Carlsberg bets on China, expensive beer for higher growth goals

A bar worker carries a tray of Carlsberg beer in Copenhagen, Denmark, July 30, 2022. REUTERS/Andrew Kelly/File Photo

LONDON  —Danish brewer Carlsberg on Wednesday outlined plans to reach its stepped-up growth ambitions through 2027, including higher spending on marketing for its expensive beers and in key countries like China.

The world’s third-largest brewer and maker of brands such as Kronenbourg 1664 also reported forecast-beating full-year revenue, though its expectations for 2024 operating profit growth were behind many analysts’ expectations.

Its shares rose 3 percent in early trade.

On Tuesday, Carlsberg raised its 2027 targets for revenue and operating profit growth after new CEO Jacob Aarup-Andersen reviewed his predecessor’s strategy, but gave few details about how it would reach its more ambitious goals.

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Aarup-Andersen told journalists on Wednesday that during a challenging past few years with the COVID-19 pandemic and war in Ukraine, Carlsberg had been defensive. But now it could accelerate its long-term plans.

“We see clear opportunities to inject investments and accelerate our long-term growth,” he said.

Upscaling

Those investments include more spending on marketing for its portfolio of more expensive beers, pushing further into other categories like ciders and seltzers and doubling down on its expansion in Asia, in particular China, its largest market.

In 2024 alone, Carlsberg expects to increase sales and marketing investments by over 20 percent, with most of that spending dedicated to China and Vietnam, premium brands and digital projects.

It said it expects organic operating profit growth of between 1 percent and 5 percent in 2024, well below some analysts’ expectations.

Laurence Whyatt, analyst at Barclays, said the company has a reputation for setting more conservative guidance at the start of the year and upgrading it later, but its current guidance suggested Carlsberg could struggle to reach his estimates.

“Maybe we’re being too optimistic,” he said of his forecast for operating profit growth of around 12 percent. He added that Carlsberg’s 2027 growth goals also appeared to rest on uncertainties, such as a rebound in the Chinese economy.

Carlsberg said while the consumer environment in the country remained subdued, it still expected to grow volumes in China thanks to market share expansion.

The company reported a 4.7 percent rise in 2023 revenue to 73.59 billion Danish crowns, narrowly topping the 73.31 billion expected by analysts, LSEG data showed.