Carlsberg Sees Sustained China Growth on Premium Beer Push

Carlsberg A/S (CARLB) forecasts the 5 percent organic sales growth it had in the first half in China will be sustained the rest of the year as it boosts premium brews in the world’s biggest beer market.

“With the expanding middle class, international beers are becoming more affordable,” said Soren Ravn, who heads the Danish brewer’s business in the Greater China region. Rising incomes and urbanization will drive demand for its premium products, he said in an interview yesterday in Dalian, China, where he was attending the World Economic Forum.

The growth of Carlsberg’s business in Asia and Eastern Europe countered the decline in Western Europe, the Copenhagen-based company said last month. Brewers including Carlsberg and global market leader Anheuser-Busch InBev NV (ABI) seek to increase sales in emerging markets such as Mexico and China.

Carlsberg had a 2.6 percent share of China’s beer market last year, ranking sixth, according to Euromonitor International. China Resources Enterprise Ltd. (291), the maker of Snow beer and the state-backed partner of SABMiller Plc, had the most share at 21.7 percent while Tsingtao Brewery Co. (600600) ranked second with 15.7 percent, the London-based research company said.

Beijing Yanjing Brewery Co. ranked third with 11.7 percent, followed by AB InBev’s 11.4 percent and Henan Jinxing Brewery with 3.4 percent, according to Euromonitor.

Sales of Carlsberg’s premium brands such as Carlsberg Light and Tuborg are growing twice as fast as its local brands, Ravn said.

“The momentum we have seen in the first half, we can continue in the second half,” the executive said. “After many years of urbanization, you can start to do more of a cluster strategy and go for big cities.”

Acquisition Opportunities

Carlsberg has stakes in 40 breweries in China, mostly in the western and central region, and is “looking at opportunities available” for acquisitions, he said, declining to provide details.

Carlsberg rose 0.5 percent to 570 kroner in Copenhagen trading yesterday. The stock has gained 2.9 percent this year.

The world’s fourth-largest brewer saw a slight slowdown in its China business in the second quarter, Chief Executive Officer Joergen Buhl Rasmussen said on a conference call on Aug. 21. “In places like China, developing markets, you do see variance quarter on quarter,” he said at the time.

In March, Carlsberg offered to increase its stake in Chongqing Brewery Co. (600132), seeking to buy as much as 2.9 billion yuan ($474 million) of shares or a further 30 percent of the brewer. The purchase is pending regulatory approval.

Organic volume growth excludes the effect of acquisitions and disposals.

To contact Bloomberg News staff for this story: Liza Lin in Shanghai at llin15@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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