Michael N. Jensen
Managing Director, Carlsberg India
The Danish beer brand, Carlsberg came to India in 2006 by incorporating a company named South Asia Breweries Pvt. Ltd, in three years, its name was changed to Carlsberg India Private Limited.
BW speaks with Michael N. Jensen on insights, challenges, plan and strategies.
Even though worldwide Carlsberg’s top sellers are milder beers, in India the company adopted the strategy of entering the strong beer category with Tuborg Strong and Carlsberg Elephant gave the company the push to break through the developing beer markets of India. Smart strategy brought Carlsberg India to the third position in the Indian beer market. Today, the company not only focuses on key markets and an innovative and focused portfolio, but also on expanding its manufacturing footprint to ensure increased product availability, and generate better revenues and bigger market share.
What kind of opportunity did Carlsberg worldwide see as a potential in the Indian market? Can you please share some thoughts on the strategy behind the brand’s entry in India?
Our aim was to build a growth platform for our businesses across Asia and we saw a strategic opportunity in India as a long-term market for Carlsberg. In our experience, we have seen low alcohol content beverages like beer and wine being appreciated by consumers and eventually gaining share in the spirits markets. Back in 2007, beer was still a very small segment in India with a low per capita consumption. However, the Indian market boasts of one of the largest and fastest growing population and increasing disposable incomes, hence, we could see the potential for a promising growth of beer consumption. We could clearly see an opportunity to invest in India and develop it as a long-term market for us.
How did you find the Indian market when the brand entered this space? What changes did Carlsberg hope to make to ensure growth of your own beer brands in India as well as the overall difference Carlsberg could make to the Indian market?
The Indian beer market had very few International brands to offer when Carlsberg started its operations in India. This offered a great opportunity for us to bring our portfolio to the Indian consumers. As per industry sources, the Indian Beer market was already witnessing a rise in volumes registering a market growth of over 10% during 2004-2005, making it an exciting place for a company like us to enter.
As a company, our aim was not to change the market but bring our international product portfolio, the promise of quality and innovation, to enhance the consumer experience in India. In 2007, we introduced our flagship brand Carlsberg Green, an all malt beer. For Carlsberg India, packaging innovation has been of prime importance. Through our brand Tuborg Green launched in March 2009, we were the first in India to introduce innovative packaging in the form of a unique pull-off cap, which did not need a bottle opener. We also introduced an easy to grip packaging in 2012.
We also pioneered the Premium strong beer category in India with the launch of Tuborg Strong in 2010 and the Super Premium Strong beer category with the launch of Carlsberg Elephant in January 2011. This helped us gain share in the strong beer segment, which today accounts for almost 85% of the Indian beer consumption.
Our decade long journey in India has hence been very encouraging and we are presently a strong number 3 player in the market.
Carlsberg is one of the strongest global brands in beer. What do you expect from the Indian market?
India’s economic and industrial growth has made it an exciting market not only for the beer industry but also for businesses across industries. It is being viewed as one of the fastest emerging markets and offers great opportunity for growth. The favourable demographics, rising disposable incomes coupled with beer appreciation and increasing consumer demand make it a great opportunity market for premium offerings.
We aim to strengthen our presence in the country further and hope the consumers continue to appreciate the distinctive quality and taste of beer, a low alcohol content drink and our brands further.
Is it being fulfilled? Could we have any figures?
Our journey in India has indeed been very fulfilling and encouraging and India continues to be an integral part of Carlsberg’s ambitious growth plan.
We registered a 16% organic volume growth in 2016 while growing our market share at 16.6%. Both our brands, Carlsberg and Tuborg have experienced favourable growth and continue to gain consumer appreciation. While Carlsberg Elephant is the market leader in the super premium strong segment, brand Tuborg is in the second place, but it takes the top slot in the international beer brands in the country. Last year, while the industry had been flat, with maybe a 1%-2% growth, we grew in double digits.
Could you share something about the growth pattern? Was it replacing existing brands or creating a niche? What was the strategy?
In our 10 years of operations in India, our growth in the Indian market has been very encouraging. We have witnessed our market shares grow from 5.6% in FY 2011 to 16.6% in FY 2016.
