Rising fuel costs drive up brewing costs in Asia, Heineken (HEINY.US) says it is passing 70%-80% of the cost pressure on to consumers.

According to Zhihui Finance APP, Jacco van der Linden, President of the Asia Pacific region at Heineken (HEINY.US), stated that rising fuel costs driven by the Iran conflict are pushing up the company’s brewing input costs in Asia. “We are seeing this reflected in input costs, especially in Asia,” he said in an interview on Monday. “In Asia, we are more reliant on oil from the Middle East, and local oil reserves are relatively lower.”

Van der Linden said the company is passing on about 70% to 80% of the cost increases to consumers, with the remaining portion being absorbed through improvements in production efficiency.

“Input costs are rising, so production efficiency and revenue management are becoming increasingly important for us,” he said.

As cost pressures intensify, global brewers are facing structural challenges such as reduced alcohol consumption and a shift in tastes toward healthier beverages. In the post-pandemic business recovery, Heineken has lagged behind AB InBev (BUD.US) and Carlsberg (Carlsberg A/S). Incoming as the company’s first external CEO in October, Rafael Oliveira will be taking over Heineken amid sluggish sales in Europe and the US.

This has made growth in emerging markets increasingly crucial. Heineken is tapping into rising demand in Asia, Africa, and other developing economies to offset weakness in Europe and the Americas. In the second quarter, sales volume in the Asia Pacific region grew by 13%, Africa and the Middle East increased by 3.5%, while the Americas fell by 4.1%.

Analyst Ignacio Canals Polo believes Heineken needs to keep investing in Asia, Africa, and Latin America, and drive more premium products to counter weak sales in mature markets. In a research report published on September 10, he wrote that Vietnam and Mexico “demonstrate this strategy can work.”

Van der Linden stated that the company is focusing on key growth markets, particularly in Asia such as Vietnam, India, and China, where local consumers prefer lighter-tasting beer.