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Carlsberg beats Heineken on beer volume and profits

By Guy Montague-Jones , 23-Feb-2010

Brewing giants Heineken and Carlsberg have struggled through a tough year for beer and reported a mixed set of financial results.

With higher exposure to Western Europe and North America, Heineken took a harder hit from declining beer consumption in developed markets. Beer volumes fell 1.5 per cent at the Dutch brewer and organic revenue fell 0.2 per cent while Carlsberg reported a 6 per cent increase in volumes and 6 per cent organic revenue growth.

But not everything went Carlsberg’s way. The Danish company posted a 1 per cent decline in sales revenues to DKK 59.4bn (€7.98bn) due largely to adverse currency fluctuations while Heineken reported a 2.7 increase in reported revenues to €14.701bn.

On the profit side, Carlsberg reported an increase in operating profit from DKK 8bn in 2008 to DKK 9.4bn last year and a 38 per cent increase in net profit to DKK 3.6bn. Strong performances in Eastern Europe and Asia were the main drivers for this growth.

Meanwhile, Heineken reported a 4 per cent increase in net profit to €1.055bn.

Emerging markets

Heineken and Carlsberg bought up Scottish & Newcastle in 2008 with Heineken taking most of the UK assets while Carlsberg gained full control of Baltic Beverage Holdings (BBH).

The split gave Carlsberg greater share of faster growing emerging markets but Heineken has recently taken steps to improve its share of developing market growth as well.

In its full yea results, Heineken said the planned acquisition of FEMSA Cerveza in Mexico and a new partnership with United Breweries in India will increase its exposure to fast growing, developing markets and provide a platform for future growth.

Meanwhile, its Danish rival Carlsberg has not had everything its own way in emerging markets. Its ownership of BBH has made the brewer more exposed to the weak Russian market.

Russian weakness

Carlsberg said the Russian beer market declined by around 10 per cent last year. In this weak environment, Carlsberg increased its market share from 38.8 per cent last year to 40.6 per cent in 2009.

But the brewer is expecting further low double-digit declines in 2010 after Russia increased excise duty on beer by 200 per cent from 1 January. In anticipation of this increase, Carlsberg put up its prices by 4-5 per cent in Q4 last year and has introduced another round of 6 per cent price increases in January.

The Q4 price increases hit market share slightly as in its Q3 results Carlsberg had reported a share of 40.9 per cent. For more information on the impact of the Russian beer tax and the strategy of the big brewers to combat the tax increases click here .

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