The beer market in Malaysia has faced heavy pressure in recent years due to large increases in excise duties from 2004-2006, making beer taxes the second highest in the world. This led beer consumption to drop significantly. Carlsberg, which previously dominated the market with a 55% share, bore the brunt of the tax increases and lost market share to competitor GAB. GAB was better positioned as it sells more premium brands that saw less impact, while Carlsberg relied on its lower-priced main brand. To strengthen its position, Carlsberg overhauled its brand portfolio to include more premium options and increased advertising spending, but still lagged behind GAB's outlays.

1. CARLSBERGMALAYSIA—
SELLING BEER IN A 60
PERCENTMUSLIM
NATION
CASE STUDY

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. 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. 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. 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. 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. 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. 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. 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?