Analysis - Carlsberg to get biggest boost from barley price drop

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Carlsberg is likely to benefit the most out of the global brewers from lower input costs next year, according to an analyst. 


Nomura's latest input cost analysis, released this week, shows “a material drop in barley prices in most geographies, in expectation of a good harvest in the northern hemisphere”. Analyst Ian Shackleton added: “As a result, for most brewers we see input costs becoming no longer a headwind for 2014, but possibly a tailwind as current hedging arrangements expire.”

Shackleton said Carlsberg is due to be the “largest beneficiary”, having suffered from higher input costs due to shortages in Russia in 2010 and 2011. “We see the greatest potential for recovery,” the note said. “With limited hedging in place in Eastern Europe, it is possible that lower input costs, especially on barley, could benefit Q4 of this year. Certainly, the most recent update on the Russia harvest is looking positive.”

Heineken is also likely to benefit, but Western Europe remains an “issue”, Shackleton said. Molson Coors has already been flagging some upside from lower input costs, although not in its key US and Canadian markets, it noted. 

Anheuser-Busch InBev has said it expects cost of goods-per-hectolitre to rise by mid-single digits on a constant geographical basis, Nomura flagged. 

SABMiller is forecasting input costs to increase low to mid-single digits in constant currency, reflecting lower raw material and packaging costs. Nomura added: “For FY2014, we believe the company is well hedged together with some benefits from its 'Business Capability Programme', where the company plans to centrally source all its raw materials need.”

Analysts Bernstein Research first predicted positive news for brewers on barley prices in May.

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