Heineken warns of higher prices

Heineken says it will pass on higher costs to consumers

Heineken has warned prices will rise as it passes on the higher costs of barley, hops and packaging to drinkers.

The warning came as the Dutch brewer reported a fall in profits after a large fine from the European Commission for fixing prices.

Heineken, which along with Carlsberg is taking over UK brewer Scottish & Newcastle, said net profit fell 33.4% to 807m euros (£609m) for 2007.

The firm said that raw material prices had risen by 15%.

Consumer reaction

Scottish & Newcastle (S&N) has also warned of "substantial price increases" to offset rising costs.

"We are confident of the growth of our brands, we are confident in maintaining our margins, we are confident in how we manage our operations on the cost side," said Heineken's chief executive, Jean-François van Boxmeer.

"The one element we cannot pinpoint is how the consumer reaction will be to a higher inflationary environment at large," he added.

The European Commission fined Heineken 219m euros for leading a price-fixing cartel on the Dutch market.

Heineken also makes Amstel, Cruzcampo and Tiger beer.

It said its takeover of S&N was on track to be completed between April and June this year.