The Wehring Interview - Carlsberg
By Chris Mercer | 26 April 2011
This month's Wehring interview - which is not with Wehring - is with Carlsberg's CEO
The first thing we should point out is that this is not Wehring. Family commitments in the form of a 3lb 8oz offspring has predicated that our editor is house-bound for the time being. The second is that only half of this interview took place in person in Copenhagen; the other half was conducted via 'phone from the terrace of an Italian vineyard following a meeting between yours' truly and approximately 50 wines. You're right, I'm showing off.
Down to business, then.
For someone who has just launched his company's first global marketing campaign, Jørgen Buhl Rasmussen cuts a remarkably relaxed figure. It's all open-collar shirts at Carlsberg and the culture clearly seeps down from the top. Rasmussen appears as happy chatting about football - "whenever Chelsea lose, I am happy" - as the global beer market landscape.
This is not to say that the brewer lacks drive, however. Moments before our first meeting, Carlsberg trumpeted its new campaign, 'That Calls for a Carlsberg', by dazzling around 80 journalists with green spotlights, cinema screens and thumping speakers. And now, I feel a little overwhelmed as I board the lift to the top floor of the malt silo tower that houses Carlsberg's headquarters and dominates the Copenhagen skyline.
I thought it was Heineken that wants to 'Heinekenise' the world with one brand. Rasmussen's view is that all brewers need a mixture of "strong local brands" and international big-hitters. "We have an opportunity with the Carlsberg brand that we did not make enough of in the past," he says.
Carlsberg wants to double its profits on its namesake beer within four years, but Rasmussen won't put a figure on it, despite much jockeying.
I change tack and ask him how the group envisages achieving this goal. "We'll achieve it mainly by selling more Carlsberg," he says, but concedes that some margin growth will come from efficiencies of scale. As part of the campaign, for example, Carlsberg has reduced the number of bottle designs that it uses for the brand by 50% globally.
Will Carlsberg seek to develop its brand in new markets, perhaps as an imported beer in the US? "This is about making Carlsberg bigger only in markets where it is today," says Rasmussen. "We don't have a big presence in the US and I don't see that changing significantly."
This brings us on to Carlsberg's wider ambitions in the world. It's almost three years to the day since Carlsberg bought (probably) the better half of Scottish & Newcastle, handing it a dominant position in Russia, and the group has since set about nurturing a promising business in Asia. I put it to Rasmussen that the group might now be getting restless for another big deal.
"We see ourselves as being part of consolidation in the brewing industry and I believe that there is more to come," he says. "We're always looking for opportunities. If we invest, then it's very likely to be in the Asian continent."
That said, Carlsberg's appetite at the mergers and acquisitions table has its limits. “This doesn't necessarily mean that we want to be world number one, two or even three, as long as we are strong in the regions where we are,” Rasmussen says. “It would be very difficult for us to become a significant player in Latin America, for example.
"So, we want to be one of the global brewers, but we'll only interest ourselves in three big geographies. Two of those probably have a lot of growth going forward. We are in some very attractive places, which is a lot more important."
I suggest that, given the trend towards consolidation in the beer sector, Carlsberg's stance could expose it to the risk of plunder by a bigger player. "Firstly, I don't know if that's a risk or an opportunity," Rasmussen comments, somewhat cryptically.
However, the Carlsberg Foundation, set up by group founder JC Jacobsen in 1876, offers the firm some protection against unwanted interest. According to the brewer's charter, the Foundation's trustees must hold a minimum 51% stake in the business.
"Based on our current structure," says Rasmussen, "anyone who wanted to do it would have to find a solution to how it could be achieved with the Foundation still in control".
We turn to Carlsberg's markets. Western Europe is pretty much as you were, with Rasmussen reiterating that "beer as a category is not growing" in the region, and that more brewery closures are likely. Asia is fast-growing but remains small, which leaves Russia, a market on which I'm particularly keen to get Rasmussen's opinion.
Last year's three-fold hike in beer tax further dented a Russian beer market that was already struggling to surface amid the ripples from the world economic meltdown. While Carlsberg's Baltika Breweries maintained a Russian market share of around 40% in volume terms, it's clearly not been a cakewalk.
"We've had two very challenging years, but I'm extremely optimistic about Russia," says Rasmussen. (NB: This part of our interview took place over the phone, so I'm not able to gauge how taut his smile is). Nevertheless, he offers reasons to be optimistic rather than merely hopeful about Russia's progession as a beer market.
Jørgen Buhl Rasmussen, CEO of Carlsberg
"I would think that it's very unlikely that we will see anything like that again in Russia," he says of the the tax rise in 2010. The country's authorities appear to have turned their attention to vodka. In addition, Rasmussen adds: "Russia's per capita consumption has gone from 80 litres in 2008 to 66 litres, which is below the European average. It's hard to believe that Russia would not come up to at least the European average." Average per capita consumption in the European Union is just over 70 litres.
What about Carlsberg's market share in Russia, is there much room for growth? "I think our market share will continue to go up slightly year-on-year," Rasmussen predicts.
He talks with the calmness one would expect of a CEO of a company that has been around for a few years and has endured its share of ups and downs. Indeed, what every visitor to Carlsberg in Copenhagen can't fail to notice is the group's history. The brewer is proud of its claim to have helped discover and market what we now call lager. Rasmussen, I know, is keen on innovation and, two years ago, the group integrated its R&D facilities to try to bring products through more quickly. "As an industry we have been pretty poor at innovation," Rasmussen tells me.
"The industry has not brought a lot of new products into the market for years and we want to step up in that area." He says that Carlsberg has begun more in-depth consumer studies to give itself "a better chance of coming up with new products". Although he is coy on developments, but does suggest that the brewer is working on low alcohol and even alcohol-free beers.
Meanwhile, the group has announced the development of a new yeast strain that, together with a relatively new strain of barley, offers the chance to keep Carlsberg fresher for longer. This is of particular importance in emerging markets, such as India and Russia, with long transport hours and hot warehouses in summer months. "It also means that, if you have a crate of beers in your garage at home, they will stay fresher for longer," offers Rasmussen.
We are coming to the end of our second allocated slot and, finally, I ask him whether he envisages sticking around for the long haul. It's four years since he took the job and I wonder, considering he is in his 56th year, whether Carlsberg could be the last stop in a career that has spanned everything from pet food to batteries to shaving cream. "I'm not the only one deciding about that," he says diplomatically. "But, I'm still really excited by this business. Every morning that I wake up I do think that I'm lucky. If it was up to me, I could see myself being here for some time."
I'm thinking the same thing about this Italian vineyard. Unfortunately for me, my time is up.
Sectors: Beer & cider
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