Heineken and Pernod Ricard are expected to face their quarterly earnings test this week. An appointment that, in case of disappointing results, would definitively certify that inflation is now making its presence felt in consumers’ wallets. Both producers, like other competitors in the sector, have been exposed for some months to a declining market, albeit with relative differences across various operational segments. Both will present their quarterly earnings in the coming days.

For Pernod Ricard, in particular, Bloomberg Intelligence predicts that first-half revenues will be lower in all regions of activity, due to factors such as still slow destocking and consumer tightening. The disappointing results of Diageo (below expectations despite warnings issued by the company itself, with a 23% decline in the South American market and a 5.4% decline in operating profit), along with broader sector weakness, are testing investor confidence in the sector. Nevertheless, according to Citi analysts, Pernod Ricard could bounce back in the second half of the year if Chinese New Year trading proves solid, they said. Overall, according to BI analysis, consumption trends in Asia will be crucial for full-year EPS guidance.

Even an expected decline in Heineken’s premium brand volumes in the fourth quarter (results will be published on Wednesday) would, according to BI analysis, signal that consumers are definitively feeling the effects of inflation and could hinder growth this year. Recovery in the Americas had helped preserve profitability last summer, when adverse weather in Europe had slowed premium sales, but the beer producer also needs to see a recovery in key Asian markets such as Vietnam and Cambodia, which represent nearly 30% of operating profit. Meanwhile, Carlsberg, one of Heineken’s main competitors, expects moderate growth this year and is increasing marketing expenses to boost sales.

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