James Wilmore

just On Call - Carlsberg stays bullish on China despite slowdown

By | 21 August 2013

Carlsberg is still hopeful of the opportunity China offers

Carlsberg is still hopeful of the opportunity China offers

Carlsberg remains confident on its long-term prospects in China despite seeing a slowdown in growth in the country this year. 

The Danish brewer today (21 August) reported flat volume growth in its second-quarter in China, while half-year volumes slowed to a 5% rise organically. “We are seeing a slight slowdown in the Chinese market,” Carlsberg's president & CEO Jorgen Buhl Rasmussen said to analysts on a conference call. 

“Part of that would be weather and also a little less underlying growth, he said. “But in places like China and emerging markets, you do see variations quarter on quarter. 

He added: “We are still confident about future growth in this market as overall consumption is still quite low, not least in the regions we are in.” 

Carlsberg earns around 11% of its group profits from Asia. 

Earlier this year, an analyst predicted that the 'Big Four' global brewers are likley to be engaged in a “bruising slugfest” in China for some years, as margins remain low. 

Meawhile, Carlsberg's performance in Russia also came under the spotlight from analysts today. Rasmussen admitted that the closure of around half of the country's dedicated beer kiosks had been “more disruptive” than the company had anticipated.

“The biggest factor we did not get right is consumers getting used to not being able to buy beer from just below where they lived. It takes time to adapt to that,” said the CEO. 

However, the group said some of the volume sold from the kiosk has been picked up by hypermarkets, minmarkets, traditional stores and the on-trade. Russia's overall beer market declined by around 7% in this year's first half, Carlsberg estimated. The group's own H1 volumes in Eastern Europe, including Ukraine, rose by 3% to 21.9m hectolitres, while sales by value dipped by 1% to DKK9.1bn.

On Somersby, the company's cider brand launched last year, Rasmussen said that the brand is now in 35 markets and “doing extremely well”, with 85% year-on-year volume growth to date. 

Expert analysis

Global Beer Tax Tables, 2012

This report covers 58 markets and comprises a series of tables covering taxation base, historical excise rates, legal controls and a calculation of the total taxation burden on beer.

Sectors: Beer & cider, Emerging markets – BRIC

Companies: Carlsberg

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