Price cut seeks to boost brand Carlsberg in Russia
Carlsberg reduced the price of its namesake brand by 35-40% in Russia
Carlsberg has reduced the price of its namesake brand in Russia by more than a third in an effort to make it more affordable for cash-strapped consumers.
In a conference call following yesterdsay's H1 results, Carlsberg CEO Cees 't Hart said the macro economic environment in the country "continued to be very challenging" in the first six months of the year. He said the company had cut the price of brand Carlsberg by "35-40%" at the start of 2016.
"We have indeed decreased the price of Carlsberg, we are focusing much more on key accounts, having a better mix of national and regional brands and we focus more on deals," he said.
Hart described brand Carlsberg's share as "insignificant" in comparison to the brewer's other international premium brands such as Tuborg and Holsten.
"As consumers are under pressure they are looking for more affordable alternatives. And what we can mention now is that the first signs of this reduction of the new pricing is really successful but it's early days in the season," he said.
Meanwhile, Carlsberg has raised the prices of some other brands in the market.
"We increased prices across the portfolio in H1 by 5%," Hart said "It's an significant variation between brands. We applied this selective approach to achieve a clearer distinction between categories and brands, for instance we reduced the price point of the Carlsberg brand to make it a more affordable international proposition for consumers."
The company is also bracing for the ban on PETs above 1.5 litres, which comes into effect on 1 January. CFO Heine Dalsgaard said the company would stop production of the packs in the second half of 2016.
The Russian beer market declined by an estimated 2% in H1, the company said. Carlsberg volumes were flat for the six months as the brewer saw a deterioration in Q2 of 3% compared to a 6% increase in Q1, when the impact of last year's destocking among wholesalers and distributors in the country was more pronounced. Meanwhile, Carlsberg saw market share improvement driven by the modern trade channel. The Zhigulevskoe, Carlsberg, Baltika 0 and Baltika 9 brands posted a good performance, while Baltika 3 and Tuborg declined.
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