Carlsberg looks to the east for growth

Related tags Carlsberg Eastern europe

Carlsberg's business will continue to grow in the coming years, but
that growth will be focused on markets in eastern Europe and Asia.

Danish brewing group Carlsberg will continue to grow its business in the next few years, but that growth will have to come from markets in East Europe or Asia, according to an analysis of the company's business from drinks industry specialists Canadean​.

The report claims that since traditional beer markets in western Europe are stagnant, the company will only be able to grow through the development of its global operations in Central and Eastern Europe and Asia.

"With an increasing number of brewers looking in the direction of Eastern Europe, Carlsberg will have to devise a highly targeted campaign to obtain maximum benefits,"​ the report states. "One strategy has been for the company to transfer ownership of its operations in Russia, Ukraine and the Baltics to BBH (the joint venture which it controls with the UK's S&N), so consolidating its activities, and constructing an entry barrier to competition."

Having established a good relationship with S&N in Russia via BBH, Carlsberg may also extend this into Western Europe, the Canadean report suggests. Carlsberg could benefit from S&N's business in France, Belgium and Greece, while the UK group could take advantage of Carlsberg's links in Scandinavia, Switzerland, Italy and Germany.

"In Asia, Carlsberg has been operating for over a hundred years in what is now the world's largest beer market, China. However, both here and in the highly attractive South Korean market, the company will need to increase its representation if it is to press home its advantage,"​ Canadean's report continued.

The report also queries whether Carlsberg has enough premium products to benefit from the increasing international demand for premium beers. It may have to develop Tuborg in other markets but concentration on one brand could result in lost opportunities.

Carlsberg last month reported sales up 3 per cent to DK35.5 billion for 2002, as well as a 15 per cent increase in operating profit to DK3.8 billion, both of which were boosted by good performances from the eastern Europe and Asian businesses. Volumes for the year increased by 17 per cent to 11.6 million hl, with a 6 per cent increase for the Carlsberg brand and a slight decline in soft drink volumes.

In western Europe, total beer volume amounted to 26.3 million hl, an increase of 2 per cent. Operating profit for the region was 27 per cent higher at DK2.3 billion, while sales were 4 per cent higher at DK27 billion primarily due to developments in the Nordic countries, the UK, Italy and Portugal.

Volume sales in eastern Europe rose by 17 per cent to 37.5 million hl, while net revenues rose by 28 per cent to DK7.5 billion, primarily due to growth at BBH and the addition of new companies in Turkey and Poland in the second half of 2001. Operating profit was 6 per cent up on last year and amounted to DK1.2 billion

Asian operating profit increased to DK467 million, but sales were down 45 per cent to DK1 billion as a resulted of structural changes relating to the creation of Carlsberg Thailand and its consolidation within the group.

Related topics Manufacturers Carlsberg