Carlsberg Malaysia recently released its financial results for Q3FY2023, announcing a 10.2% year-on-year decline in revenue to RM513.4mn (US$108mn) and a 0.6% year-on-year decline in net profit to RM75.9mn (US$16mn).
In terms of cumulative nine-month results, the firm reported a decrease in revenue by 6.6% year-on-year to RM1.68bn (US$353.4) and a net profit decline of 3.0% year-on-year to RM249.2mn (US$52.4mn).
Of note was that profitability decline was mitigated as the government had removed a prosperity tax that was imposed in the previous year, and higher profits were seen from Carlsberg Malaysia’s Sri Lankan-based associate company Lion Brewery.
The firm largely attributed these declines to economic challenges and reduced consumer demand.
“The persistent weak consumer sentiment has continued to affect our third-quarter results,” Carlsberg Malaysia Managing Director Stefano Clini said when announcing the financial results.
“The higher interest rates and ongoing concerns over the escalating cost of living, particularly the rising cost of food amidst the backdrop of global economic uncertainty, continue to put pressure on consumer spending.
“[As such], we maintain a cautious outlook due to the anticipated higher inflationary pressures, and rising interest rates that are expected to depress consumer spending.”
Carlsberg Malaysia has been persistent in its implementation of a premiumisation strategy over the past few years, firm in its belief of this as a crucial strategy to continue achieving profitable growth - and it appears this slump in profitability has not changed its plans so far.
“On November 1, [Carlsberg Malaysia] has entered into a Memorandum of Understanding with Sapporo Breweries for the exclusive manufacturing and distribution of Sapporo Premium Beer in Malaysia commencing from 2024,” Clini announced.
“Similarly, [our] Singaporean operations shall have joint-distribution rights to sell and distribute both Sapporo Premium Beer and Yebisu.
“[Other premium initiatives ahead] for the year-end festivities include the launch of our limited edition 1664 PRESTIGE, packaged in a 750ml bottle and brewed with the finest champagne yeast, in Malaysia and Singapore to elevate the premium drinking experience.”
Clini had previously confirmed to FoodNavigator-Asia that premiumisation would continue to be a major focus in the medium-to-long term.
“The past three years have clearly shown that premium products are the items consumers look to for that consumption experience and we are confident that we will still be better off pursuing this strategy in the medium to long term,” he said.
“We believe that the trend is our friend and this is the best course to take - [It] is also important to note that trends by no means proceed in a geometrical straight line and just go up and down in a fixed manner but instead can be quite flexible so what does not work today may suddenly work perfectly tomorrow.”
Although not specifically highlighted, the new Sapporo partnership comes in as a rather clear replacement for Asahi, which was Carlsberg Malaysia’s previous exclusive distribution partner in Malaysia for over 10 years.
Earlier this year, the partnership between both brands was announced to be ending starting 2024.
“It is an amicable parting, [and] starting January 1 2024 Asahi will be a competitor and we will treat them respectfully just like we treat every other partner,” Clini told us previously.
“We believe that there is no risk at all to not continuing this partnership in Malaysia [nor] any material financial impact to the company for the year ending December 31 2023.
“This does not mean that we are stepping back from premiumisation at all, in fact we will continue to drive our premiumisation strategy.”