Heineken: beware a heady brew Lumbering along with one concrete boot is no fun. For the past few years the world's largest brewers have been doing just that. The heavy weight has been European beer demand, which fell as much as 4 per cent during 2009. Mercifully, though, cracks are appearing. Heineken said on Wednesday that its organic volumes last year rose 3.6 per cent - with western European volumes increasing, though only slightly. Although its earnings per share fell 5 per cent, investors added 5 per cent to the Dutch company's shares. Should this return to volume growth be sustained, the world's top four brewers by sales would be able to cease their scramble to consolidate in the face of a declining market, and return to regular business - that is, distributing beer as efficiently as possible. But investors would be mistaken if they think that will encourage beermakers to adopt a utility-like business model. For starters, brewers maintain very different levels of net debt (in contrast with the high leverage of most utilities). Heineken and Carlsberg both carry debt of about 2.4 times their respective earnings before interest, tax, depreciation, and amortisation. SABMiller has about 1.5 times, and Anheuser-Busch InBev almost 3 times. And unlike utilities, where higher leverage usually equates to higher returns, this is not the case for brewers. Lower-leveraged SABMiller's return on equity of 13 per cent is almost double that of more-indebted Carlsberg, according to Bloomberg data. What it shows is that strategy still matters. Heineken is the most exposed of the big four brewers to Europe. And despite the recent market jump, Europe, with its sick economy, is still the lowest-growth beer region in the world. Before investors become too excited about Heineken's prospects, they should wait until the brewer can prove its good result has become a trend.