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Worse Yet To Come Due To Coronavirus Pandemic, Says Carlsberg

Worse Yet To Come Due To Coronavirus Pandemic, Says Carlsberg
After announcing a 7 per cent drop in its sales for the first quarter, beer maker Carlsberg said that the worse because of the coronavirus pandemic is yet to be seen. The company reported that the increased demand and sale of beer in the supermarkets could not offset the impact to the business because of the closure of bars and restaurants because of lockdown imposed by governments across the world in order to prevent the spread of the coronavirus pandemic.
There were some visible signs of recovery in the Chinese market, the largest for Carlsberg, after the lockdown restrictions were relaxed there which allowed the opening up of smaller outlets, said the third biggest brewer of the world that is only preceded by Anheuser Busch InBev and Heineken.
These positive signals were reported by the company after a drop in sale by one fifth in terms of volume during the first three months of the current year.  
"We see some pockets of demand in bars and restaurants, but in general it's a relatively slow recovery in China," Chief Executive Cees t'Hart told Reuters.
Earlier this month, the company suspended its guidance after sale of its beer was severely impacted following closure of bars and restaurants especially in Western Europe as a part of the lockdown because of the coronavirus pandemic.
Even though the company reported higher sale in volumes of its beer from supermarkets, it was not enough to cushion the hit in sale and resultant loss of revenues because of closure of bars in western Europe, with drop of 6 per cent in volume during the quarter, Carlsberg said.
"Social-distancing requirements will continue and will impact consumer behaviour. Consequently, volumes will decline further in the second quarter," t'Hart said.
Sale of the company between January and March came in at 12.9 billion Danish crowns ($1.88 billion), Carlsberg said. In comparison, a group of analysts polled by Carlsberg had expected the sale revenues for the company for the aforesaid period to come in at 12.8 billion. Hence the company beat the market estimates.
During the last year or so, the company has shifted its strategic focus from cost-cutting to revenue growth, particularly through the increased sale of more of its pricier brands.
That strategy of the company has been hit by the closure of the bars and restaurants, t'Hart said, explaining that consumers of beer under lockdown tend to not to go for specialty beer in the supermarket but rather choose to purchase multipacks of less expensive mainstream brands.
Carlsberg's price/mix, which indicates whether the company sold more or less of its expensive beer, was unchanged in the three months.
Carlsberg did not disclose a full set of earnings figures.

Christopher J. Mitchell

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