Carlsberg targets Russia, Asia

14 December 2010

COPENHAGEN: Carlsberg is to use innovation and sophisticated consumer insight in a bid to establish a stronger footprint in Russia and Asia.

In an interview with the Wall Street Journal, Jørgen Buhl Rasmussen, ceo and president at the world's fourth-largest brewer, said the brand's heritage will help it grow in both regions.

Expansion will be fuelled by a campaign of strategically-timed acquisition.

Two years ago, Carlsberg teamed up with its Dutch rival, Heineken, to complete the takeover of the UK's Scottish & Newcastle.

The S&N deal, which saw Carlsberg become a global player with exposure to the enormous Russian market, has resulted in its Baltika Brewery division accounting for some 45% of the company's overall revenue today.

But the global economic slowdown of recent years has hit the firm hard, with Russian sales falling by 10% in 2009.

Moreover, a further drop of between 10% to 13% is expected for 2010.

Despite this sales trend, and the tripling of beer excise tax in Russia at the beginning of this year, Buhl Rasmussen said that emerging markets have enormous growth potential.

For Russia specifically, he stressed that Carlsberg is in it for the long haul.

"We would rather be there than not. Our view is that in the long term there is a lot of growth in Russia."

The other big growth opportunity for the firm is Asia.

With major interests in China, India, Malaysia and Vietnam already bearing fruit, Buhl Rasmussen said that future growth will inevitably be linked to these key territories.

"You are probably looking at somewhere between 60% to 80% of global volume growth coming from Asia and a big part of that will come from China," he added.

While Buhl Rasmussen refused to be drawn on the likely time frame for a possible acquisition in the region, he said that Carlsberg "sees many opportunities for strengthening our position in Asia and that includes at some point in time some further acquisition out there."

More generally, the Danish brewer is moving away from its roots and toward a more FMCG-style business model.

The organisation today, Buhl Rasmussen said, is an international company with a global reach, not just a "Nordic brewing business."

He added: "We are a branded business, focused on innovation.

"So in essence we are very much like other FMCG companies such as Procter & Gamble."

Data sourced from Wall Street Journal; additional content by Warc staff