E-Malt. E-Malt.com News article: Malaysia: Carlsberg Malaysia announces continued focus on its premium portfolio

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E-Malt.com News article: Malaysia: Carlsberg Malaysia announces continued focus on its premium portfolio
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Carlsberg Malaysia has announced a continued focus on its premium portfolio as well as some strategic new branding will be major parts of its newly launched five-year business strategy to cope and grow amid recession and inflationary pressures, the Food Navigator Asia reported on April 5.

Carlsberg Malaysia (covering the firm’s Malaysia, Singapore and Sri Lanka operations) closed out the 2022 financial year with 36.1% growth in revenue from RM1.8bn (US$406.4mn) in FY2021 to RM2.4bn (US$541.9mn) this year; as well as 57.7% growth in net profit from RM201mn (US$45.4mn) in 2021 to RM317mn (US$71.6mn) this year.

The firm also announced the end of SAIL’22, the strategy that had tided it throughout the COVID-19 pandemic, transitioning over to a new five-year plan dubbed SAIL’27 which is expected to guide the company through the next five years to 2027.

The change comes at a crucial time as the firm continues to battle with ongoing cost challenges arising from raw material price hikes and inflation despite its optimistic financial results.

“2023 will certainly be another challenging year as a global recession looms following inflationary pressures - Both Malaysia and Singapore are expected to record more moderate growth rates as inflation persists amid escalating commodity prices,” Carlsberg Malaysia Managing Director Stefano Clini told FoodNavigator-Asia.

“[Amidst this landscape], we will continue to focus on product innovations around alcohol-free and premium brands [in cognisance of] evolving consumer tastes and preferences.

“While these are currently emerging categories here, over time we do expect consumer behaviour to model the more mature European consumer markets that are more discerning regarding alternative choices to beer [especially as] the inflationary pressures are expected to adversely affect consumer sentiment and consumption habits.”

Over the past two to three years, Carlsberg has already seen significant success with the premiumisation strategy via the introduction of premium brands such as Kronenbourg 1664 and Connor’s Stout within its portfolio; and with non-alcoholic launches such as Somersby 0.0 and Carlsberg 0.0.

In addition to continuing down the premiumisation route, the firm is also planning to do a round of new branding for its SKOL beer to revitalise its market presence amongst consumers on the lookout for more affordable options.

“We are planning to launch new packaging for the SKOL beer brand in Malaysia and Singapore in the first half of 2023,” Clini added.

“This will be in line with its ‘New Look, Same Great Taste’ tagline and ‘You’ve Earned It’ branding [which looks to] cater to consumers who are more price-sensitive as a result of inflation.”

Carlsberg is maintaining a much more optimistic outlook for 2023 as compared to previous predictions for 2022, but has still taken the precautionary step to develop its new five-year strategy to withstand external challenges.

“Notwithstanding the current challenging business environment, we [believe] that we can capture long-term growth opportunities [to] sustain revenue and net profit growth [based on our] SAIL’27 strategy,” the firm highlighted in its recent integrated annual report.

“[In addition to inflationary pressures], The prevalence of illicit beer in Malaysia remains a challenge as it is estimated to make up about 60% of beer consumption in Sabah and Sarawak, and 20% in Peninsular Malaysia - This results in an estimated annual loss of RM1.5bn (US$338.6mn) in unpaid taxes for the Malaysian government.

“[Thankfully], no excise increase for alcohol was announced during the re-tabling of the Malaysian and Singapore Government Budgets in February 2023 - Malaysia and Singapore’s tax rate on beer is the second-highest in the world and any further increase will tighten consumers’ purchasing power for legitimate beer given the current high-inflation environment.

“[That said] we have seen a strong rebound as the modern and traditional on-trade channel as well as in the off-trade channel, driven by factors such as convenience, safety with the absence of crowds and cost-consciousness.”


07 April, 2023

   
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