Malaysia: Carlsberg to exercise prudence in business plan

Malaysia’s breweries expect the business environment to remain challenging in 2023 on the back of global supply chain disruptions and recessionary pressures from leading economies, The Star reported on March 27.

Carlsberg Brewery Malaysia Bhd (Carlsberg Malaysia) chairman Tan Sri Chor Chee Heung said factors such as the ongoing Russia-Ukraine war, rising inflation and policy tightening would have an impact on business.

“These challenges are expected to impact overall gross domestic product growth due to waning consumer spending as the cost of living rises,” he said in the company’s latest annual report.

Despite these challenges, Chor said the group would exercise prudence in its business strategies going forward.

“Key opportunities that lie ahead for us include innovating and building on the growth momentum of our brands, while driving organic growth in our winning channels in both Malaysia and Singapore.”

Carlsberg Malaysia managing director Stefano Clini said Malaysia and Singapore are expected to record more moderate growth rates, as inflation persists amid escalating commodity prices.

“Cognisant of evolving consumer tastes and preferences, we will continue to focus on product innovations around alcohol-free and premium brands.

“While these are currently emerging categories here, over time, we expect consumer behaviour to model the more mature European consumer markets that are more discerning regarding alternative choices to beer,” he said in a statement in the company’s latest annual report.

Clini added that these inflationary pressures are expected to adversely affect consumer sentiment and consumption habits.

In a recent statement following Heineken Malaysia Bhd’s financial results for the financial year ended Dec 31, 2022 (FY22), managing director Roland Bala said was maintaining a cautious outlook for 2023.

“The group expects the business environment in 2023 to remain challenging given the continued global supply chain disruptions, recessionary pressures from leading economies, rising input costs, currency fluctuation and rising inflation that could impact consumer purchasing power.”

He added that the group would remain responsive to the volatile business environment and new market realities.

Roland also said he welcomed the stance taken by the government not to increase the excise duties on beer during the revised Budget 2023, which was tabled last month.

“Any hike in excise rates will further fuel illicit alcohol demand. As it is, Malaysia’s excise rate for beer and stout ranks second highest in the world.

“Illegal trade and smuggling have caused the government to incur tax revenue losses and pose health hazards to consumers with unregulated illicit alcohol.”

Meanwhile, RHB Research, in a recent report, said it expects volume growth for Heineken Malaysia to be flattish going forward from the high FY22 base.

“Management is expecting a more challenging year ahead in view of the uncertain global economic outlook and elevated inflationary pressure,” the research house said.

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