Carlsberg: ‘slow recovery in China’ after sales fall 7%

Danish brewer Carlsberg’s sales fell by 7.4% in the first quarter of 2020, but CEO Cees t’Hart warned the worst is yet to come.

Carlsberg has started replacing beers in its portfolio with new products that have a premium feel. (Photo: Carlsberg)

Volume sales in China, where smaller outlets are now allowed to reopen, fell by around 20% in the first three months.

As China’s own lockdown restrictions start to loosen, the brewery’s chief executive said it is yet to see any serious recovery.

“We see some pockets of demand in bars and restaurants, but in general it’s a relatively slow recovery in China,” Cees ‘t Hart told Reuters.

A rise in supermarket sales in the first three months of the year were not enough to compensate losses due to the widespread closure of bars and restaurants. Already, on-trade revenues have fallen 6% in Europe, but t’Hart warned there will be more trouble ahead if social distancing measures continue to be enforced throughout the year.

“Social-distancing requirements will continue and will impact consumer behaviour,” he said. “Consequently, volumes will decline further in the second quarter.”

Between January and March, Carlsberg made 12.9 billion Danish DKK ($1.88 billion), slightly above the 12.8 billion expected by analysts in a poll compiled by the brewer.

Over the past 12 months, the company has shifted its focus to premium and speciality beers in order to drive revenue growth. Carlsberg has started phasing out some beers in its portfolio and replacing them with brands that have a more premium feel. The brewer spent £20 million on a new ad campaign for a Danish Pilsner launched last year, while at the same time admitting its current flagship lager is “probably not the best beer in the world”.

But current lockdown measures could hurt this strategy. According to a recent survey compiled by market researcher Nielsen, the vast majority (69%) of people said they are buying brands they are already familiar with, rather than trying new things.

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