This article first appeared in The Edge Financial Daily on August 16, 2019

KUALA LUMPUR: Carlsberg Brewery Malaysia Bhd (Carlsberg Malaysia), which reported its sixth consecutive quarter-on-quarter growth in both its top and bottom lines, expects a softer market in the second half of 2019 (2H19).

“So far, we have very good momentum, but we expect a softer market and potentially some turbulence in 2H19,” said Carlsberg Malaysia managing director Ted Akiskalos. “But certainly, we intend to maintain the momentum that we have.

There is “certainly still demand for beer” and consumption patterns and occasions tend to evolve, he told a press conference on the brewer’s second-quarter financial results yesterday. “We do see a shift towards premium brands and this is why we also see different segments evolving in different ways.”

Akiskalos said the mainstream beers segment remained the main contributor to the group’s total volume and had maintained its higher sales momentum so far this year. But the premium segment has also been gaining more traction and has become “more sizeable”, with the volume growing 22% in 1H19 compared with 1H18.

“Consumers are increasingly looking for value over volume. This means consumers are looking for, and are willing to pay for, experiences that are going to be differentiated from the past.

“Of course those experiences need to deliver expectations and they need to justify the premiums. That’s why it’s a bit of a different ball game from what it has been in the past,” he said.

“We do see the trend continuing in the future, which we think is a great development for our portfolio strength,” he added.

On the move by its closest competitor to launch an alcohol-free product this year, Akiskalos said Carlsberg Malaysia is “evaluating options and monitoring developments in this area”.

But he highlighted that entering into the alcohol-free segment is definitely part of the global agenda for Carlsberg.

For the second financial quarter ended June 30, 2019, Carlsberg Malaysia’s net profit rose 2.1% to RM65.26 million or 21.34 sen per share, from RM63.91 million or 20.9 sen per share a year ago, driven by top-line growth and higher profit from both the Malaysian and Singapore operations.

Quarterly revenue rose 15.66% to RM480.52 million from RM415.45 million previously.

The brewer declared a second interim dividend of 16.1 sen per share, bringing the total payout to date for the current financial year to 37.6 sen.

For the first half, Carlsberg Malaysia’s net profit grew 5.61% to RM152.86 million from RM144.73 million for the previous corresponding period, while revenue was up 18.31% at RM1.14 billion from RM963.92 million.

On prospects, Akiskalos said Carlsberg Malaysia is expecting a more challenging market on the back of a softer market as consumer sentiment in 2019 is seen to remain dampened amid uncertainty in the macroeconomic situation.

“The group is hopeful that the government will not impose any further excise duty increases in Budget 2020, which will lead to [a higher] influx of contraband beers and losses in government tax revenue,” he said.