Focus - Carlsberg's 'Capital Markets Day 2010'
Carlsberg gathered its leaders together for its 'Capital Markets Day 2010'
Around 120 investors, analysts and journalist landed in Copenhagen yesterday (15 September) for Carlsberg's 'Capital Markets Day 2010'.
The Denmark-based company gathered its leaders together to address attendees on the firm's European businesses, its successes, its hurdles and where the future lies in the region for the world's fourth largest brewer.
While Asia was left for another day, there was plenty to discuss, with a whole afternoon dedicated to Eastern Europe, a topic of interest for both Carlsberg and those present.
CEO Jørgen Buhl Rasmussen kicked off the event, informing attendees that it is Carlsberg's ambition to be "the fastest growing global beer company".
"I do believe we can deliver," the CEO said. "We believe if we deliver we will be attractive to any stakeholder. Carlsberg has a lot of potential, it should be bigger and we want to exploit this going forward."
He was followed by Khalil Younes, senior vice president of global sales, market and innovation, who talked about the development of a new type of barley as the company looks to broaden its offering and develop products other than core brands for growth.
"We are using the same technology platforms to create something different," Younes said. "We always enter a market with the idea of increasing margin. In some cases it is a big segment, and it can be big in volumes and sales. In some there are gaps that can be highly profitable. They may be less big but they may be profitable."
Successful launches in Russia of Somersby cider and Eve, a fruit-flavoured malt beverage aimed at women, means the company will now look at categories adjacent to beer, and even turn to bottled water and soft drinks if that pays off.
The move, the firm insisted, is part of a global strategy, and will include Western Europe also, where demand for beer has declined over the last few years and most major brewers, including Carlsberg, have sought to streamline their operations.
Despite this, the firm remains optimistic about the region.
Senior vice president of Western Europe, Jesper Friis, told attendees that, with a 20% share of the market, Carlsberg still has "oceans of opportunities" in the region.
"In the UK, we kept the right people on the bus and the wrong people off," he said. "We have asked management to get out there and be visible, we have turned the company into a performance-driven organisation.
In the UK, Friis insisted that "things are going well".
"We introduced San Miguel into the market and it is going very well," Friis said. "Tuborg has also been re-introduced, which is also doing well. We will continue to be creative in order to continue our journey in the UK."
"In France, what we took from Scottish & Newcastle was a turnaround case and the need to change was very high," he added. "But we are delivering savings a lot faster than anticipated."
Carlsberg's Eastern European beer markets, which were also hit hard in the global economic downturn, are also looking healthier, the head of the region's unit said, with growth likely to return next year.
"The markets in Eastern Europe are starting to grow again," Anton Artemiev, SVP for Eastern Europe said. "The potential is very high ... and the markets are showing positive trends. The propensity to save is expiring and consumer expenditure is going up. Purchasing power is much lower in Eastern Europe than the rest of Europe but this will grow."
Artemiev also predicted a decline in vodka consumption as the Russian Government slapped a minimum price on the sale of the spirit last month.
"Beer is the drink of the new generation. Facts are showing strong evidence that the vodka markets are moving over to beer," Artemiev said. "There are a number of opportunities and we will practically chase them. We are not just going to sit and wait for growth opportunities to come, we will go out and get them."
Indeed, in Russia, a country that has experienced a tumultuous period involving wheat shortages, a ban on exports, a slump in beer sales and of course the Government's three-fold tax hike, the brewer remains confident of growth.
"For the last five quarters in a row we have seen consumer confidence growing," Maksim Stepanov, director of strategic planning and innovation for Carlsberg's Baltika Breweries, told investors. "We don't see any reason why we won't see growth in per capita consumption across all regions. There is huge potential and expectations to return to former levels at least."
However, it is the Moscow region in particular, that Carlsberg has its eye on.
"We have big opportunities," Stepanov insisted. "Moscow is the biggest region in Russia, it is also the most expensive. The downside of this is that it is the most competitive and we only have a 26% market share here. We have a dedicated team for Moscow, we have ambition and we are trying to equalise with our market share in Russia. There is a significant opportunity in modern trade here."
And so, as Carlsberg closed the event on a positive note, investors, analysts and journalist now await the firm's next Capital Markets Day, which may well be on Asia.
One of the first signs of madness, I was always told, is talking to yourself. If that's the case, then Larry Nelson may have finally lost it. Before we cart him off, though, let's listen in on his and...
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