Carlsberg Coursework 2

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Company Profile Incorporated in December 1969, Carlsberg Brewery Malaysia Berhad (Carlsberg Malaysia) began brewing Carlsberg Green Label beer locally in 1972. Since then, the brand has become part of everyday’s life and is the No. 1 beer brand with more than a 50% share of the Malaysian Beer Market. Carlsberg Malaysia is listed on the Main Board of Bursa Malaysia Securities Berhad (Malaysia Stock Exchange) under the consumer products sector. It is an established brewery that manufactures and distribute beers, stout and other beverages mainly in the domestic Malaysian market and also has investments in Sri Lanka, Singapore and in a Malaysian alcoholic beverage company. Carlsberg Malaysia has a beer for every drinker with different palates and lifestyles for every occasion. Its expanded brand portfolio includes Carlsberg Green Label, Carlsberg Gold, Carlsberg Special Brew, Kronenbourg 1664, Kronenbourg 1664 Blanc, Asahi Super Dry, Somersby Apple Cider, SKOL beer, SKOL Super beer, Danish Royal Stout, Corona Extra, Jolly Shandy Lemon and as well as nonalcoholic Nutrimalt drink. In addition, Carlsberg Malaysia through its subsidiaries, has also a wide range of imported international beer brands such as Hoegaarden, Stella Artois, Budweiser, Grimbergen and Beck’s. The Company now has 7 of 9 world’s top international beer brands. Being at the forefront of innovation and quality, Carlsberg Malaysia has always led the market with dynamic product launches and massive consumer campaigns. The company has also been championing many Corporate Social Responsibility initiatives focusing on four aspects of Environment, Community, Workplace and Marketplace.

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SWOT ANALYSIS Strength Quality brands:Carlsberg holds 7 out of 9 most popular beers throughout the world such as, Carlsberg Gold, Carlsberg Special Brew, Asahi Super Dry, Carlsberg Green Label, SKOL beer, SKOL Super beer, Danish Royal Stout. Strong performance in operations in Eastern Europe:The Carlsberg Group holds a strong no. 1 position in Eastern Europe. The Eastern Europe region covers the growth markets of Russia and the Ukraine and the emerging beer markets of Kazakhstan, Uzbekistan, Belarus and Azerbaijan. Economies of scale:They call this "the Carlsberg way". Faster because they will optimise their processes; smarter because they can share best practice across countries and leaner because they can focus on value adding activities and reduce costs through economies of scale. Product innovation:Carlsberg has sharpened its focus on innovation and the development of new products that can be sold throughout the world. Copenhagen is the first example of a new beer brand that is being rolled out globally. The beer, brand and design have all been developed by Carlsberg’s International Innovation Department in Copenhagen in collaboration with the Carlsberg Research Center. Strong position compared to smaller competitors:Carlsberg also holds a strong position compared to smaller competitors due to its higher revenue and capability to buy over local companies based on the market research according to the local taste. Capabilities of adapting to new environmental policies:Carlsberg has also been known to be very adaptive to new environmental policies and also has earned a good name through various projects to save the mother nature from pollution. Examples of some campaigns are reducing Carbon Dioxide and also Reduce water consumptions in their brewery.

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Weakness Largely exposed to the European beer market:Since Carlsberg is largely exposed in the beer market they face issues with other brewers as they would have to vary and enhance their products from time to time in order to stay competitive and remain as favorites. Very weak presence in Northern America and Latin Europe:Due to weak performances in mature beer markets in Europe and North America in recent years, major brewers have made strong efforts to create a more balanced geographical footprint so as to be able to take advantage of volume growth in fast-growing emerging markets and value growth in high-value mature markets. The base of their total cost are large:Since Carlsberg has evolved to become a brand from a brewery now it has to sustain certain costs like sponsors, environmental adjustments, advertisements and lot more to retain its name in the market.

