Carlsberg recovers from highway ban hangover, volumes up 9.4%

Danish brewer Carlsberg grew its Indian business 23% in the year to March 2018, helped by higher sales of premium brands as well as disruptions such highway ban and demonetisation in the base year.

The maker of eponymous brand and Tuborg posted revenues of Rs 3,735 crore during FY18 compared to Rs 3,041crore a year ago, as per the latest filing with the Registrar of Companies. The world’s third largest brewer said sales volume rose 9.4% against the overall beer market growth of 8.6% during the year with market share increase of 100 basis points.

“The growth in volume and sales is driven due to consistent and increasing consumer demand for our brands, sustainable marketing support and coupled with increased production capacity of the company as a result of its operational contract manufacturing tie-ups,” it said in the filing. In late 2017, the brewer finalised building of its eighth brewery in Karnataka.

The Indian market was volatile in 2017 due to the highway ban and the implementation of goods and services tax, which led to fall in India’s beer sales. India is largely a whiskey and spirits dominated market and per capita consumption of beer is about 2 litres per person a year, which is little compared with the global average of about 30 litres.

Unlike most other markets where Carlsberg’s top seller is the milder version of lager, Carlsberg has been focusing on brands such as Tuborg Strong and Elephant in India because strong beer accounts for 80% of country’s overall sales volume. “India is another market of particular focus in Asia. Tuborg is our largest brand in the country, accounting for 86% of volumes and 81% of net revenue,” said Carlsberg in its 2017 annual report.

Carlsberg entered India in 2007 and became profitable in FY17. Its net profit grew 21% to Rs 216 crore in FY18. While Carlsberg’s turnover size is about a fourth of United Breweries, its profit is more than half of the larger rival, indicating higher focus on premium brands and urban markets compared to other players.

“Our industry checks reveal that with Carlsberg now reducing promotion intensity in the quest for profitability, it should augur well for the industry profitability. Selling and distribution costs are coming down for United Breweries,” a Motilal Oswal report said.

Source:-https://economictimes.indiatimes.com/industry/cons-products/liquor/carlsberg-recovers-from-highway-ban-hangover-volumes-up-9-4/articleshow/66913674.cms

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