How does the performance of Carlsberg compare to the performance of its direct competitors (profitability, market share,

growth)?

The four largest brewers world wide and Carlsberg´s main competitors:

Global beer sales by volume in 2010%

1. AB-InBev 18%2. SABMiller 14%3. Heineken 9%

4. Carlsberg 5%5. Other 54%

Source: Canadean

These four companies produce almost half of all industry volume and generate up to 70% of industry profits (JPMorgan Cazenove, 2010).|

Performance

Carlsberg is the market leader in Northern Europe with No. 1 positions in Denmark, Sweden, Norway, Finland and the three Baltic States

In Western Europe, with important markets such as UK, Germany, France, Switzerland and Poland, Carlsberg holds an important share of the market. In 2010 Northern and Western Europe accounted for 43% of total volume and 46% of operating profit.

Carlsberg has concentrated its presence in the European and Asian markets

Performance

The Carlsberg Group is a significant player in the Asian markets they have chosen to compete. In 2010 Asia accounted for 16% of total volume and 9% of operating profit.

In 2010 Eastern Europe accounted for 41 % of total volume and 45% of operating profit. Carlsberg holds the no. 1 position in Eastern Europe.

Performance

Carlsberg overall performance has been excellent in the markets they have chosen to compete. However, their presence in the most important beer market (North America) is minimum in comparison to its competitors.

“Anheuser-Busch InBev (ABI), now the global leader, sold a third of its beer in North America in 2010 … reaped 46% of its profits there” (The Economist, 2011)

Performance

Performance“Carlsberg and Anheuser-Busch InBev showed sharply contrasting fortunes in the third quarter (of 2011)”. (Reuters, 2011).

Share Price Performance: comparison between leader Anheuser-Busch InBev and Carlsberg

Source: Reuters

Carlsberg shares went approximately 33% down during 2011 (so far), while AB InBev's are only 4% weaker.2011 has been a rough year for Carlsberg. The organisation betted heavily on the Russian market and have faced significant problems there: costly raw material (barley) imports enforced by last year's poor harvest there and the raise of duty on beer by the Russian Government. These situations have impacted Carlsberg's recent performance (2011 third-quarter operating profit fell by 21 %).

Because many of its competitors have betted in other markets (North America and South America, they have done significantly better than Carlsberg. Nevertheless, Carlsberg maintained its full year profit outlook.

What are the main economic characteristics of the industry, using Porter’s 5 forces analysis?

Porter’s 5 Forces• Threat of new entrants

– Possible to gain competitive advantage by exploiting economies of scales.• Beer industry is considered as oligopoly market.

– Highly Expensive Capital requirement of entry• A company needs to spend a large amount of money in advertising cost in

order to create brand awareness, attract consumers and build market share. Ex. Carlsberg spends a lot of money on advertising in order to strengthen its status as a global premium brand.

– Long process to make the connection in the industry and a well established distribution network for products to be delivered.• It is time consuming when new entrants need to build the good relationship

with customer.• Consumers tend to choose the familiar brand. Ex. If Carlsberg launches the new

products such as apple cider , it is easily to attract consumer. Therefore , Carlsberg do not need to fear competition from entirely new players

• Bargaining power of buyers– Consumer Preferences

• Some consumers who prefer the premium segment value attributes especially quality or taste of beer and image of brand, tends to have less price sensitivity. EX. Carlsberg

– Different beer market in each region • In Denmark, consumers tend to have little bargaining power because beer

product is considered as basic product for them. They can easily find it in supermarket.

• In the rest of European market , Carlsberg is a premium brand which tends to present in bars, pubs and restaurant compared to supermarket. This means that beer is not a basic product as it is in Denmark, where they have a lot of mainstream beers. Thus, consumers tend to have more bargaining power in this area.

• Bargaining power of suppliers– Bargaining power of supplier is limited

• Beer industry has more than one suppliers of raw material and packaging to its production units around the world.

Carlsberg do not have to worry about lacking of available raw material for beer production. It is positive view for Carlsberg because it need not to be dependent

with single supplier.

• Threat of substitute productThere have been the increase in many types of alcoholic beverages in the market

– Wine • focus on people in high income and age between 45 to 54 years old. It is a luxury product.

– Ready to drink • focus on young and women drinker. Taste is often very sweet.

