Carlsberg in Hong Kong

Transcription

1 Carlsberg in Hong Kong By Managing Director Søren Holm Jensen

2 Carlsberg Hong Kong key messages Winning in tough market through: Building Winning Team Growing Carlsberg brand Building Strong Portfolio Operational Excellence

3 Although HK is a mature beer market, having a strong position is important to Carlsberg s development in Asia, since HK is: A High Price Beer Market => Provide funds to invest in growth markets Demark Sweden Hong Kong Malaysia China Price index of CGL

4 Although HK is a mature beer market, having a strong position is important to Carlsberg s development in Asia, since HK is: A High Price Beer Market => Provide funds to invest in growth markets A Window to China => Exposure of brands and company strength to tourists and partners YTD Sept 06, number of visitors from Mainland China reached 10.2 million or +11% vs LY Source: Hong Kong SAR Government

5 Although HK is a mature beer market, having a strong position is important to Carlsberg s development in Asia, since HK is: A High Price Beer Market => Provide funds to invest in growth markets A Window to China => Exposure of brands and company strength to tourists and partners The most sophisticated market in Asia => Learnings/education for developing markets

6 Hong Kong A Mature and competitive Beer Market

7 Hong Kong SAR facts Became a Special Administrative Region (SAR) of mainland China on July 1, th consecutive year ranked as the freest economy in the world Stable political & well-established legal system Population is estimated to reach 7.05 million in 2007 (Average 0.8% growth per year) Economic recession from 1997 to 2003 Recovering since SARS in mid 2003 Hong Kong , ,000 26, , '97 '00 '03 E06 F07 24,000 23, , ,000 '97 '00 '03 E06F Unemployment (%) GDP (%) Source of Information: Hong Kong SAR Government GDP per Capita (US$) Inflation %

8 Alcohol Market Beer losing share to Wine and Whisky % Share of Throat (calculated as standard alcoholic units) HL Other Spirits Whisky Wine Beer Total Alcohol 1,800,000 1,700,000 1,600, Beer 1,500, E 2008E 2009E 1,400, Total Alcohol market projected to be decreased by 4.0% (2009 vs 2002) 2. Beer volume estimated to be dropped by 8.0% 3. Wine + Whisky share of throat projected to be increased from 15.2% to 29.2% Source: Hong Kong SAR Government & Internal Estimation

9 Fast growing Economy segment Value erosion Total Market Volume (HL 000) E 1,584 1,493 1,529 1,514 1,499 1, E 1, E 1,478 Volume % Share Premium 39.3% 36.3% 35.4% 35.1% 36.8% 36.3% 35.8% 35.3% Mainstream 31.0% 29.1% 26.2% 22.9% 20.7% 19.7% 18.7% 17.7% Economy 29.8% 34.62% 38.41% 42.03% 42.49% 44.0% 45.5% 47.0% Source: ACNielsen & internal estimation

10 Fragmented Beer Market 9 brands have > 5% share Vol Change +/- vs LY Blue Girl San Miguel % -10% Carlsberg** % Tsingtao % Top 5 companies < 70% share Kingway 6.8-1% No entry barriers Blue Ice Heineken** % -4% Carlsberg HK No 2 beer company after San Miguel Skol % Blue Ribbon % Others YTD Oct 2006 Vol % Share ** Due to low on-trade coverage from ACNielsen, brands with high On-trade share of sales (e.g. Carlsberg & Heineken) have understated market shares Source: ACNielsen

11 Diverse Sales Channels Entertainment (17%) THT (52%) Convenience Stores 17% Chinese Bars/Pubs 8% Karaoke 2% Western Bars/Pubs/Hotel 4% Night Clubs/Discos 3% Supermarkets 26% Chinese Restaurants 27% Provision Stores 9% Dai Pai Dong 4% Dining (31%) Source of Estimation : ACNielsen Source: Internal Estimation

12 Carlsberg Hong Kong Going for Market Leadership

13 Carlsberg Hong Kong History CBHK established HK Brewery operational CBHK acquires Huizhou Brewery HK Brewery closed, CHK established Status 2003: Joint no. 3 in beer market with 12% market share The only Beer Company with direct distribution to On-Trade Pressure on earnings from declining beer prices Fully dependant on Carlsberg brand in declining premium segment Good and efficient organization, but lack of winning culture

14 : New Ambitious Strategy plan Vision 2009 Targets 4 MWB s Build Winning Team The leading Beer Company In HK Sales +60% Strong double digit EBIT margin Grow Carlsberg Brand Build Strong Portfolio Operational Excellence

15 : New Ambitious Strategy plan Vision 2009 Targets Sales +60% 4 MWB s Build Winning Team Key Initiatives 1. New Mission / Vision 2. Reorganization 3. KPI s 4. Staff Communication & Training The leading Beer Company In HK Grow Carlsberg Brand Strong double digit EBIT margin Build Strong Portfolio Operational Excellence

16 New Mission & Vision based on Group M & V Our Mission Who we are Carlsberg Hong Kong is a dynamic provider of quality beers. Our exciting brands, innovative culture and committed team bring people together and add to the enjoyment of life Our Vision Where we want to go We will be the first choice of our consumers, customers and employees, by fully understanding their needs and proactively driving market development

17 Reorganization of Sales and Marketing => 40% of managers changed in 2004/05 Managing Director Executive Secretary Administration Sales Director Marketing Manager Business Dev. Manager General Logistics Manager HR Manager Finance Manager IT Dining Carlsberg Entertaining Non-Carlsberg Off-trade Macau Draught Services Sales Administration Trade Marketing Total 176 FTE s Beer promoters Approx half is in Sales and Marketing. Sales teams and TM organized by channels.

