Asia: Carlsberg to boost investment in Asia, keep raising beer prices, CEO says

Carlsberg A/S’ new chief executive officer said he’ll spend more to drive growth in Asia, and keep raising beer prices, as the Danish brewer looks to offset the loss of key Russian operations seized by that country’s government, The Edge Malaysia reported on December 12.

Jacob Aarup-Andersen, the former Goldman Sachs banker who’s now running the brewer, said in an interview that he’s earmarking fast-growing Asian markets like China, Vietnam and India for stepped-up investments, after several years of pandemic-related challenges and belt-tightening under predecessor Cees ’t Hart.

During ‘t Hart’s tenure, Carlsberg’s capital expenditure fell to about four billion kroner (US$578 million or RM2.71 billion) in 2022, from about 4.6 billion kroner in 2019.

The spending boost to drive growth comes after Carlsberg’s Russian business Baltika, which employed some 8,400 and accounted for about 13% of Carlsberg’s group revenue and 9% of 2021 operating profit, was seized by Russian government officials in July.

The 46-year-old CEO, who’s about 100 days into his tenure running the maker of Carlsberg and Tuborg beer, also said he wants the company to push harder on digital and data-driven activities as the trend of overall declining beer volumes persists.

Future plans for the brewer will be “focused on growth”, Aarup-Andersen said in Copenhagen, where the company is based. But the CEO, who succeeded an executive some 20 years his senior, said the shift in investment won’t be overly dramatic.

“We’ll continue to have strong financial discipline, but we’ll be normalising investments in key areas such as marketing and branding,” Aarup-Andersen said. “There are certain areas and geographies where we’ll be pushing harder.”

Aarup-Andersen said he’ll offer more strategy details in February as he prepares to “refresh”, rather than replace, the 176-year-old company’s Sail’27 plan drawn up under ‘t Hart.

“It would be would be very unnatural if the new CEO didn’t come with a fresh perspective on strategy,” Aarup-Andersen said, noting that Sail’27 dates back to before the Baltika seizure.

“On top of that, we’ve had significant inflation, we’ve had a consumer struggling globally,” the CEO said.

But Aarup-Andersen said he expects beer prices to keep rising to offset ever-increasing input costs, albeit at a slower pace than the unprecedented hikes seen over the past two years.

“I don’t think anyone in the industry will be able to maintain that in the coming years, but we will continue to take price,” Aarup-Andersen said.

Carlsberg’s total cost base will keep rising in 2024, and that means “you will see price increases from us again next year”, the CEO said.

The company also plans to ramp up low and no-alcohol beer ranges that are spread across its stable of brands.

Shifting consumer lifestyle choices and improvements in product taste mean that no-alcohol beer could account for as much as 10% of the market in Nordic countries within five years, the CEO said, up from the current 3% to 4%.

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