Announcing its full-year profits for the year ending December 31 2012 last Friday, the Danish brewer said its net sales rose 5.7% to DKK 67.2bn or $12.03bn versus 2011, but operating profit for the year fell slightly from DKK 9.816bn to DKK 9.793bn.
But despite promising growth in Asia (operating profit +31%), Western Europe operating profits fell 5% during 2012, while in Eastern Europe (a division that includes Carlsberg’s largest market in Russia) operating profits were flat.
Carlsberg said its volume market share in Russia for the full-year remained flat (38.2%) versus 2011, with a “similar development in value share” (Nielsen data).
Market share erosion?
The firm’s beer volumes in Russia fell 4% across the year, due to destocking in Q1 and Q4 of 2012, while the broader market declined by circa 2-3% in Q4 due to the impact of kiosk closures.
“Our Q4 volume market share was 38.3%, an 110bp [1.1%] improvement versus Q4 2011, and with a similar value share development,” Carlsberg said in an earnings release.
But on a later call, analyst Michael Vitfell-Rasmussen from ABG Sunday Collier noted that Carlsberg had suffered sequential erosion of market share in Q4 of 2012 (60 basis points or 0.6%) and he asked whether management expected the brewer to regain share in 2013?
CEO Jørgen Buhl Rasmussen replied: “On Russia and market share, I have said again and again and all along that you cannot look at this month by month or quarter by quarter. You have to look at the trends, and we are extremely pleased by the trend line in 2012 being up.
Positive Russian trend
“And we assume also, yes, that we can add a bit of market share – that’s certainly our plan in 2013…but don’t look at it month by month or quarter by quarter,” Rasmussen added.
“Because, there’s three quarters of a month where it’s down, or not up, depending on activities or competition.”
But Rasmussen said that Carlsberg’s market share had been “on a positive trend” since the end of 2011 in Russia, when key driver commercial and organizational changes were implemented.
The firm’s focused brand agenda in Russia meant that Tuborg was now the largest international premium brand in Russia, while Kronenbourg 1664 was its fastest-growing brand in the country.
“Within mainstream, the Baltika, and especially Zatecky Gus brands performed very well, while in premium Baltika 7 lost some share due to disruption following the non-stationary outlet closures,” Rasmussen added.