Craft, premium and alcohol-free beers boost Carlsberg results
Carlsberg links the growth of such brands to its SAIL ’22 strategy; an initiative that was launched last year to strengthen the business and identify growth opportunities and value drivers of the global beer industry.
The brewer recently bought London Fields Brewery, eying up an opportunity to add to its growing portfolio of craft and specialty beers.
It has also enjoyed partnerships with New York craft brewer, Brooklyn Brewery, for several years: most recently launching a craft beer brand for Hong Kong called HK YAU; and announcing a brewery for small batch classic and experimental beers in Lithuania.
Despite the recent acquisition of London Fields, Carlsberg says its focus is not on acquiring more craft brewers, but rather growing its existing brands.
Carlsberg’s craft strategy
Speaking in today’s earnings call for Carlsberg’s H1 2017 results, CEO Cees ‘t Hart outlined the brewer’s craft strategy.
“With regard to craft, we have in our view a strong portfolio with brands like Grimbergen, Brooklyn… and these are international craft brands which we want to further grow and you’ve seen some signs of early success in our figures, talking about over 20% growth in this category,” he said. “So we feel our initiatives in Sail '22 really work.
“These are the international ones. Then we have some line extensions of our power brands, local power brands, we call that ‘crafty’ extensions, these are successful as well. Then we see here and there the need for some very local specific brands in our portfolio, one in the UK, one in the Baltics.
“But you should not expect from us a big effort in acquiring small craft breweries. So here and there… Where we see some gaps in our portfolio we will do so, but it’s not that you will see a step up in our acquisitions.”
London Fields Brewery
London Fields was founded in 2011 in Hackney, London, and sells a range of craft beers including Craft Lager, Easy IPA, and Shoreditch Triangle IPA.
Carlsberg acquired London Fields Brewery in July this year. The London Fields Brewery will operate as an independent business within a joint venture between Carlsberg and Brooklyn Brewery. Its craft beer range will become part of the Danish brewer’s core portfolio in the UK and will also form part of its House of Beers range – which caters for premium venues across London and other major cities.
Experimental beers in Lithuania
Carlsberg and US craft brewer, Brooklyn Brewery, will establish a brewery in Klaipėda, Lithuania, with brewers collaborating to create small-batch classic and experimental beers. The brewery will be installed at the site of Carlsberg’s Švyturys Brewery.
Carlsberg notes changing consumer habits: saying the level of knowledge about beer is rising; and demand is growing for diverse flavors and new, versatile beers.
Non-alcoholic beer growth
Releasing its H1 2017 results this morning, Carlsberg noted organic and reported net revenue growth of 2% and organic operating profit up 15%.
Total organic volume was down 2%, impacted by PET downsizing in Russia. However, volumes of Tuborg were up 3%, driven by Asia; while brand Carlsberg declined 1% impacted by tough EURO 2016 comparables.
Carlsberg also notes increasing interest in alcohol-free beer in Western Europe, with volumes up 13%. Some of its brands in this category include Carlsberg 0.0%, Tuborg Super Light and Carlsberg Nordic Hvede.
Commenting on the H1 2017 results, ’t Hart said: “We delivered a strong set of results for the first half-year, improving earnings and cash flow and reducing leverage. The results show we’re well on track to deliver on our key priorities for this year: achieving a substantial proportion of the remaining Funding the Journey benefits, enabling investments in SAIL’22-related activities to grow the top-line in the future.
“Funding the Journey is now well established and being embedded as normal procedure across our markets and functions. “Our strong financial results enable us to accelerate our investments in the SAIL’22 priorities to drive sustainable long-term growth of the Carlsberg Group. The growth of Tuborg in Asia, the expansion of Grimbergen and the further development of our fruitful cooperation with Brooklyn serve as excellent examples of SAIL’22 at this point in time.”