Opportunities Asian Organic Growth Program:Possibilities for organic growth in Asia together with strategic acquisitions and joint ventures may benefit Carlsberg to get cheaper supplies and helps the brand to be advertised with least cost required. Adapting Local Russian Brand:Baltika has a great potential in Russia and possibilities for further growth in other Eastern European countries, and with this Carlsberg will also grow as they holds 89.01% share in the company. Increasing growth in premium segment:December 2011, received rights to locally manufacture, sell and distribute one of Asia's fastest growing premium beers - Asahi Super Dry. Liquidity and possibilities for greater advantage of economies of scale:Since they are well known for chipping out an amount to maintain the market position they may get a chance and grow together with their rivals.

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Threat Turbulent period in the global economy:Turbulent period in the global economy period of recovery or a new face of recession? This may lead to more budgets implemented by people on their daily live and reducing costs on anything else besides food and basic necessity. Exchange rate:The RUB exchange can make large losses for Carlsberg on a short term basis as they may fluctuate from time to time. Decline in Consumptions:In case there decline in beer consumption in the Northern- and Western European region as they are Carlsberg's largest market. Changes in consumption pattern:Also not to be forgotten as customer’s may think differently from time to time and if there is a sudden change in their consumption patterns Carlsberg being the fourth largest brewery may face fatal business lost.

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Strategic Planning Process Set Objective:Initiate local production and community water management activities at high-risk sites. Carlsberg has added an idea to its Eco-friendly nature as they decided to reduce water consumptions by 9% to 3.2hl/hl* within and outside their brewery as water wastage may cause a lots of issues in the future and giving a kick-start to this project hoping that other companies will also support in saving the mother nature and leaving our future generation with a better environment to stay in. Formulated:This idea has been formulated since early 2008 as they have participated in the Designing Water's Future in 2009 with INDEX and AIGA. Since then we can see the continuous effort from this brewery to reduce the usage of water in their daily efforts to produce one of the finest beers. Although its a challenging task, Carlsberg did some research on this matter and came out with an excellent idea of producing higher end barley's which are more resistant to climate change and also last longer with fresher taste. With this discovery they have a clear picture and speculations that will assist them for their 2013 project with the Russian's Baltika Breweries to conserve water in their breweries. Implementation:Implementation of this significant idea will begin early 2013 in collaboration with the United Nations Industrial Development Organization (UNIDO) where they will later have an oppurtunity to further strengthen one of their core values of engaging with society through dedicated community activities focused at improving the environment and implementing sustainable practices in agro-projects. Certain information about the progress of the Group in the 8 key CSR directions: “Environment”, “Responsible drinking”, “Community engagement”, “Marketing communications”, “Labour and human rights”, “Health & safety”, “Business ethics”, and “Responsible sourcing”. The online document also includes the targets of Carlsberg Group concerning CSR for 2012-2013. The report is based on data provided by the companies of the Group including Carlsberg Ukraine. Evaluation:This projects seems to be beneficial for the both the breweries and also for the brewing industry as it takes them them to the next level considering the mother nature and making our living environment a safer place to be. Taking risk to improve our surrounding is never a harm as Carlsberg may regain its investments once people starts to realize the difference and the effort put in by this company to make a difference for our future generation.

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Generic Strategy Carlsberg has a very different sort of strategy where it depends on the locals and their customer's to be more precise on their market. They learn as they mature in this business, in the sense of when they set a base in certain markets they offer their global product and also adapt to local strong beers to work together and tries to cover the entire market. Within this process itself they tend to learn their competitors and partners marketing strategy up till their brewing skills in order to improve their own quality in almost everything with this they gain more and more experience in order to understand their customers base. This information will then be processed and presented during the Annual Meeting among all the global Carlsberg Leaders. This is not only a very unique but a very beneficial technique which will keep them on the track as they mature in this line of business. Another marketting strategy that is strongly being imposed by Carlsberg is that they do heavy advertising job from a banner till the extend to sponsor a famous football club and even collaborating with charity and human rights association. This sort of activities may not only lead fame to the company but will also provide a high return and within few years almost everyone shall be aware of this amazing brand.

