Carlsberg Malaysia banks on premiumization to achieve more profit margins

MALAYSIA – Carlsberg Malaysia, a subsidiary of Danish multinational brewer Carlsberg, is aiming at premiumization to be its crucial strategy for growth during this time of inflationary pressures, rising costs, and price hikes.

Carlsberg Malaysia Managing Director Stefano Clini explained that one of the main reasons for premiumization is that the company can see that this strategy is a definite win-win for both the firm and its consumers.

The win-win format according to Malaysian brewer is that consumer gets more innovative drinks and experiences to try and enjoy, and it gets to sustain and increase profit margins.

The fact that the premium category is continuing to grow after all this time clearly shows that this strategy is right and is working, for example Connors stout , which was launched last year and has already become a top performer both on and off-trade.

Carlsberg’s premium product portfolio also includes multiple other well-known brands such as 1664 Kronenbourg Blanc, Somersby, and Asahi.

The Malaysian firm has launched innovations in the premium portfolio including a rosé flavor for Kronenbourg and a Passionfruit Orange flavor as well as a 0.0 version for Somersby.

In the recently announced first half of 2022 financial results, Carlsberg Malaysia’s high revenue remained in its premium category which achieved a further 41% growth in addition to continuous growth even throughout the pandemic.

There was also a rebound for Carlsberg’s mainstream beer products which had a 32% growth as opposed to continuous downturns over the past few years.

Cumulatively, the company reported a healthy 74.3% growth year-on-year in net profits to RM180.5mn (US$40.3mn) and 29.4% growth in revenue to RM1.2bn (US$269mn).

These impressive results were alongside even more exemplary second-quarter 2022 results of 139.5% year-on-year growth in profit to RM88.9mn (US$19.9mn) and 64.4% revenue growth to RM574.2mn (US$128.3mn).

Despite the sharp rebound it has seen, the beverage giant remains cautious about the future citing supply chain disruptions, rising commodity prices, the Ukraine-Russia crisis, and inflation.

As a result, the company has moved to raise its product prices in the second half of the year, affecting most of its major portfolio items including beer, stout, and cider.

Carlsberg removes partners’ board representatives from the Indian unit

Elsewhere, its parent company, Carlsberg, has said it is removing “certain” board representatives from its India unit that come from its partner Nepal-based Khetan Group, accusing them of acting against their joint venture’s interests.

Carlsberg said in an emailed statement to Reuters it had acted to “remove certain representatives” who had put forward what it called “serious and baseless accusations”. It declined to specify how many board members it had acted against.

Khetan has had three members on the board of Carlsberg India while Carlsberg has seven.

Carlsberg’s moves follow its win against Khetan last month in an arbitration case in which Khetan had been seeking financial relief related to the dispute.

The two giants in an Indian joint venture have had a deepening long-standing dispute that first came to light in 2019 when Carlsberg India board members from Khetan first protested internally before asking the Indian government to investigate what they said was Carlsberg’s ill business practices in the country.

Khetan had alleged the Danish brewer was non-compliant with laws on trade discounts, advertisement, and sales promotion.

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