|✅ Paper Type: Free Essay||✅ Subject: Retail|
|✅ Wordcount: 1189 words||✅ Published: 1st Jan 2015|
Carlsberg A/S (Carlsberg) is one of the leadingbrewing companies in the world. The company is engaged in the production, retail and marketing of beers and non-alcoholic beverages. It is also engaged in the development and sale of real estate and operation of the Carlsberg Research Center. The company offers wide range of beer, mineral water, cider and malt based drinks through more than 500 brands including Carlsberg and regional brands such
as Tuborg, Baltika and Kronenbourg. Carlsberg sells its products in more than 150 countries and operates approximately 100 subsidiaries in Western & Northern European, Eastern European and Asian markets.
Carlsberg A/S (Carlsberg) is the fourth largest brewery group in the world. The company along with its subsidiaries engaged in the production, retail and marketing of beers and non-alcoholic beverages. It offers beer, mineral water, cider and malt-based drinks under more than 270 brands. The company is also engaged in the development and sale of real estate and operation of the Carlsberg Research Center. Carlsberg operates through its several subsidiaries in Denmark and globally with over 45,505 employees. The company’s beer portfolio includes more than 500 brands which vary significantly in volume, price, target audience and geographic penetration. The company’s brand portfolio includes international brands such as Carlsberg, Tuborg, Baltika and 1664, and local brands such as Ringnes (Norway), Feldschlösschen (Switzerland), Lav (Serbia) and Wusu (Western China).
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During the fiscal year 2008, beer sales accounted for 75.9% of nets sales of the company. Along with core beer business, the company also offers Malt-based beverages and other beverages such as soft drinks, water and cider. These non alcoholic beverages are available in different flavors namely Coffee, Lemon, Chocolate, Angelica, Cloves, Raspberry, Prunes, Lime, Chili. Carlsberg operates in three geographical regions namely, Northern & Western Europe, Eastern Europe, and Asia. The Northern & Western Europe segment includes the operations in countries Denmark, Italy, Poland, France, Greece, Norway, Sweden, the UK, Germany, the UK, and Ballistic states. This segment plays an important role in the company’s business portfolio. During the fiscal year 2008, the company generated DKK 37,128 million of the total net revenues from
this segment. The Eastern Europe segment includes the operation in countries such as Russia, Ukrian, Kazakhstan, Uzbekistan, Belarus, and Azerbaijan. In this segment, Russia is the largest and market and accounts for 85% of segment’ s net revenue. The partial acquisition of Scottish & Newcastle increased the importance of this region in the company’s business portfolio.
During the fiscal year 2008, the company generated DKK 19,137 million of the total net revenues from this segment.
The Asia segment operates in Malaysia, Singapore, China, India, Laos, Vietnam, and Cambodia. Carlsberg is one of the leading international brewery groups in Asia and has significant positions in a number of Asian markets and the Carlsberg brand is one of the major international beer brands in the region. During the fiscal year 2008, the company generated DKK 3,555 million of the total net revenues from this segment. During the year 2009 the company launched one of the worlds most expensive beers, Vintage No. 2. Further, it acquired 41% interest of Xinjiang Lanjian Jianiang Investment Co., Ltd and increased its stake to 89.3%.
Robust Financial Performance
The company has exhibited robust financial performance from the past few years. The company reported revenues of (Danish Krone) DKK 59,944.00 million during the fiscal year ended December 2008, an increase of 33.95% over 2007. The operating profit of the company was DKK 6,338.00 million during the fiscal year 2008, an increase of 31.09% over 2007. The net profit of the company was DKK 2,631.00 million during the fiscal year 2008, an increase of 14.54% over 2007. The higher level of earnings was due to the volume increase in growth markets. The strong financial growth of the company signifies its efficient cost structure and market share gains. Also, it would help in the future investments of the company such as strategic acquisitions.
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Market Leading Position
Carlsberg is one of the fastest growing breweries in the world. It operates in Europe and Asia and sells its products in more than 150 countries. With the acquisition of Scottish & Newcastle together with Heineken, it became the fourth largest brewery group in the world. It is the market leader in most of the countries in which it operates. The Group is the leader in
the Western Europe countries with market share of 63% in Denmark, 54.2% in Norway, 37.7% in Sweden, and 46.9% in Finland. The Group also has a 45% market share in the Baltic countries and acquired number one position in Russia, Kazakhstan and Western China. This dominant market position and wide international presence helps in maintaining its market position and gives it the power to attract new customers and easily venture into new businesses.
Consolidation of Beer Industry
The beer industry in which Carlsberg operates is very competitive. With entrance of more new players and industry consolidation, the current level of competition is expected to further intensify in the near future, which may result in price reductions. In 1998, the top ten brewers accounted for 34% of the global beer market, but as the global consolidation process accelerated this figure grown to 59% in 2008. In 2008, Anheuser-Busch Companies, Inc. acquired InBev and the company along with Heineken acquired Scottish & Newcastle. This industry consolidation increases the company and if the company is not able to maintain the product quality and consumer loyalty, this intense competition could reduce the sales volume of the company, thereby affects its market position.
Decrease in Global Beer Sales
The decreasing global beer sales has been a major area of concern for the company as its core business activity is the sales of beer across the world. In the first three months of 2009, global beer sales volumes dropped by 6.3%, due to global economic downturn, bad weather and smoking bans in some countries. Beer sales volume in Western Europe declined 1.6% organically in 2008, due to the combined impact of the financial crisis, smoking bans in France, the UK, Finland and the Netherlands, and extraordinary increases in excise duties in the UK. According to the British Beer & Pub Association (BBPA), beer sales in the UK, in the first quarter of 2009, dropped by 8.2% as compared to the same period in 2008. As the company operates principally in European beer markets, the decrease in beer sales may affect the sales and profits of the company.
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