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Conclusion In conclusion I would say that Carlsberg Group has a very different and adaptive mind-set. It is proven that they are outstanding and are able to attract customers and partners easily. I'm pretty sure other competitors will have to think twice before competing with Carlsberg in the same market, after all they are now the 4th ranking brewery in the whole world and holding the 1st in certain countries. Certain threats like consumers behavior is unavoidable but besides that I feel that Carlsberg is ready for any sort of challenge within its business line. Working towards the environment sounds like a great idea and I doubt that any brewing company will take up such measures in order to produce beverages, with this step beverage industry will actually move up to the next stage producing better quality products and also ensuring our future generation has a better place to live. Looking at the confidence and amazing skills to adapt to new environment this company will probably be the 1st ranked worldwide brewing company in the next few years.

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References www.carlsberg.com.my/company/board_of_directors.html http://www.carlsberggroup.com/investor/companyprofile/Pages/default.aspx http://carlsbergmalaysia.com.my/web/company/cm_index.aspx http://carlsbergmalaysia.com.my/web/company/cm_boardofdirectors.aspx http://biz.thestar.com.my/news/story.asp?file=/2012/11/1/business/20121101090202&sec=business http://blog.euromonitor.com/2012/02/carlsberg-needs-to-find-growth-opportunities-if-it-is-to-retain-itsglobal-position.html http://www.carlsberggroup.com/csr/map/Pages/OurStories.aspx

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Appendix 1 Determine strategic vision

Define organizational mission

Analyze external environment

Analyze internal resources

Establish Objectives

Formulate strategy

Implement strategy ➢ Action plans ➢ Implement plans ➢ Monitor outcomes 10

Appendix 2 Water Consumption Table and Pie Chart

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Appendix 3 Key Figures for Carlsberg according to region Segment reporting by region (beverages) DKK million 2011

2010

49.7 47.7 21.3

49.5 46.8 17.9

118.7

114.2

Net revenue (DKK million) Northern & Western Europe Eastern Europe Asia Not allocated

36,879 19,719 6,838 125

36,156 18,187 5,613 98

Beverages, total

63,561

60,054

Operating profit before depreciation, amortisation and special items(EBITDA - DKK million) Northern & Western Europe Eastern Europe Asia Not allocated

7,307 5,753 1,643 -1,060

7,143 6,555 1,331 -817

Beverages, total

13,643

14,212

5,419

5,086

Beer sales (pro rata, million hl) Northern & Western Europe Eastern Europe Asia Total

Operating profit before special items (EBIT - DKK million) Northern & Western Europe 12

Eastern Europe Asia Not allocated

4,286 1,286 -1,114

5,048 1,044 -932

Beverages, total

9,877

10,246

Operating profit margin (%) Northern & Western Europe Eastern Europe Asia Not allocated

14.7 21.7 18.8 -

14.1 27.8 18.6 -

Beverages, total

15.5

17.1

Capital expenditure, CAPEX (DKK million) Northern & Western Europe Eastern Europe Asia Not allocated

1,946 1,153 889 332

1,644 745 549 384

Beverages, total

4,320

3,322

Depreciation and amortisation (DKK million) Northern & Western Europe Eastern Europe Asia Not allocated

1,884 1,467 356 55

2,057 1,507 287 115

Beverages, total

3,762

3,966

Capital expenditure/Depreciation and amortisation (%) 13

Northern & Western Europe Eastern Europe Asia Not allocated

103 79 250 -

80 49 191 -

Beverages, total

115

84

27,754 65,285 15,631 -2,678

28,216 67,553 10,826 -1,722

105,992

104,873

18.3 6.5 11.4

17.2 7.4

-

-

9.4

9.8

Invested capital, period-end (DKK million) Northern & Western Europe Eastern Europe Asia Not allocated Beverages, total

Return on average invested capital, ROIC (%) (running 12 months) Northern & Western Europe Eastern Europe Asia Not allocated Beverages, total

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13.7