Carlsberg Suspends Outlook As Locked-Down Drinkers Opt For Cheaper Beers

By Dave Simpson
Carlsberg Suspends Outlook As Locked-Down Drinkers Opt For Cheaper Beers

Carlsberg has said that it has expanded its cost-cutting programme and suspended its outlook as beer drinkers under lockdown in key European markets opt for cheaper beers.

The world's third biggest brewer said that while sales at bars and restaurants in western Europe have been severely impacted as many countries are in lockdown, sales at supermarkets have been less affected.

However, as consumers top up their trolleys with daily essentials during less frequent visits to the supermarket, they tend to take no chances with speciality beer and instead stick to the less pricey mainstream brands.

"Consumers shift their purchasing towards multipacks and show less demand for craft and speciality products," the Danish brewer said in a statement.

With most bars and restaurants closed across Europe to tackle the coronavirus pandemic, grocery sales have spiked to record highs in some countries as shoppers under lockdown stock up on essentials.

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In China, Carlsberg's biggest market in terms of volume, "there were signs of recovery in March" after volumes were significantly down in February, the brewer said.

"Unable To Estimate The Full Impact Of COVID-19"

Carlsberg added that it has suspended guidance for 2020 and will review the second part of a share buy-back programme that was announced on February 4.

"The recent rapid increase in lockdowns of key markets and the uncertainty about the further development of the pandemic make us unable to estimate the full impact of COVID-19 on our business," chief executive Cees 't Hart said.

Cost Reduction Initiatives

"To mitigate the earnings impact of the lost volumes, we're further emphasising our Funding the Journey [cost-cutting programme] initiatives and have launched several firm cost reduction initiatives," he said.

The brewer has implemented hiring restrictions and is looking to reduce marketing and promotional campaigns.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.