Hangover for Carlsberg after ‘transition’ year

Carlsberg said on Wednesday it plunged into the red in 2015 because of large restructuring provisions and declining sales in Europe amid a shrinking Russian beer market.

Hangover for Carlsberg after 'transition' year
A bartender holds a glass of Carlsberg beer in a bar in St. Petersburg, Russia. Photo: Alexander Demianchuk/Scanpix
The Danish brewer reported a net loss of 2.6 billion kroner (€346 million, $392 million) for last year, compared to a net profit of 4.9 billion kroner a year earlier.
Carlsberg announced in November it was cutting 2,000 white-collar jobs, or around 15 percent of its workforce, to address its woes, affecting primarily Russia, China and Britain.
Around 1,700 people have already left the company or will do so shortly.
The brewer registered restructuring provisions of 8.5 billion kroner (compared to exceptional items of 1.3 billion in 2014) in 2015, out of a total of 10 billion kroner worth of restructuring charges and reductions in the value of its assets forecast until 2017.
Much of the charges were due to Carlsberg's Baltika brewery, the largest beermaker in Russia, where the beer market has gone flat after the government took measures to tackle alcoholism, including a crackdown on marketing and banning the sale of beer in kiosks and late at night.
Carlsberg has reduced production capacity at four sites and cut hundreds of jobs there.
“Savings are fully on track,” Carlsberg said in a statement.
In China, the brewer shut five breweries last year and two more since the start of this year. And in Britain, where the group recently ended a distribution deal with Tesco, negotiations are underway with unions.
The group's sales inched up last year by 1.3 percent to 65.3 billion kroner, as volumes fell by 1.0 percent.
Chief executive Cees't Hart admitted 2015 had been “a mixed year” for the group, with declines in its premium market Europe, while Asia posted robust earnings.
“As a consequence of the strong Asian results, however, 2015 marked the inflection point when the growth markets of Asia accounted for a larger part of the group than Eastern Europe,” it said.
The positive impact of acquisitions in China and Greece were “more than offset by the negative currency impact from the weakness of the Russian and Ukrainian currencies, in turn partly offset by stronger Asian currencies,” it said.
“The Carlsberg brand continued to deliver growth in Asia but declined in Western and Eastern Europe as a result of the overall market decline and (cyclical comparison difficulties) due to the World Cup in 2014,” an event that generates significant revenues for the football sponsor, the brewer said.
For 2016, Carlsberg said it expected low one-digit growth for its operating profit.

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Is Carlsberg about to release a paper beer bottle?

Two prototypes and new partnerships have brought Danish brewing giant Carlsberg a step closer to releasing a paper beer bottle.

Is Carlsberg about to release a paper beer bottle?
Is the glass Carlsberg bottle living on borrowed time? Photo: Kristian Juul Pedersen/Ritzau Scanpix

Carlsberg said in a press release that it was close to selling beer in paper bottles, in part to the partnership.

Having worked on development of sustainable packaging since 2015, the company is scheduled to present two prototype paper bottles in Copenhagen on Friday.

“Although we’ve not yet reached our goal, the two prototypes are a significant step on the way to achieving our ultimate ambition, which is to bring this groundbreaking technology onto the market,” deputy director of Group Development at Carlsberg, Myriam Shingleton, said via the press statement.

A ‘paper bottle union’ between Carlsberg, The Paper Bottle Company (Paboco) and three other global companies – Coca-Cola, L'Oréal and The Absolut Company – is driving the development, according to the Danish brewery.

Paboco said that the partnership with the high-profile brands would strengthen work to create sustainable packaging.

“We are working across different retail sectors, sharing risk and are together in our vision to make the paper bottle reality which would fundamentally change the sector forever,” Paboco CEO Gittan Schiöld said.

Both prototypes are constructed primarily of sustainably grown wooden fibres and have internal coatings which enable them to contain beer.

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