COPENHAGEN (Reuters) - Danish brewer Carlsberg CARLb.CO has appointed former Heinz executive Christopher Warmoth as head of its Asia business to aim for a bigger share of the high-growth market to offset weak beer sales in recession-hit western Europe.
Asia has become the main battle ground for the world’s biggest brewers, such as Carlsberg, AB InBev ABI.BR, SABMiller SAB.L and Heineken HEIN.AS, which are relying on growing middle classes in emerging markets to compensate for sluggish sales Europe and the United States.
Warmoth’s appointment comes a day before the brewer reports third-quarter earnings, which are expected to show a fall in revenue and operating profit, showing that its progress in Asia so far is not yet enough to counteract sales hit by poor weather and a grinding economic downturn in Europe.
“His most important role will be to grow Carlsberg in Asia and carry out potential acquisitions to generate as much growth as possible,” said Sydbank analyst Morten Imsgard.
Asia accounts for roughly 20 percent of Carlsberg’s revenue, with sales up 10 percent in the previous quarter, albeit lagging forecasts.
While Carlsberg has the leading market share in the smaller Asian markets of Nepal, Laos and Sri Lanka, its presence in larger markets is dwarfed by that of its bigger rivals. China, the world’s largest beer market by volume, is dominated by SABMiller SAB.L, while Heineken HEIN.AS is the leader in India, Malaysia and Indonesia.
Carlsberg is hoping the 54-year old British national can replicate the type of deals he presided over in Asia during his 10 years at Heinz. Heinz acquired Foodstar in China, a maker of soy sauce, for $165.4 million in 2010, and it bought the remaining 21 percent it did not own of a China subsidiary that makes infant formula.
“He brings a wealth of valuable experience from multinational fast moving consumer goods companies,” Chief Executive Jorgen Rasmussen said. “He has also led extensive change and capability programs.”
In April, Rasmussen said that the new Asia head would need commercial and merger and acquisition qualifications.
Rasmussen has himself been heading the Asia region since Roy Bagattini resigned in June to take up a position at Levi Strauss & Company LEVST.UL. Bagattini ran the Asia division since 2009.
But recent high deal multiples would likely make any acquisitions expensive.
Heineken paid a mammoth 35 times trailing earnings for control of Asia Pacific Breweries Ltd last year.
Another challenge for Warmoth will be to increase earnings by convincing consumers to switch from the cheaper local beer brands in its portfolio to the pricier premium brands, such as its Carlsberg, Tuborg and Baltika beers.
“Here, he will be able to draw on his experience from Heinz,” Sydbank analyst Morten Imsgard said.
Shares in Carlsberg were little changed at 1352 GMT, in line with the Copenhagen stock exchange’s benchmark index .OMXC20CAP.
Additional reporting by Martinne Geller in London, editing by Sophie Walker and Louise Heavens