The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Aimee Donnellan

DUBLIN, June 23 (Reuters Breakingviews) - Heineken’s HEIN.AS pick of a new chief executive may send a signal to investors about the company's likely next tipple. On Tuesday, the €41 billion brewer named Rafael Oliveira, the CEO of coffee maker JDE Peet’s, to lead the company. Oliveira’s consumer goods background may embolden him to tap into soft drinks as an elixir for the business' depressed valuation.

For now, Oliveira, who has also held senior roles at Kraft Heinz KHC.O, says he is committed to delivering Heineken’s current 2030 strategy, which involves boosting sales and cost cutting. But this plan is unlikely to reinvigorate the company’s flat valuation. Before the pandemic, which gave all consumer goods groups an unprecedented boost, Heineken’s forward price to earnings multiple regularly exceeded 20 times, per LSEG data. But since 2022, a cocktail of inflation and falling consumption of alcohol in core markets like the U.S. means Heineken currently trades at just 13 times earnings.

Oliveira may need to follow the lead of his rivals to get some fizz back into Heineken. In 2024, Carlsberg CARLb.CO snapped up Britvic for £3.3 billion to ride the wave of demand for low and non-alcoholic drinks as health-conscious consumers ditch the booze. Molson Coors TAP.N also dipped its toe in last year and bought an 8.5% stake in Fevertree Drinks FEVR.L. The maths is compelling. Coca-Cola KO.N and $192 billion PepsiCo PEP.O trade at nearly 24- and 16-times earnings respectively — a stark premium to Heineken.

Oliveira's challenge will be to find a suitable target. Coca-Cola and Pepsi are more likely to buy Heineken than the other way around given their size. He could buy Nestlé’s NESN.S water unit which includes popular soft drinks like Sanpellegrino and could be worth around $6 billion. Vita Coco COCO.O, a $5 billion maker of plant-based drinks, is another option but at 45 times earnings it won’t come cheap.

Still, without such a deal, Heineken faces a groggy future. Across developed markets, drinkers old and young are cutting back or abstaining altogether — leaving Oliveira with few levers to pull. The outlook, like the stock, risks going flat.

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CONTEXT NEWS

Heineken on June 23 appointed Rafael Oliveira as its new chair and CEO.

Oliveira has been the CEO of Dutch coffee and tea maker JDE Peet's since 2024. He will join Heineken, the world's number two brewer, for four years from October 1, the company said, adding it expects him to accelerate its existing 2030 strategy.

Shares in Heineken were up 2.14% by 0931 GMT on June 23.