Rising inflation not affecting beer sales, says Carlsberg

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(PORNCHAI KITTIWONGSAKUL/AFP via Getty Images)

Danish brewer Carlsberg said on Wednesday (17) that it had not seen rising living costs impacting beer sales, but that higher raw material prices would pressure earnings in the second half of the year. 

The world’s third-biggest brewer said sales in the second quarter were boosted by the reopening of bars and restaurants in most markets. 

“So far we don’t any see any impact in our figures (from rising inflation),” Chief Executive Cees ‘t Hart said, Reuters reported. 

“When people spend less on holidays, cars or a new fridge, they are at least willing to have a premium beer at the end of the day,” he said. 

The company, which also produces brands such as Kronenbourg 1664, Tuborg and Somersby, lifted its profit growth forecast last week on the back of strong performances in Europe and Asia. 

As pubs continue to recover from the pandemic, the UK saw 20 per cent on-trade volume growth “on the back of easy comps”. However, in the off-trade, there was a high single digit volume decline in the UK. The trend of strong post-pandemic on-trade growth and weaker off-trade growth is continued across many of Carlsberg’s market.

Globally, the company’s volumes grew organically by 8.7 per cent in the quarter, with sales reaching £2.32 billion(20.51 billion Danish kronor, $2.81 billion). 

“We are now well ahead of pre-pandemic levels, however we see dark clouds on the horizon,” ‘t Hart said. “We will see full effect of rising input costs in the second half of the year.” 

The company expects “high single-digit-percentage” organic profit growth for the full year, much below the 32 per cent growth it achieved in the first six months of the year. 

Rival Heineken said this month that consumers bought more beer in the first half of the year despite cost-of-living pressures, but that it expected rising costs to squeeze profit margins next year. 

In terms of its portfolio strategy, the business is looking to grow in its premium brands, alcohol-free brews, core beer and beyond-beer offering. CEO Cees ‘t Hart said the business had seen “good progress” on premium and alcohol-free beer in the first half of the year. 

The alcohol-free brews category saw its volume decline by three per cent in the first half, which is partly explained by a weaker off-trade performance, as the business says the category performs better in this channel than in the on-trade. 

The group is planning to “accelerate” investment in marketing across the business in the second half of the year, after bumping up spend in the six months to 30 June 2022. 

Despite challenges from inflation and the war in Ukraine, Carlsberg is far from the only drinks company to be betting on marketing to drive growth. Earlier this month, rival Heineken revealed it had upped marketing spend by 28.5 per cent in the first half of 2022. Last month, AB InBev attributed its rising profits in the second quarter of this year partly to its own increased marketing spend.