India: Carlsberg expects ‘volatile year’ in India
Danish brewer Carlsberg expects 2017 to be "volatile year" in India with its sales in the country continuing to be hit through the first half of the year following ban on selling liquor near highways, the Outlook India reported on May 11.
"We feel or our Indian team feels that especially the first half of the year will be hit the most due to the combination of closing, relocating and destocking as a consequence of that," said Carlsberg CEO Cees 't Hart at an investor call last week
He further added: "We expect a volatile year in India. It's too early to say how this all will pan out."
However, Carlsberg is expecting that the second half of the year would be better as the first will have issues such as implementation of GST. In addition to it, the brewer feels that demonetisation still has its effects on the market.
"Our team is a bit more confident about second half of the year than the first half of the year," Hart added.
The company said last week its Asian business was impacted in January-March quarter because of the highway ban.
"The totality of Asia, let's say, has declined or contracted a bit because of India," Hart said.
He further added: "So, despite a good start in all the other countries, in India, because of the implication of the highway ban, we had a double-digit volume decline. So, it's mainly India which impacts the performance in Asia in Q1."
In Q1 of 2017, Carlsberg's volume in the country declined by 20 per cent.
Moreover, its "comparables were impacted by alcohol ban in Bihar" by the Nitish Kumar government, which has banned use and sale of alcohol in the state last year.
Carlsberg's volume growth in Asia in January-March was flat, although, it had revenue growth of 6 per cent.
In China, the company had 4 per cent volume growth. However, in the premium portfolio, Carlsberg had 16 per cent growth mainly driven by brand Tuborg.
Despite, all these issues, the company is not seeing any decline in the demand from the Indian markets.
"We don't see a lower demand. The only thing is that there are less outlets and obviously that restricts some of the sales," Hart said.
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