Brewers toast World Cup boost

An encouraging week for the beer industry culminated with Carlsberg doubling its full-year profits guidance after reporting a jump in net profits for the first half of 2010.

The announcement from the Danish brewer followed the news that Anheuser-Busch InBev, the world’s biggest brewer, reported a second-quarter profits rise of 7.5%, which it said was mainly thanks to the recent football World Cup.

Carlsberg said yesterday that it expects net profits for the year to rise by 40%, rather than the previously-forecast 20% increase, despite challenging conditions in many of its major markets.

The decision followed a 57% increase in net profits for the six months to the end of June to US$533 million.

A surprisingly resilient performance in Russia was the catalyst for the optimism, despite the Russian beer market being rocked by a three-fold increase in beer duty back at the start of the year.

Carlsberg had previously anticipated Russia would witness a volume decline of between 10-14%, but now believes the loss will be in single digits.

Carlsberg attributed around three quarters of its 12% rise in operating profits to currency gains from the Russian rouble.

In total, Russia showed a 3% like-for-like volume decline for the first half of the year against H1 2009, while Northern and Western Europe also saw declines of 2%.

Asia is also proving fruitful for Carlsberg, with volume share gains of 40% – albeit off a small base – and the brewer reported strong market share gains in the region.

Jørgen Buhl Rasmussen, Carlsberg CEO, said: “We achieved higher margins in all three regions for the first six months, showing that we are clearly on-track to meet our medium-term margin targets.

“We will continue to balance our plans to improve efficiency and margins with our ambitions to drive top-line growth.”

Meanwhile, A-B InBev, the producer of Budweiser, Stella Artois and Beck’s, said results this year beat its own expectations and it anticipates continued growth through 2010.

Revenue rose 4.1% to US$9.2bn in the second quarter, with the Belgium-based company saying it sold 2% more beer during this period.

It said decent weather "helped drive volume growth, except in Asia," and the company’s sponsorship of the World Cup this summer, and its heavy marketing of flagship brand Budweiser, helped performance and drove volume growth.

Molson Coors said earlier this month that it too was helped by thirsty World Cup fans around the globe.

Felipe Dutra, chief financial officer, said: “Thanks to Budweiser’s 2010 FIFA World Cup sponsorship [the brand’s] volumes were essentially flat in the first half of 2010.

"We are quite pleased by that performance. The brand had been declining for a long period of time.”

The company expects profits to keep rising for the rest of the year, helped by a rebound in sales from last year, when key markets worldwide were hit by recession.

While US volumes dropped by almost 5% in the first half – and by more than 7% in Canada – they rose sharply in Latin America, Western Europe and Asia. The company said volumes also dropped in Russia and other East European markets.

Alan Lodge, 18.08.2010