Carlsberg warns higher prices will hit beer sales

Carlsberg has warned that beer sales this year would be hurt by higher prices, threatening to squeeze profits at the world’s third-largest brewer.

The Danish group said on Tuesday that while beer “historically has been a resilient consumer category” the large price increases required and high inflation would hit sales, especially in Europe.

“2023 will be another challenging year, but the strategic, organisational and financial health of our company is strong, and we are confident that our purpose-led and performance-driven culture will drive continued sustainable long-term value creation,” said chief executive Cees ‘t Hart.

As a result, Carlsberg said its operating profit this year could fall by up to 5 per cent or rise by up to 5 per cent, depending on how sales perform.

The Danish brewer forecast its cost of sales to increase by a “low-teen” percentage, with the pressure expected to be acutest in the first half. It added that it would offset the higher expenses by increasing prices, changing the mix of products and cutting overheads.

Hart told reporters that prices would have to increase by a high single-digit percentage to cover the rise in costs.

Shares in the brewer, which lags behind Anheuser-Busch InBev and Heineken by sales, fell 2 per cent on Tuesday.

Hart raised eyebrows on Monday when he declared that he hoped Carlsberg could eventually return to Russia even if it took more than a decade. The company is in the process of selling its Russian business after President Vladimir Putin’s full-scale invasion of Ukraine and is hoping to find a buyer before the summer.

Carlsberg intends to sell licensing rights for some of its most popular drinks, including Tuborg, 1664 Blanc and Somersby cider, as part of the divestment in Russia, Hart told Danish daily Børsen.

In its full-year results on Tuesday, Carlsberg reported a 17 per cent increase in revenues to DKr70.3bn ($10.1bn), its highest growth in at least a decade as the beer market continued its gradual recovery from the pandemic. Operating profits rose 13 per cent to DKr10.7bn.

Its profit guidance reflected a “highly uncertain” outlook due to the war in Ukraine and the pace of any recovery in China from the Covid-19 pandemic, the group added.