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Carlsberg Sees Asia ‘Transformational,’ CEO Rasmussen Says

Oct. 12 (Bloomberg) -- Carlsberg A/S, the Danish owner of Russia’s biggest brewer, said Asia will be “transformational” for the company as it expands sales across the region.

Asia has grown to represent about 15 percent of Carlsberg’s volume and is the main emphasis of the brewer’s emerging-markets development, Chief Executive Officer Joergen Buhl Rasmussen said today in an interview in London.

The region may eventually rival the volume of beer the Copenhagen-based brewer sells in Russia, its largest market, the CEO said, “although certainly not in my time at Carlsberg.”

The company sells beers in countries including Cambodia and China and got 11 percent of revenue from Asia in 2011, according to Bloomberg data. Further expansion could be achieved through joint ventures or acquisitions, Rasmussen said, after Carlsberg announced Sept. 28 it will team up with Singha Corp., Thailand’s biggest brewer, to distribute its brands in the country.

Brewers are scrambling to expand in Asia and other emerging markets as volume growth stagnates or wanes in the U.S. and Europe. Heineken NV got approval to take full control of Asia Pacific Breweries Ltd. on Sept. 28 after offering to buy out its South East Asian partner for S$5.6 billion ($4.6 billion). Anheuser-Busch InBev NV bid for the rest of Mexico’s Grupo Modelo SAB, the maker of Corona beer, in June for $20.2 billion.

Rasmussen said Carlsberg has “more than enough opportunities” in the regions it currently operates in, though that “doesn’t mean we’re not looking elsewhere.”

Russian Regulation

The Danish brewer gets the majority of sales from its north and western European unit and eastern Europe division, primarily Russia, where it has a market share of about 37 percent. Growth in Russia has been stymied as regulators stepped up restrictions on alcohol sales, including enforcing an advertising ban. Taxes on beer have been subject to regular increases, including a 200 percent excise tax rise at the start of 2010.

“We believe we will start to see growth in Russia again,” Rasmussen said, declining to give a forecast on the country’s beer market in 2013. The market may be “flattish” this year, he said as the company announced second-quarter results in August. Carlsberg is placing an increasing emphasis on selling higher-priced beers to compensate for weakening volume.

Carlsberg fell 0.6 percent to 513 kroner at 4:23 p.m. in Copenhagen. The stock has added 27 percent this year, giving the company a market value of 78.7 billion kroner ($13.7 billion).

Europe ‘Challenging’

Europe will be a “very challenging environment,” Rasmussen said, adding that conditions in northern Europe were becoming “a little more negative” as economic turmoil roils markets and affects consumer confidence.

“What we’ve been through in 2012, 2011 we should look at for 2013, 2014” he said of the European crisis. “There’s still a lot of opportunity in that negative environment.”

Brewers in Russia are facing a 25 percent tax increase next year to 15 rubles ($0.48) a liter. Carlsberg said it expects to increase prices “a little” more than the tax increase to drive profitability as drinkers outside big cities start to trade up and drink pricier beers.

The maker of Tuborg and Kronenbourg 1664 reiterated its full-year profit forecast in August as a better ruble exchange rate than when it made a prediction in February helped offset the effect of bad weather across north and east Europe.

Operating profit will stay at about the same level as last year, the company has said, while it anticipates that adjusted net income will grow “slightly.”

To contact the reporter on this story: Clementine Fletcher in London cfletcher5@bloomberg.net.

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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