Carlsberg pledges to ‘selectively’ deploy marketing spend

The brewer says it will step up marketing spend as an absolute sum but will take a targeted approach and only deploy the investment in areas where it is confident it will see strong returns.

Carlsberg has committed to stepping up its marketing spend while deploying it “selectively” to drive the best returns and grow its brands.

The group, which owns brands such as Estrella, San Miguel and Somersby cider, as well as the Carlsberg name brand, grew marketing investments by 7.2% in the first half of its fiscal year.

As a ratio of revenue, however, marketing spend actually decreased in the quarter. Carlsberg chief financial officer Ulrica Fearn told investors on a call today (16 August) that this was not a significant decrease. She committed to the company continuing to step up its marketing investment in absolute terms.

This spend will be deployed “selectively”, she said, in areas where the company believes it will generate the strongest returns.

“We are looking to invest, of course, in our marketing, in our brands and behind our premium business and we’re doing that very clearly, very selectively and in the most effective way,” she claimed.

In its first half the company took over the Kronenbourg 1664 brand in the UK, which previously was under a licensee agreement with Heineken. Fearn said the company would be looking to “unlock the long-term growth potential” of this “iconic brand” through support such as marketing spend.

The Kronenbourg brand is classed as part of Carlsberg’s premium portfolio, an area which it has been prioritising for the long-term growth of the business. It indicated to investors today that its premium portfolio is performing well.

“We are in general outperforming in premium across markets, thanks to our strong brands and good support behind the brands,” said chief executive Cees ‘t Hart.

Carlsberg ups marketing spend as inflation bites

Its premium portfolio grew volume sales by 3% versus the same period in 2022, outperforming the portfolio as a whole, which grew volumes by 0.8%.

Its Brooklyn Brewery brand grew volumes by 50% in the first half of the year. The brand’s biggest market is the UK, where it saw a particularly strong performance for its Brooklyn Pilsner product.

As well as organic volume growth, the company delivered revenue growth of 11.2% in the first half of the year. It generated 37.79bn Danish Krone (£4.35bn) in revenue during the period.

Profits also grew 5.2% to 16.88bn Danish Krone (£1.94bn) in the period.

This “solid” performance in the year to date prompted Carlsberg to upgrade its profit forecast for the full year. It now expects organic operating profit to grow by between 4-7% in the year. Previously it had guided it expected to generate profit growth of between -2 to 4% in 2023.

Despite the upgraded performance forecasts, Hart warned that the company has been seeing some negative impact from poor weather in Europe this July.

“Volumes are volatile when weather is bad,” he stated, saying it had been hard to get a clear picture of consumer sentiment in Western Europe in recent times due to the impact of bad weather.