Heineken and Carlsberg raise prices in response to growing operational pressures
Malaysian breweries Heineken Malaysia Bhd and Carlsberg Brewery Malaysia Bhd are raising their prices by 5% to 8% from this month for on-trade channels, and from 1 May for off-trade channels’ aluminium can products.
Analysts said the local breweries’ price adjustments are aimed at mitigating operational cost pressures. “Both brewers cited growing internal cost pressure from elevated input costs and weakening ringgit to dollar foreign exchange as reasons for the price increase,” said Maybank Investment Bank (Maybank IB) Research, in a report. It notes that Heineken and Carlsberg have not raised their product prices in Malaysia since the second half of 2022.
The price increase comes as both companies have witnessed a downturn in sales volumes amid ongoing inflationary pressures, with Heineken experiencing an 8% decline and Carlsberg more than 10% in the 2023 financial year.
Maybank IB said that although the price hike could relieve some margin pressures, it might also affect sales volume growth in the medium term due to the current economic environment’s impact on consumer spending. “This is especially when consumers are still reeling from lower disposable income and potentially negative effects on consumer spending if subsidy roll-backs are implemented,” according to Maybank IB.
Still, Carlsberg Malaysia’s managing director, Stefano Clini, expressed cautious optimism for the year ahead, focusing on expanding the brand portfolio and implementing cost-efficiency measures.
The company also plans to start local manufacturing of Sapporo quart and pint bottles by the second half of 2024, and is exploring further partnership opportunities with Sapporo, beyond the existing manufacturing and distribution rights in Malaysia and Singapore.
Heineken Malaysia, meanwhile, reported a decrease in revenue and net profit for both the fourth quarter and the full year of 2023, reflecting the challenging market conditions. The company’s managing director Roland Bala conceded that macroeconomic concerns on market sentiment in the last financial year had had an adverse effect, but there had been an improvement in consumer sentiment since the fourth quarter, partly due to strong sales during the Lunar New Year period.
