waning demand in Europe and the US, where the company makes about two-thirds of its sales.

Beer consumption in bars is slumping in Europe amid smoking bans in some countries and slower economic growth, while Americans are increasingly choosing spirits and wine over beers such as Heineken.

Shares of Heineken have risen 10 per cent this year. Anheuser-Busch, the world's biggest beermaker, has fallen 11 per cent over the same period.

About 55 per cent of beer and 73 per cent of wine was consumed outside bars in Europe in 2003, market-research group Datamonitor said last week.

- BLOOMBERG