Case study carlsberg malaysia

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Case study carlsberg malaysia

  1. 1. CARLSBERGMALAYSIA— SELLING BEER IN A 60 PERCENTMUSLIM NATION CASE STUDY
  2. 2. CARLSBERGMALAYSIA— SELLING BEER IN A 60 PERCENTMUSLIM NATION  Malaysia’s beer market has been under heavy pressure lately. From 2004 to 2006, the industry saw heavy increases in excise duties. With an excise duty ofRM7.40 (US$2) per liter, Malaysia now has the second highest beer tax in the world (Norway ranks first). The price increases have narrowed the price gap between beer and other alcoholic drinks such as wine. Beer drinkers have balked: consumption dropped from 1.4 million (2004) to 1.2 million hectoliters (2006) as a result of the price increases.
  3. 3. CARLSBERGMALAYSIA— SELLING BEER IN A 60 PERCENTMUSLIM NATION  Many beer and stout customers have turned to wine and liquor due to the narrowed price gap for these products with beer. The tax increases have also reshaped the competitive landscape. Carlsberg bore the brunt of the price increases. Until recently, two big brewers carved up Malaysia’s beer market: Carlsberg, which has been operating in Malaysia for over 35 years, and Guinness Anchor Berhad (GAB), the maker of Guinness, Tiger and Anchor beer.
  4. 4. CARLSBERGMALAYSIA— SELLING BEER IN A 60 PERCENTMUSLIM NATION  In 2000 Carlsberg had a 55 percent market share while GAB had the remaining 45 percent. By mid-2006, GAB’s share had risen to 55 percent. In 2007 a new local beer maker under the name of Napex Corporation joined the two brewers selling a beer named Jaz Beer. Differences between the brand portfolios of GAB and Carlsberg partly explain the market share reversal. GAB sells pricier brands such as Guinness and Heineken while most of Carlsberg’s sales came from the lower priced Carlsberg green label.
  5. 5. CARLSBERGMALAYSIA— SELLING BEER IN A 60 PERCENTMUSLIM NATION  Buyers of premium brands are wealthier and less price sensitive than cheap beer consumers. Soren Jensen, managing director of Carlsberg Malaysia, explained the situation as follows: ‘‘Once you have high duties, you don’t have much cheap beer. The premium brands have strengthened because the relative price difference is smaller.’’ Charles Ireland, the head of GAB, said: ‘‘We sell premium brands, they sell brands which are of lower prices; we have different business models and our consumer markets are different.’’ (www.theedgeasia.com).
  6. 6. CARLSBERGMALAYSIA— SELLING BEER IN A 60 PERCENTMUSLIM NATION  To shore up Carlsberg’s position, the firm overhauled its brand stable by adding new high-end offerings such as Tuborg, Skol Super, and Carlsberg Gold as well as importing Corona from Mexico. GAB also outspent Carlsberg in advertising during 2007: RM10.4 million ($2.8 million) for GAB versus RM6.8 million ($1.8 million) spent by Carlsberg on its core brand (see Table A). Television, radio, and outdoor are not used.
  7. 7. CARLSBERGMALAYSIA— SELLING BEER IN A 60 PERCENTMUSLIM NATION  Print accounts for 70 percent of all advertising spending, cinema 19 percent, and point-of-sale 11 percent. Other promotional activities include relationship marketing, trade promotions, and sponsorships. Global brands such as Heineken and Carlsberg also get exposure through global sponsorship activities: Carlsberg with Liverpool, Heineken with the UEFA Champions
  8. 8. CARLSBERGMALAYSIA— SELLING BEER IN A 60 PERCENTMUSLIM NATION  Top five brands by adspend (000’s)  Carlsberg RM6,780 (Carlsberg)  Heineken RM5,867 (GAB)  Tiger Beer RM2,967 (GAB)  Skol RM1,884 (Carlsberg)  Anchor RM1,603 (GAB)
  9. 9. DISCUSSION QUESTIONS 1. What do you see as the main challenges that Carlsberg is facing in Malaysia? 2. From 2004 to 2006, the beer and stout market in Malaysia saw heavy increases in duties. Carlsberg bore the brunt of these increases, losing market share to GAB. What strategic initiatives would you recommend to Soren Jensen to meet the challenges Carlsberg is facing?

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