The just-drinks interview - Jørgen Buhl Rasmussen

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Late last year, Carlsberg announced a change at the top, with Jørgen Buhl Rasmussen replacing Nils Smedegaard Andersen as CEO. Ten months into his tenure, Rasmussen has rarely been out of the headlines, most notably due to Carlsberg's long-running fight to buy Scottish & Newcastle. In this month's just-drinks interview, Olly Wehring quizzes Rasmussen about S&N, where he sees growth for the Denmark-based brewer and the current landscape in the global brewing industry.

Jørgen Buhl Rasmussen's first ten months in the hot seat at Carlsberg have been nothing if not lively. No sooner had he replaced Nils Smedegaard Andersen as CEO last October than the Danish brewer confirmed it was in talks with Heineken to buy and break up Scottish & Newcastle (S&N). The battle that ensued was arduous and colourful - at one point S&N went on record calling the two European companies "pathetic, desperate men clutching at straws".

"It was a tough and long process," Rasmussen admits. "We were not surprised that it became a little emotional. Having worked with S&N as a joint venture partner [in Eastern European brewer Baltic Beverages Holding (BBH)], we'd talked on a number of occasions over the last few years about what we could do together more in certain areas, and it never really happened."

Rasmussen was all too aware that having to publicly announce Carlsberg's discussions with Heineken before approaching S&N was bound to cause upset at the UK brewer. "The strong reactions to the news that we were in a consortium to acquire S&N was understandable," he says. "But, yes, some of the language was a little stronger than we anticipated. They played their game, and they played it very well. Our game was all about being very disciplined, and not getting involved in arguments through the media. If we had done that, we'd have been off our own agenda and not focused. We did not want to get into a battle through the media, but we did a good job at sticking to our own strategy and not getting drawn into anything nasty."

If Rasmussen could go back and run through the transaction again, there is only one thing he'd look to change. "I don't think we could have done anything differently," he says. "I would have preferred to go to [S&N chairman] Sir Brian Stewart and [S&N CEO] John Dunsmore and talked to them face to face before it came out in the media. But then again, we're still on good terms - I still talk to both Sir Brian and John. They played their tactic, we played our tactic, and it became, I believe, a win-win situation for both them and us. I'm still convinced that this is a win for Carlsberg."

The two European brewers finally completed the purchase of S&N in April, after upping their initial offer of 720p per share four times. The transaction - at GBP800 per share - ended up costing Carlsberg and Heineken GBP7.8bn (US$15.34bn), and saw Carlsberg gain full control of BBH, market leader and veritable cash cow in Eastern Europe and Russia.

So, how is the integration of Carlsberg's share of S&N progressing? "I think it's going exactly as planned," says Rasmussen. "Before we finalised the deal, we started preparing for the hoped-for takeover of S&N and integration into Carlsberg. We established a lot of different work streams to work on, in areas including financial reporting and portfolio management. I think we did a good job in terms of planning for the integration and now we are starting to execute it. So far, there haven't been any big surprises compared to what we analysed before. We don't really have any big issues. What we've acquired here is more or less what we thought we would acquire."

Jørgen Buhl Rasmussen, Carlsberg's CEO

Certainly this is the case with its erstwhile joint venture, BBH. "BBH we knew, so there aren't any surprises there," Rasmussen says, adding that it was focusing on "getting them into a framework within Carlsberg without putting a Western European system on top of them because they need some freedom to explore all opportunities".

In France, however, Rasmussen feels that Carlsberg has some issues to deal with. Indeed, S&N had problems in the country right up to its sale, forcing it to divest a large proportion of its on-trade distribution businesses in the country in November. "The French business still has some issues," Rasmussen says, "particularly portfolio and brand positioning - and these aren't the kind of things you just turn around tomorrow. But it's all progressing as we more or less assumed and analysed beforehand.

"We're playing in Western Europe, Eastern Europe and a number of markets in Asia," he says. "Where we play, we are big. We will always be an important player, as long as we're significant where we are. We're not in America, we're not in Latin America or in Africa in a big way - that's the choice we've made and I don't think we should be in those markets at this point in time."

It is Vietnam, however, that Rasmussen feels Carlsberg could do well going forward. "Vietnam's one of the few markets where we see growth in population," he says. "It's a market where, economically, right now there are some issues - high inflation based on what's happening to raw material costs. But in the medium-to-long-term, everyone believes that Vietnam will have significant growth. They also have a beer culture, as well as a growing population. We have a partnership with Habeco in the north, which is a significant player, so we have many opportunities to really make this a very exciting market for Carlsberg."

While the majority of global brewers are focusing their energy on India, Rasmussen prefers to take a softly-softly approach to the market there. "India to me is a bit like testing the waters," he says. "We're starting in India the way we did with BBH many years back. It may be a concern that the other global brewers are a little ahead of us in India. But even if we have strong competition, this market could be a big opportunity - there are just so many people there, and consumption can only grow.

"Nobody knew 15 years ago what would come out of BBH. The way we've approached India, with our branding strategy - Carlsberg, Okocim Palone, and maybe adding another brand - is different to the other players who are around local brands. Who knows? If this is not significant, it'll still be very important."

Considering the current events amongst the global brewers, the temptation to ask Rasmussen about InBev's moves to buy Anheuser-Busch is too great. "I look forward to seeing how the Inbev Anheuser-Busch situation turns out," he says. "I wouldn't like to guess what the outcome will be, but I can already see some signs that this will involve a long process, so good luck to them."

From Carlsberg's perspective, however, Rasmussen sees little effect should InBev prove victorious. "I don't see anything changing from our point of view, in terms of the competitive scene. I've often said that it's very important for us to be strong in the markets in which we choose to compete. This possible takeover won't really impact us in the markets we are in - China, maybe, a little bit, but not to any significant extent. I don't mind if we are number three, four, five or six on a global ranking, as long as we are important in the areas where we choose to play."

The S&N acquisition has clearly left Carlsberg's coffers rather lighter than they were but Rasmussen appears happy with the brewer's finances, and is confident it could fund further bolt-on acquisitions if opportunities arose. "I've no concerns about our financial situation," he says. "If you look at what's happening out there, I don't think our debt level should be of any concern. We have a cash machine in the form of BBH in Eastern Europe, so I don't think there's any reason to be concerned.

"We will have the same strategy as before, in terms of if there's somewhere where we feel it could add value to invest - we bought the market leader in Azerbaijan not long ago - we are not restricted. If there were other positions to buy in Asia, we would buy. Of course, we cannot do another S&N in the near term, so it wouldn't be another huge takeover, but the add-ons that make strategic sense and can strengthen our position in markets we've chosen to be in, we can still do. We have that flexibility. I'm sure we'll be a key player in terms of consolidating the marketplace going forward. We're here to stay."

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