Carlsberg to overhaul business and cut jobs

If you need proof that price promotion is a finite strategy, look no further than to Carlsberg. “Probably the best beer in the world” will need to cut its lager beer production in the UK and axe up to 100 jobs, after the supermarket chain Tesco said last month that it will stop stocking Carlsberg’s beers in all but 200 of its stores.

To all appearances, Carlsberg did not meet Tesco’s targets, not even when they used bargain prices to deliver higher supermarket sales. What this means for the Carlsberg brand is all too clear. Analyst Trevor Stirling, at Bernstein, put the finger into the wound when he told The Guardian newspaper: “In order to stay in Tesco they were putting money into price promotions instead of investing. They need to put more money behind the brand.”

So now Carlsberg will need to overhaul its image as well as its UK business.

“Funding the Journey” as Carlsberg’s global recovery plan is called, will be Carlsberg’s employees – those with jobs and those soon without one – as well as Carlsberg’s suppliers.

Thanks to the industry body Forum of Private Business talking to the media, Carlsberg was put into the Hall of Shame for changing its terms of payment such that bills will not be paid until 93 days after the end of the month in which the invoice is filed by the supplier.

Despite European Union guidelines stating that it should take no more than 60 days for businesses to pay bills, Carlsberg told the Forum of Private Business that “parties are free under English law to agree payment terms longer than 60 days”.

The extent of Carlsberg’s UK woes already became clear in September when media reported that over the summer the Irish cider maker C&C was negotiating a deal to acquire the UK operations of Carlsberg. Talks apparently came to nothing. The brewer has 13 percent of the UK market through brands such as Carlsberg, Tuborg, Tetley’s and Somersby Cider. It employs about 1,600 people in the UK.