18 Build Winning team Staff Communication Program

19 Build Winning team Staff Communication Program Performance oriented bonus system 40% EBIT / 60% personal KPI Incentive to overdeliver % of 100% Max. bon us 75% paid 0% No Bonus ~ 90% (Min.) 100% (Target ~ 110% (Max.) = Budget) Performance Gate Achievement vs target

20 Build Winning team Staff Communication Program Performance oriented bonus system 40% EBIT / 60% personal KPI Incentive to overdeliver Extensive Development & Training program

21 : New Ambitious Strategy plan Vision The leading Beer Company In HK 2009 Targets Sales +60% 4 MWB s Build Winning Team Grow Carlsberg Brand Key Initiatives 1. New Mission / Vision 2. Reorganization 3. KPI s 4. Staff Communication & Training 5. Innovation 6. Localized Communication Strong double digit EBIT margin Build Strong Portfolio Operational Excellence

22 Innovation: Carlsberg Chill Line extension of Carlsberg targeting Young drinkers with light taste preference Launched in August 2004 Focus on Chinese Entertaining channel: Chinese bars Karaoke Nightclubs Locally developed TV Commercial and print advertising Chill TVC

23 Carlsberg localized communication Promotion Adaptation of Global football campaign using local celebrity Hacken Lee

24 Carlsberg localized communication - Thematic Locally developed TV Commercial and Print advertising based on new Global Best Beer Best Moment platform. Launched in HK and Singapore in August 2006 Carlsberg TVC

25 : New Ambitious Strategy plan Vision 2009 Targets Sales +60% 4 MWB s Build Winning Team Key Initiatives 1. New Mission / Vision 2. Reorganization 3. KPI s 4. Staff Communication & Training The leading Beer Company In HK Strong double digit EBIT margin Grow Carlsberg Brand Build Strong Portfolio 5. Innovation 6. Localized Communication 7. Grow SKOL 8. Expand channel specific portfolio Operational Excellence

26 Develop SKOL into major Brand Invest in Brand Building pioneer among Economy brands Locally developed Platform Top 5 beer in the world Activate through Horse Racing sponsorship SKOL TVC => HK s Fastest growing beer brand in 2005 & 2006

27 Expand channel specific portfolio Super Premium (>130) 2003 Premium ( ) Mainstream (100) Economy (40-70)

28 Expand channel specific portfolio Super Premium (>130) > Non-Beer Premium ( ) Mainstream (100) Economy (40-70)

29 Expand channel specific portfolio Carlsberg No 1 priority in all channels Convenience Stores 17% Chinese Bars/Pubs 8% Karaoke 2% Western Bars/Pubs/Hotel 4% Night Clubs/Discos 3% Supermarkets 26% Chinese Restaurants 27% Provision Stores 9% Dai Pai Dong 4% Source of Estimation : ACNielsen

30 : New Ambitious Strategy plan Vision 2009 Targets Sales +60% 4 MWB s Build Winning Team Key Initiatives 1. New Mission / Vision 2. Reorganization 3. KPI s 4. Staff Communication & Training The leading Beer Company In HK Strong double digit EBIT margin Grow Carlsberg Brand Build Strong Portfolio Operational Excellence 5. Innovation 6. Localized Communication 7. Grow SKOL 8. Expand channel specific portfolio 9. Cost to Produce 10.Cost to Serve 11.Cost to Operate

31 Operational Excellence 1. Cost to Produce Stock Keeping Units (SKU) optimization Procurement coordination Cum. operating profit Cumulative operating profit SKUs (truncated)

32 Operational Excellence 1. Cost to produce 2. Cost to Serve Commercial Excellence Truck utilization

33 Operational Excellence 1. Cost to Produce There are only TWO jobs at CHK. You either 2. Cost to Serve 3. Cost to Operate Administration Excellence Eliminate non-value adding activities

34 Good progress at halftime % Change Sales Volume 205,000HL 282,000HL +38% Gross Revenue HK$420M HK$600M +43% Operating Costs Index 100/HL Index 86/HL -14% Market Share Beer 11.8% 16.2% +4.4 share pt Market Position Joint No. 3 Growing No. 2 Employees Average motivation Very high motivation Managers Functional focus Winning Team

35 To win the game, we will continue to build the will to win, our Star Player, the best team and effective use of skills Winning Team Carlsberg brand Strong Portfolio Operational Excellence Brazil national team winners of 2005 Carlsberg Cup in Hong Kong

36 END