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CASTLE MALTING NEWS in partnership with Ukrainean
24 March, 2022

Brewing news Malaysia: Brewers poised for recover as Malaysia transitions into endemic phase of Covid-19

Carlsberg Brewery Malaysia Bhd and Heineken Malaysia Bhd are poised for a recovery as the country transitions into the endemic phase of Covid-19 from April 1, The Star reported on March 24.

Better sales for the brewery sector are expected as the country lifts lockdown measures by the reopening of borders, removal of limited operating hours for businesses and allowing for a higher number of people at events, according to CGS-CIMB Research.

“We expect an increase in work-from-office activities will result in higher footfall at key on-trade sales locations,” it said.

The on-trade sales have been weak at 30% to 40% lower compared with pre-pandemic levels.

Meanwhile, CGS-CIMB Research said the surge in raw material prices are not a key concern because raw material costs make up 8% of Carlsberg’s total revenue and 3% of Heineken’s total revenue.

For every 10% increase in raw material costs, it is only expected to lower earnings-per-share of Carlsberg and Heineken by 3.8% and 1.5% respectively for financial year 2022.

The recent selling price increase of 5% to 10% since the final quarter of 2021 is sufficient to offset the increase in raw material prices, according to the research house.

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