Carlsberg’s Russia Beer Struggle Worsens

REPLAY VIDEO
Your next video will start in
Pause

Recommended Videos

  • Info

  • Comments

  • VIDEO TEXT

Aug. 20 (Bloomberg) -- Carlsberg A/S and Heineken NV, two of the world’s top four brewers, signaled tougher times ahead for the beer industry as escalating political tensions in eastern Europe weigh on the region’s economy. Bloomberg’s Hans Nichols reports on “Market Makers.” (Source: Bloomberg)

May be better than anybody in the bloomberg universe.

What is going on?

What we have here is a barometer, a bellwether, of how slow growth is in russia.

Carlsberg is the biggest brewer in russia.

They get about 1/3 of their profits there.

They issued a profit warning earlier this year and they pulled back even further today.

You look at the organic beer sales in russia, it's down 13%. we have a tale of two brewers -- carlsberg overreliance on russia and heineken which is also the fourth biggest brewer globally, i think forth in russia as well, but they are also seeing some strength because they have been well diversified and have had a good summer here.

The world cup was a big hit and here is a hint, it is certain later this year.

People going outside.

If you are a beer brewer, you want a late easter and that's my take away from these two earnings reports.

Easter as a drinking holiday, this is new.

You mentioned carlsberg's emphasis on russia but the regulatory and tax environment there does not look like it will get any easier anytime soon.

Why are they comfortable staying at their size in that country?

Well, there are clear hints that the ceo gave that they will right size their production facilities inside russia.

You mentioned the taxes and the regulatory aspects, the heineken ceo says yes, some of this is geopolitical headwinds but also its shifting consumer tastes and about these new taxes and regulations on beer inside russia.

The other discouraging point for carlsberg is they also lost market share.

This cannot entirely be explained by the fact that there are sanctions and the ruble has weakened.

They also lost market share and that has to be a concern for them.

Russia is still a problem and we see consolidation the beer industry in the u.s. how much will that spread over two names like carlsberg?

There is a big scandal in germany maybe two months ago that the margins are so tight on beer with big brewers, it's hard to hit a profit.

What you had in germany is a bit of a cartel.

Basic ingredients of beer are pretty easy.

You need to let the yeast do the work and ferment it but other than that, you're basically looking at a pretty simple process that can be scaled.

Whenever you can scale, you have tight margins.

Hans nichols, the only man to talk to you when it comes to fermentation.

Thanks very much.

Craft beer is very expensive.

This text has been automatically generated. It may not be 100% accurate.

Advertisement

BTV Channel Finder

Channel_finder_loader

ZIP is required for U.S. locations

Bloomberg Television in   change