just On Call - Carlsberg shrugs off Russian ad ban as kiosk closures bite
Carlsberg posted its Q1 results today
Carlsberg's CEO has said the shuttering of half of Russia's beer kiosks has disrupted the Danish brewer's sales more than the country's alcohol advertising ban in the first quarter.
Jørgen Buhl Rasmussen told analysts in a call today (7 May) that the brewer “has not seen a significant impact” from the marketing ban. “What has had an impact," Rasmussen noted, "is the short-term disruption from the kiosk closures."
Rasmussen said that about half of Russia's outdoor kiosks have stopped selling beer since it was reclassified as an alcoholic beverage and banned from sale in 'non-stationary outlets' on 1 January. About one-third of the kiosks have side-stepped the ban by becoming permanent outlets, Rasmussen said.
The Russian Government also banned print media advertising of alcohol on 1 January, an extension of measures introduced last year that outlawed alcohol promotions on television, radio, the internet, public transport and billboards.
However, Rasmussen said Carlsberg's broad portfolio and leading market position in the country has protected it from the marketing ban. He said: “We cannot sit here and claim that the marketing ban has had a significant role in terms of category development, or in terms of market share movement.”
In first-quarter results released today, Carlsberg saw shipments to Russia increase by 6%, however overall net sales in Eastern Europe, which accounts for about 40% of the brewer's operating profits fell by 2%.
Rasmussen said in the call that Carlsberg put in place a 4% price increase in Russia last month, which would “more than cover” the latest tax hikes in the country that have seen beer prices quadruple since 2009. He refused to say if more price increases are planned for the rest of the year.
Carlsberg has struggled in recent years in its core Russian market because of soft beer volumes caused by the tax increases and other government measures targeting alcohol. However, in the past few quarters, the brewer has increased market share, leading one analyst in November to say Carlsberg has the region “under control”.
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