Carlsberg sacks Baltika CEO
On 26 Ocotber 2011 Carlsberg announced it has appointed Dr Isaac Sheps, currently CEO of Carlsberg UK, to take over the leadership of Baltika Breweries (Baltika), Carlsberg’s Russian unit. Dr Sheps will also be responsible for Carlsberg’s operations across Eastern Europe. He will take over on 1 December 2011 and replace Anton Artemiev, the current CEO of Baltika, who will nevertheless continue to serve as a member of the Baltika Supervisory Board.
The change in the executive suite may take some by surprise but it’s the usual last ditch resort once the going gets tough. Baltika’s Russian sales have weakened in recent years following the government’s clampdown policies on beer consumption in order to tackle alcoholism. Moreover, competition is likely to intensify as SABMiller plans to join forces with Turkey’s Anadolu Efes to become the number two in the market.
Carlsberg, which relies on Russia for 40 percent of sales and perhaps 45 percent of its profits, said in August it would cut its outlook for 2011 beer volume growth in Russia after the second-quarter performance missed both analysts’ and Carlsberg’s own expectations.
The Russian beer market declined by about 2 percent in the second quarter. As a consequence of Carlsberg’s Russian troubles, the brewer has seen its market capitalisation halve between June and September 2011.
This called for drastic actions.
Mr Artemiev had been President of Baltika since 2005, when it was co-owned by Carlsberg and Scottish & Newcastle, and has overseen significant increases in market share.
However, Carlsberg’s top brass in Denmark probably thought that they will need to fight harder for market share in Russia than before, when the extreme growth left a bit more room for slack in the organisation.
Why Carlsberg thought a foreign manager such as the Romanian-born Dr Sheps could give them greater control over the business remains to be seen. To his credit, Dr Sheps, who joined Carlsberg UK in October 2008, has been successful in turning the UK business around to a point where it is has tripled its profits while growing market share from 13 percent to more than 15 percent, at a time when the UK beer market has been in decline.
At least, Carlsberg are keeping Mr Artemiev on the board (for the time being, at least) to help them negotiate Russia’s complicated political landscape.
An announcement regarding the appointment of a new CEO for Carlsberg UK will be made as soon as possible. Jesper Friis, Senior Vice President, Western Europe, will act as the interim CEO.