– Cider • The largest threat of beer industry. It is a fruit alcohol drinks.

It is considered as a threat for Carlsberg that they should be aware of in the future. It needs to follow consumption trends. That’s why Carlsberg launched Somersby apple ciders

in 2007 and also launched a pear cider in 2008 (Carlsberg’s annual report 2008: 42).

• Rivalry among existing firms– Europe

Heineken is the most direct competitors with Carlsberg. There are also have InBev, Sabmiller and few local competitors around Europe.

– AsiaLocal competitors seem to be the most important competitors for Carlsberg. Carlsberg just recently get into Asia market.

Due to the increase in competitors, Carlsberg needs to follow the development in the market by investing heavily on advertisements and marketing campaigns to maintain market shares around Europe, as this is one of the most essential markets for Carlsberg

What are the unique resources and capabilities of Carlsberg, differentiating it from its

competitors?

Unique Resources & Capabilities of Carlsberg, differentiating it from its competitors

Tangible Resources & Capabilities• Financial – Invests in/Purchases successful

breweries in current & emerging markets (E.g. – Hue Brewery Company in Vietnam)

• Physical – Technology Centre in Copenhagen where new strains of Barley & Yeast are tested

• Technological – Collaborated with Microsoft Enterprise Strategy Services (2010/2011) to develop a standardized IT model across the organization and deliver solutions that its employees can use to drive business value

• Organisational - Focuses on saving money and being efficient, producing, delivering and selling quality beer daily

Intangible Resources & Capabilities• Human – Recruits qualified employees at

every level, building a diverse work environment, maintains meaningful connections to local markets (sponsors sports events, supports/sponsors charity events etc.), customers are at the heart of every decision

• Innovation – More aggressive marketing campaigns, New worldwide slogan “That calls for a Carlsberg”

• Reputation – Strong brand name, Is known as part of the Big 4 (among ABI, SABMiller & Heineken) in the beer industry, strong geographical presence in over 150 countries with over 500 brands

Carlsberg Tangible Resources & Capabilities

• Financial – Invests in/Purchases successful breweries in current & emerging markets (E.g. – Hue Brewery Company in Vietnam)

• Physical – Technology Centre in Copenhagen where new strains of Barley & Yeast are tested

• Technological – Collaborated with Microsoft Enterprise Strategy Services (2010/2011) to develop a standardized IT model across the organization and deliver solutions that its employees can use to drive business value

• Organisational - Focuses on saving money and being efficient, producing, delivering and selling quality beer daily

Carlsberg Intangible Resources & Capabilities

• Human – Recruits qualified employees at every level, building a diverse work environment, maintains meaningful connections to local markets (sponsors sports events, supports/sponsors charity events etc.), customers are at the heart of every decision

• Innovation – More aggressive marketing campaigns, New

worldwide slogan “That calls for a Carlsberg”

• Reputation – Strong brand name, Is known as part of the Big 4 (among ABI, SABMiller & Heineken) in the beer industry, strong geographical presence via over 500 brands in over 150 countries

How would you characterise the internationalisation strategy of Carlsberg, and

how does this relate to its resources and capabilities?

• Carlsberg has a long standing tradition for acquisitions and consolidations

- Carlsberg merged with the second-largest brewery in Denmark, Tuborg in 1970

- Through the co-operation with Orkla (Norway), Calsberg acquired Procordia (Sweden) together with its 50% stake in Russian joint venture, BBH, which owns 86% of Russia’s leading brewery, Baltika. BBH has over recent years been the most important source of growth in sales as well as earnings at Carlsberg

• A Glocal strategy- Carlsberg is considered to be a diverse company - a number of well-known brands in its portfolio, which are marketed

either globally, regionally or locally.

• A Glocal strategy (cont.)- a large number of breweries across Europe and Russia make it possible to optimize the distribution network to market.

• A Glocal strategy (cont.)

• An Excellence Programme- Created by the former CEO Nils Smedegaard Anderson in 2003- A rationalisation programmes which consist of a systematic analysis

and subsequent rationalisations of all processes and workflows within a certain area - The margins should be increased through 3 parts: control of the

cost, increased efficiency and optimisation of turnover growth (sales and marketing)

With a success in Northern and Western European region, the program was implemented globally.

Thank you for your attention