Carlsberg has most to lose in Russia with its significant market share

Carlsberg has most to lose in Russia with its significant market share

Carlsberg is still suffering in one of its core markets - Russia. 

Earlier today, the Danish brewer reported that its full-year volumes in the country, through its Baltika Breweries unit, slipped by 7%. Regulatory restrictions introduced last year, including a ban on beer sales from street kiosks, continue to bite, with the Baltika 7 brand faring particularly badly.

But, is Carlsberg’s Russian rumpus about to subside... finally?

Nomura analysts suggest so. “The competitive dynamic looks sensible, and regulatory change looks to be at an end,” Nomura says in a note today (19 February). Pointing to Carlsberg’s own guidance, the analysts flag that 2014 is likely to be the “inflection point for volumes”, as the impact from the regulatory changes have peaked.  

The positive soundings echo what SABMiller Europe’s Sue Clark told journalists last week

However, Anheuser-Busch InBev, which has also suffered in Russia, has been less optimistic about the market, saying it could take years for the country’s beer market to return to pre-2008 growth. Heineken has also been affected.

And, as Bernstein analyst Trevor Stirling noted last month, analysts were making similar positive noises around this time last year, but the recovery did not materialise.

As Carlsberg has the lion’s share of Russia’s beer market - around a 38% share - which accounts for 40% of its total profits, it will be executives in Copenhagen most keen to seen a bounce back. And quickly.