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Archive for May 23rd, 2008

Yes, it’s been a while. I’ve been in Dublin again, and I have some stuff to attend to both at work and at home. But you’re not forgotten.

The weekly business magazine of Danish daily Berlingske Tidende has a major article (available online, but in Danish) on Carlsberg’s strategy following the acquisition of Scottish and Newcastle. Carlsberg is now established as one of the five major players in the global beer scene, and Berlingske Nyhetsmagasin has interviewed the CEO, Jørgen Buhl Rasmussen, who talks quite openly about their four pillar strategy for how to earn money after spending a fortune on the latest acquisition.

The four value drivers are Eastern Europe, Western Europe, Asia and properties. They will not look at totally new markets, and do not envisage a move into, say, South America, even in a ten to fifteen year term.

The key factor in Eastern Europe is, naturally, Baltic Beverage Holdings, which was a joint venture between Carlsberg and S&N. BBH has a market share in Russia that has grown from 20 to 37 per cent in ten years, and is far in front of the four global competitors. The  BBH brand Baltika is the second fastest growing beer brand globally – and has a very high profit margin.

An independent analyst is quoted saying that BBH’s current market in Russia and the former Soviet republics will grow by 54 million hectoliters by 2011 – this expansion is bigger than the total British market.

The Western European market does not allow for such an expansion, so here it is more a matter of cutting costs and running the operations better. The overheads are being cut, as they have been higher then for the competition. They are closing down breweries, even the historical Copenhagen brewery is winding down. Nine or ten of 21 breweries in Western Europe are facing closure. (Including two Norwegian ones, I presume! Ed.)

There are limits to what can be done in Western Europe, but the hopes are very high in Asia, where Carlsberg is going for an expansion similar to the one in Russia. They have been present for some years in mature markets like Malaysia, Singapore and Hong Kong. The expansion now will happen in China, Vietnam and India.

Developing properties is the last part of the four pillar strategy. The development of the old Tuborg brewery area is almost finished, and the Carlsberg brewery in Valby, Copenhagen is next. They also have some very attractive real estate in cities like Leeds and Hamburg. An estiamate prices their real estate at about a thousand million Euros – serious money if you want to reduce your debt.

Puh.

Expect more beer and less beer industry next. I’m getting thirsty! But no Baltika, thank you!

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