We refined our strategy in the initial years of our operations to focus on strengthening our portfolio. Initially, we entered the market in the mild segment and successfully expanded into the predominant strong beer category with Tuborg Strong and Carlsberg Elephant.
- However, our growth in the recent years can be significantly attributed to the following:
- Having a long-term city focused strategy for India
- A phase-wise footprint expansion, to ensure we provide the finest quality products to consumers across the country. Today, Carlsberg India has 7 strategically located breweries across India and 3 contract
- A focused and innovative brand portfolio that includes our flagship brands Carlsberg Green, Carlsberg Elephant and Tuborg Green and Tuborg Strong
- Our increased product availability, owing to our increasing distribution network
- Our employees – the core of our business, who we consistently engage with to deliver our best
Carlsberg entered India in the thick of competition from UB. How did you fight it?
We have always believed that competition is healthy for the overall growth of any industry. It helps in raising the bar and increasing industry standards, directing the players to match high quality performance benchmarks. And, this stands true to the beer industry as well. This gives the consumers an opportunity to experience and choose from a vast portfolio and expand their palate.
We entered the Indian beer market with offerings in the mild segment and expanded our portfolio into the strong beer segment, which accounts for about 85% of the market. Post our initial years in India, we successfully launched Tuborg Strong in May 2010, pioneering the Premium Strong beer category in India. In 2011, Carlsberg India followed Tuborg Strong’s success by pioneering the Super Premium Strong beer category with the launch of Carlsberg Elephant. Both these brands are doing exceptionally well and have gained immense appreciation of the consumers.
In the initial years of our operations, we focused on the North & West geography before moving ahead to other parts of the country. Our goal was to ensure a steady and phased expansion, instead of establishing footholds across the country at one go.
How do you view the growth of the craft beer market in the country do you think, at any point in time, it will make any dent in the bottled commercial brands’ market? Has this affected your market in any region, in any way? If not sales, tastes?
In recent times, the craft beer segment in India has witnessed a steady growth, which is good for the industry and consumers. However, it is still at a nascent stage in India. Craft beer has a long way to go but offers an opportunity to the consumers to expand their palate and engage in a varied drinking experience. Even with the advent of craft breweries, from our perspective we are not changing anything strategically at our end. We see craft beer as a conduit for the development and understanding of beer in India.
InBev has consolidated by taking over SABMiller. How do you see this consolidation vis-A- vis competition?
The consolidation is part of the competition strategy and it is important for them to decide how the brands will play out within their portfolio. We do not see this consolidation impacting our ways of working or the need to revise our strategy. What one needs to remember is, in India, the task at hand is to extend the market boundaries of beer and the more we do this, more people shall understand beer and it shall be beneficial for everyone. When we came to India, UB was the king of the industry but we were looking for opportunities from our point of view. It was about who we were and how we should be established in India, and how we executed that. Competition is a positive thing to happen in the market, and I always like it. The more we compete against each other, the more intelligent we become and offer better experiences to the consumer.
What do you see as the biggest challenge to growth of beer industry in India?
We have evolved in the last ten years since we began our operations in India. One of the biggest challenges in India is of legislation and taxation, and that can sometimes cause a hindrance. We witnessed a liquor ban in Bihar and that can be viewed as an example of an obstacle for steady development of the beer market in India. However, the learning is that in India, one needs to be flexible to be able to meet these situations head-on.
Beer has low alcohol content and is no substitute for strong liquor. Although, being part of the All India Brewers Association (AIBA), having dialogues to identify beer as a low alcohol content beverage meant for enjoyment, is going to be a long journey. There have been some breakthroughs in the last one year, and I am hopeful we will reach there in due course of time.
What’s the plan for Carlsberg India in the near future?
At Carlsberg India, we believe in our current strategy and will continue to focus on the same. We are always open to new growth avenues whether in the form of our footprint expansion or expansion in our current brand portfolio. We will go ahead when it is the right time for us to capitalize on any good opportunity that presents itself.
As part of our footprint expansion, we recently announced a new contract manufacturing association in Maharashtra, adding to our existing capacity in the state. We also announced a similar association in Jharkhand.
Our focus now is our upcoming brewery in Karnataka, which we look to set up in 2017.
Having said that, we have some focused plans for the Indian market for the next few years, with some interesting offerings in the pipeline. New flavours, packaging and innovations will be brought in when the time is right.