China’s beer market will likely decline again in 2025, Carlsberg CEO Jacob Aarup-Andersen has said.
Beer volumes in China fell around 5% in the first nine months of the year, according to Carlsberg, which reported flat unit sales in the country during the period.
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Speaking to Just Drinks, Aarup-Andersen said Carlsberg was “quite pleased” with its “positive outperformance” but indicated the company expected another year when China’s beer market contracted.
“This year, the market in China will be down quite significantly, as you’ve seen so far. Next year, we do expect the market to perform a bit better but we are not expecting the market to go into positive growth. We do expect the market to decline next year also but our base case is that it will be a little bit better than this year,” he said.
China has attempted to boost the overall economy and consumption with a series of so-called stimulus packages. So far, there has been no impact on spending, Aarup-Andersen said.
“The big variance on that current estimate is it really depends on how the Chinese authorities act over the next couple of months. If they are going to go for bigger and more impactful stimulus, then it could impact the market versus what we’ve seen this year. Let’s see. Our focus in China is on driving our own strategy. We have a big strategy around driving especially into the big cities and that will continue no matter what happens in the market.”
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By GlobalDataAarup-Andersen was speaking after Carlsberg reported its third-quarter and nine-month sales figures yesterday (31 October).
Nine-month revenues rose 3% on an organic basis, with volumes up 0.8%.
In the third quarter, revenue grew 1.3% organically but underlying volumes dipped 0.2%.
“It was a tough quarter, impacted by a challenging consumer environment and weather. Nevertheless, we delivered volume and revenue growth in the majority of our markets, although lower volumes in China, France and the UK impacted overall group performance,” Aarup-Andersen said.
In France, Carlsberg’s market share fell in a declining beer category. Aarup-Andersen said the brewer had been affected by its moves on price.
“The market is down this year, which is not a surprise, of course, to anyone. The other element is it’s quite clear that we took a bit more price than our competitors did going into the year and the competitive reaction has been a little bit tougher than we had originally expected,” he said.
“Going into ‘25, it’s too early to say. Of course, we’re not going to talk about different strategies around price and value management in general but there’s no doubt that the strength of our brands is undiminished in France. We see a very high brand equity around our key brands there and therefore I think we will be adjusting some of our strategies and some of our relationships and partnerships.”
Across the Channel in the UK, Carlsberg reported lower sales from its ales portfolio and said its local business had also been affected by supply-chain disruptions that were now resolved. However, the brewer pointed to rising sales of Brooklyn, which it sells under licence in the UK.
Last month, Carlsberg’s UK venture announced plans to close its Banks’s Brewery in the English Midlands, the latest move to reshape its production network in the country in recent years.
Asked if Carlsberg had more plans to close or reorganise other UK sites, Aarup-Andersen said: “No, we have nothing to announce on that side. Of course, we are constantly looking at how to best run our UK business. And, of course, also with the impact from San Miguel [Carlsberg’s UK licensing deal for the brand ends this year], it’s important to stay agile in terms of our logistics footprint [but], no, nothing to announce there.”
He added: “As you know, we will hopefully in Q1 get the final approval to take over Britvic and there we would, then, of course, have a look at how to best organise ourselves but no I don’t foresee any of that type of action.”
Last month, The UK Competition and Markets Authority (CMA) set a December deadline for its investigation into Carlsberg’s acquisition of soft-drinks group Britvic.
The CMA said it has until 18 December to decide whether it needs to “refer the merger for a phase 2 investigation”.
Asked if he was concerned about the process to approve the deal, Aarup-Andersen told Just Drinks: “I get good legal advice on this and I think we have good confidence that we’re running a good process with the CMA. Of course, they need to make their decisions but I think we feel good about the probability of the deal closing on the expected timetable.”
