Jorgen Buhl Rasmussen loves chilled Carlsberg beer on a sunny summer day like this. He is lean and tall; he has green eyes and no beer belly. Meet the president and CEO of Carlsberg Group, the world's fourth largest brewer with brands such as Carlsberg, Jacobsen, Tuborg and Batlika. Reflecting on India from his office high in the Carlsberg headquarters with spectacular views of Copenhagen city and the sea, Mr Rasmussen says it will be one of the biggest beer markets in the long term. And the 55-year-old CEO is confident that Carlsberg will be one of the top competitors in India when it happens. Among the artifacts and wall-hangings in his office room, dominated by a monitor displaying latest movements in global financial markets, is a decorative axe that he calls his budget tool. He says he will use it if the CFO comes to him with a quarterly loss. The axe is yet to be stained although the Danish brewer had some tough time coping with global recession that came immediately after it acquired Scottish & Newcastle along with Heineken for about $15 billion in January 2008. But the company seems to have overcome the tough days and reported a better-than-expected net profit of about $560 million in the first half of 2010. Mr Rasmussen, who returned to his hometown Copenhagen in 2006 to Carlsberg after living in London for 14 years, talks about Carlsberg, beer, India and Indian food in a freewheeling interview. Excerpts:
In one of your recent interviews, you said Carlsberg will focus growth through purchases in China and the rest of Asia. Is India in the picture as well? What's your growth strategy?
If you take Carlsberg as a group, it has changed in the last 3-4 years. Especially after we did the Scottish & Newcastle acquisition in 2008, we became much more international and much more global. We have big business in Western Europe and in Eastern Europe, particularly Russia and Kazakhstan. Also we have a good platform in Asia, in markets like Malaysia where we are market leaders, and we are strong in Hong Kong, Singapore, Cambodia and Laos. We are very strong in the western part of China where we have close to 60% of market. We have more than 20 breweries in China. India is another place where we see a long-term big strategic opportunity. And Vietnam is another big strategic opportunity.
So often, when we think about Asia, that's our growth platform. Western Europe is a mature, more stable marketplace, while Eastern Europe is a growing marketplace. For the future, Asia will be where we will make most of our investments. And if we acquire, it will be most likely out there because we see lot of potential there. And within Asia, its primarily China and Vietnam, and if we talk more long-term, also India.
You have visited India a couple of times recently. It consumes less beer than most other markets. What makes India different?
Beer consumption in India is one of the lowest in the world. It is just about one or two litres per capita a year while a lot of markets in Asia consume at least 20 litres per capita. In some places like eastern China – Shanghai and Beijing – it's 80 litres per capita, like in Western Europe. So it's very low in India still.
But globally, when we look at history, we often talk about market clusters. There are beer clusters such as northern Europe where many years back, beer was an important part of life. So, in those markets, we generally see beer coming down and wine growing, taking share from beer. Then there are wine clusters like Italy, Spain and France where we often see beer taking share from wine. And then we have the spirit markets like Russia, China and partly India where over time I am pretty sure that lower alcoholic drinks like wine and beer will start take some share from spirits.
That's why India in the longer term is extremely interesting. Because beer should be growing and consumption should go up. And then you have more than one billion people and a lot of growth in the economy. There are more and more middle class consumers in India too. So, over time, it's a very interesting market.
So, when do you see India turning into a big beer market?
We are already investing quite a lot in India. We have four breweries there and we are now building the fifth in Andhra Pradesh. Since consumption is still very low, it will take longer before it becomes a significant market. But we are investing now and we are building the business platform now. So we have the presence to hopefully (benefit) at the point of time when we see the category show some excitement in terms of faster growth. Beer is already growing faster than spirits, at around 10-15% a year.
Tell us about Carlsberg in India and its competition, particularly after UB's tieup with Heineken.