Malaysia: Carlsberg Malaysia to pour in additional investments to boost portfolio expansion
Brewery giant Carlsberg Malaysia has pledged to pour in additional investments to boost select parts of its SAIL business strategy, with priority given to areas such as premium and zero-alcohol innovation, digitalisation and supply chain efficiency improvement, FoodNavigator-Asia reported on May 1.
Carlsberg Malaysia recently held its latest Annual General Meeting (AGM) whereupon Managing Director Stefano Clini announced a refresh of the firm’s five-year guiding strategy SAIL ’27 to become Accelerate SAIL, which would see additional resources being pumped into seven individual areas of the business.
“This is essentially the same SAIL ‘27 strategy we have been following all along, but this is just a refresh where we have selected seven elements in which to invest more to accelerate progress,” Clini told the floor at the post-AGM press conference, which FoodNavigator-Asia attended.
“The seven areas we have selected are Premium, Beyond Beer, Capability building, Digitalisation, Growth Culture, Together Towards Zero and Beyond (TTZAB, the firm’s sustainability strategy) and Supply Chain.
“We have been emphasising all along that we will continue to invest in growing our premium portfolio despite the current state of low consumer sentiment; as well as in our zero-alcohol (Beyond Beer) portfolio as this is important to be inclusive to all consumers as well as to promote a good environment for responsible drinking.
“More importantly, we believe that the current dampening in consumer sentiment is a short-term setback but that in the long-term, the metrics and growth factors are fully in our favour here in Malaysia – we have a growing young population and in the long term the economy is also set to see growth.
“The thing for us is to focus on the long-term potential, and we are well aware that it is not wise to make long-term investment choices based on short-term factors, so certainly will not shy away from our premium strategy despite low consumer sentiment this year – we need to look ahead 15, 20, even 30 years.”
Some of the firm’s portfolio expansion investments into premium and zero-alcohol products so far this year have included an alcohol-free Somersby Mandarin Orange 0.0 as well as a lager version of its hugely popular Kronenbrourg 1664.
In addition, Carlsberg Malaysia also announced that it would be adding to its RM108mn (US$) CAPEX brewery upgrade investment with a further RM92mn (US$) CAPEX funds injection this year, focused on the development of a new canning line and beer filtration plant.
“This added investment brings our cumulative CAPEX investment over the last three years to over RM200mn (US$), the largest CAPEX investment in the brewery since its inception and firmly showcasing our confidence and commitment to the Malaysian market,” Clini said.
“The new canning line and beer filtration plant will contribute to higher production flexibility and lower energy and water consumption in line with our business strategy.”
Despite Clini’s confidence, it is clear that the firm still has quite a few storms to weather before it can return to business-as-usual in terms of growth.
“We still maintain a moderately optimistic stance on the outlook ahead in 2024,” he said.
“This is due to prevailing uncertainty in the economic landscape due to high interest rates, continuing inflationary pressures, currency fluctuations and the impacts of SST – things can change very quickly.
“The GDP is starting to grow again but consumer sentiment does not necessarily grow hand-in-hand with this - So in short in the short term the waters are still troubled, but in the long term we are confident of growth.”
These pressures have also led to Carlsberg Malaysia recently also having to announce a round of price hikes to be implemented across April and May 2024.
“The priority for us and the reason for this is to preserve our margins – we have implemented a raft of other measures such as improving product mix and efficiencies as well as other initiatives, but have still found it necessary to implement some price hikes,” he added.
“This will affect selected SKUs and not all, and is our first round of price hikes since 2022.”
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