Carlsberg’s painful loss of the San Miguel licence

Denmark | The loss of the San Miguel licence in the UK to AB-InBev at the end of this year will hit Carlsberg hard. They brand had annual sales of 1.8 million hl and revenues of DKK 1.4 billion (USD 208 million). In actual fact, the San Miguel brand represented more than 50 percent of Carlsberg’s volume sales. Media put Carlsberg’s market share in the UK at 7 percent. With UK beer sales amounting to 45 million hl in 2023, Carlsberg sold some 3.1 million hl.

Naturally, analysts were wondering how Carlsberg could maintain its guidance of organic operating profit to rise between 4 percent and 6 percent this year, considering the loss of this business?

On 14 August, Carlsberg released its first half 2024 report. In the first six months, volume sales only rose 1.4 percent, given that in the second quarter, Carlsberg’s total volumes fell 3 percent over the same month last year because of poor weather in most markets in June.

Analysts were only somewhat reassured when they heard that Carlsberg’s sales in Western Europe went up again in July, making Carlsberg announce that volume sales will be flat this year over 2023, while revenue should grow in the low single digits.

In the UK, Carlsberg hopes to fill the hole left by San Miguel with its own brands like Poretti, Brooklyn, 1664 Blanc (formerly known as Kronenbourg Blanc) and Carlsberg Danish Pilsner. Moreover, Carlsberg’s CEO Jacob Aarup-Andersen is looking to diversify away from alcoholic beer as sales slow. As part of the shift, Carlsberg agreed in July to buy UK soft drink producer Britvic for GBP 3.3 billion (USD 4.2 billion).

Mr Aarup-Andersen also vowed to spend more on marketing to lure stretched consumers back. He pledged to keep raising prices to offset higher costs and lower volumes.

In the first half, Carlsberg grew organic revenue by 3.9 percent to DKK 38.8 billion (USD 5.7 billion), while organic operating profit was up by 4.7 percent to DKK 6.3 billion (USD 930 million).