Malaysia: Carlsberg Malaysia committed to focus on premium products despite significant drop in sales

Carlsberg Malaysia has committed to continue its focus on premium products moving forward despite seeing a significant drop in sales, BeverageDaily.com reported on September 3.

Carlsberg Brewery Malaysia Bhd (Carlsberg Malaysia) recently announced its H1FY2024 financial results, reporting a 5.7% rise in revenue year-on-year to RM1.23bn (US$) but a drop of -3.4% in net profits year-on-year to RM167.3mn (US$).

The decline in earnings was attributed to taxation issues in the firm’s Sri Lankan business Lion Brewery (Ceylon) PLC, which incurred RM10.8mn (US$) of charges in the first quarter of the year.

“Our performance in the first half of the year was satisfactory although profits were negatively impacted by the deferred tax liabilities due to the restatement of foreign withholding tax in Sri Lanka,” Carlsberg Malaysia Managing Director Stefano Clini told the floor at the conference announcing these most recent financial results.

“We will continue to stay vigilant on cost management and cost optimisation opportunities in our supply chain, which will enable us to accelerate investments in our brands.”

The firm has been stalwart in pushing its premium products strategy or ‘Accelerate Premium’ over the past few years, but after several years of continued growth, the premium category has taken a hit in the first half of 2024 with a decline of -13% in sales.

This was in contrast to its mainstream product portfolio comprising items such as its regular Carlsberg beer and SKOL, which grew by 7% in H1FY2024, possibly due to tougher economic conditions and tighter spend in the region.

That said, Clini stressed that this will not change the company’s commitment to its portfolio premiumisation strategy.

“We continue to drive premiumisation, aligned with our ‘Accelerate Premium’ priorities, and have done so with the successful launch of two premium lager brands [in the past few months],” he said.

“These were the Japanese Sapporo and French 1664 BRUT, which were launched in both Malaysia and Singapore.

“In addition, we also unveiled the Somersby limited-edition Pineapple & Lime cider variant in Malaysia in July as an added boost to our cider category.”

“[In line with this, we will] continue to invest in consumer-facing campaigns to regain and drive growth for the premium category.”

The firm also saw a significant 29% growth in sales for its alcohol-free brew portfolio comprising Carlsberg Alcohol-Free Wheat and Pilsner, as well as Somersby 0.0.

“We launched Somersby Apple 0.0 in Singapore in December, and the Somersby Mandarin Orange 0.0 also drove higher sales in the first quarter, helping to lift volume,” he added.

“This remains part of our commitment to advocating responsible consumption, and we will continue to strengthen our offerings in this Alcohol-Free portfolio.”

Given current economic conditions, Clini maintained that the firm is proceeding with cautious optimism.

“On prospects, [we remain] mindful of the uncertain global economic outlook, marked by the ongoing inflationary pressures, high interest rates resulting in the increasingly cautious consumer spending and currency fluctuations,” he said.

“However, the timing of seasonal celebrations including an earlier Chinese New Year celebration is expected to contribute to an increase in sales volumes.

“In addition, as part of our ongoing brewery transformation, we will complete the installation of the new canning line and filtration plant upgrade in the second half of 2024 [which opens up even more prospects for us moving forward.]”

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