Malaysia: Carlsberg Brewery Malaysia has no plans of further price hikes this year

Carlsberg Brewery Malaysia Bhd does not plan to increase the price of its products for the rest of 2019, outgoing managing director Lars Lehmann was quoted as saying by The Sun Daily on April 10.

The group has hedged its needs for malt and barley, its two main components, as well as aluminium cans for the rest of 2019 to lock in the costs.

Chairman Datuk Toh Ah Wah said there will be “no major surprises” in prices, barring new regulatory changes.

Carlsberg has hiked price of certain products to distributors and retailers between 3% to 6% effective this month on rising costs.

“The price increase is preserving our margins. If we don’t do that, our margins will go down but we are able to keep our margins more or less unchanged,” Lehmann told a press conference after its AGM on April 10.

The rising costs of raw materials were attributed to escalating production costs with malt prices increasing by 15% to 20% due to bad barley harvests in Europe and Australia; the increase in prices of glass bottles by 4% in 2019 versus 2018’s prices; as well as utilities costs that were up 6.6% in July 2018.

Meanwhile, Lehmann pointed out the existing regulatory developments, including the smoking ban will affect its on-trade consumption.

“The smoking ban is not helping the industry and it’s a new phenomenon this year impacting beer consumption in the outlets,” he said of its negative effect on beer sales.

However, he noted that stricter issuance for import licences on alcohol will benefit local brewers in the long run, while greater enforcement against counterfeit alcohol products has resulted in a 30% increase in excise duty on duty-paid production in January to February 2019.

On the sugar tax postponement until July 1, 2019, Lehmann said Carlsberg does not add sugar in its beers but noted that there is sugar in Jolly Shandy and Nutrimalt.

“We have to pay sugar tax from July 1. It’s not a huge amount. It’s around RM500,000 and we’re working to see if we can reduce the sugar in the recipe and still have the same good taste.”

There are also plans by Carlsberg to do more in the alcohol-free beverages space, in the areas of malt drinks.

“We believe that non-alcoholic beers have limited opportunity in Malaysia but there are other ways of creating exciting alcohol-free beverages,” Lehmann noted.

He added that Carlsberg remains focused on its investments in great innovations, excellent product quality and relevant consumer activations.

10 April, 2019