Bitter taste for brewers as beer market loses fizz

Two of the world's biggest brewers showed signs of suffering in the global slowdown with Denmark's Carlsberg cutting jobs and SABMiller missing forecasts with a fall in beer volumes.

The Copenhagen-based brewer is to cut 270 jobs in Denmark, Norway and the Baltic States in the face of uncertain markets, while London-based SABMiller suffered in markets as widespread as Colombia, China, the US and Russia.

In Russia, the two had contrasting fortunes with No. 1 player Carlsberg seeing flat volumes in the world's third biggest beer market in the last three months of 2008, while SABMiller saw volumes decline sharply 22 per cent blaming de-stocking.

Carlsberg chief executive officer Jorgen Rasmussen said the job losses followed moves to trim its workforce last year in Britain and France after its joint takeover with Heineken of Britain's Scottish and Newcastle, and warned that the group foresees more uncertainties and risks.

SABMiller, the brewer of Peroni, Grolsch and Pilsner Urquell, reported underlying volumes fell one per cent in October-December with signs that drinkers in emerging markets - accounting of over 80 per cent of its profits - were cutting back amid the economic slowdown.

"We suspect the market will scarcely be encouraged by that statement, given unfavourable currency headwinds and the likelihood that trading conditions will continue to deteriorate," said Investec Securities analyst Anthony Geard.

He added that China, the US, Colombia and especially Russia disappointed, while South Africa showed a surprising one per cent quarterly volume rise.

It was in Russia, the world's No. 3 beer market after China and the US, that trading differed between the two brewers.

The Danish brewer did not experience SABMiller's 22 per cent drop in sales in Russia in the last quarter of last year as it did not see such de-stocking.

"What I can say about the Russia beer market is that concerning our own sales, we expect to see a flat fourth quarter," Mr Rasmussen said.

"If we look at the overall beer market in Russia, we expect that all of consumption for last year will be flat," he added.

SABMiller said there was trading down in Russia which affected its premium brands such as Miller Genuine Draft and Kozel and especially in the Moscow and St Petersburg markets.

But the two are different-sized players in the country with Carlsberg having a near 35 per cent share of the market based around its Baltika brand, while SABMiller has under five per cent. David Jones and Kim McLaughlin, Reuters