Carlsberg rises 5% as brewery giant unveils aggressive growth strategy

Carlsberg, the Danish brewing behemoth renowned for brands like Kronenbourg 1664, witnessed a 5% surge in shares on Wednesday following the unveiling of its ambitious growth plans through 2027. The company, ranked as the world's third-largest brewer, not only exceeded full-year revenue expectations but also revealed its intentions to bolster spending in pivotal markets like China.

The appointment of Jacob Aarup-Andersen as the new CEO ushered in a re-evaluation of Carlsberg's growth trajectory, leading to an upward revision of its targets for revenue and operating profit growth over the next six years. Despite the lack of detailed strategies, the market welcomed the optimistic outlook.

Aarup-Andersen emphasized Carlsberg's transition from a defensive stance, necessitated by challenges like the COVID-19 pandemic and geopolitical tensions, to a more proactive approach. He cited compelling opportunities to fuel long-term growth, underpinned by strategic investments.

Among these investments are heightened marketing expenditures to promote Carlsberg's premium beer portfolio, diversification into categories like ciders and seltzers, and intensified focus on the Asian market, particularly China. Notably, China stands as Carlsberg's largest market, presenting substantial growth potential.

In line with its growth aspirations, Carlsberg anticipates a double-digit increase in sales and marketing investments in 2024, with a significant portion allocated to China and Vietnam, premium brands, and digital initiatives.

However, Carlsberg's projection for organic operating profit growth in 2024 fell short of analysts' expectations, prompting speculation about its ability to achieve targets. Analysts like Laurence Whyatt from Barclays noted Carlsberg's tendency to issue conservative guidance initially, potentially setting the stage for upward revisions later in the year. Nevertheless, doubts lingered about the company's ability to meet analysts' projections.

The company's ambitious 2027 growth goals hinge on various factors, including an anticipated rebound in the Chinese economy. Despite subdued consumer sentiments in China, Carlsberg remains optimistic about volume growth through market share expansion.

In its recent financial report, Carlsberg showed 4.7% increase in revenue for 2023, surpassing analyst expectations marginally. As the brewery giant forges ahead with its aggressive growth agenda, investors are closely monitoring its progress and the efficacy of its strategic initiatives.

(With Reuters inputs)