Minimal impact forecast for breweries from beer price hike

PETALING JAYA: No significant drop in beer consumption is expected as a result of the recent price hike imposed by Carlsberg Brewery Malaysia Bhd and Heineken Malaysia Bhd.

Nor will there be a major rise in beer consumption with the upcoming Euro 2024 due to the match time not being favourable for consumers to consume beer at bars and restaurants.

TA Research said the Euro Cup has fewer spectators compared to the FIFA World Cup, hence the impact on global consolidated beer volume could be minimal.

The major drivers for Malaysian breweries Heineken and Carlsberg are mainly from the tourist arrivals and sales during Chinese New Year, as well as year-end campaigns.

It said the price adjustment of about 5% to 8% in 2024 would not impact the topline of both the brewers.

But it will certainly sustain their margin from the increase in raw material prices.

The brewery players have maintained the average selling price (ASP) since 2022.

TA Research believes the breweries’ top line would see an improvement from the increase in the ASP in conjunction with the sustainable beer volume.

From the perspective of share price, TA Research reckoned the breweries would react positively following the historical trend.

It expected the share price to perform on the back of rising tourist arrivals and increase in out-of-home beer consumption with the reopening of bars and restaurants.

It maintained its “neutral” call on the consumer sector with a “buy” call on both Heineken and Carlsberg based on an unchanged target price of RM28.60 and RM22.90 a share, respectively.

It anticipated the impact of the price hike in 2022 was marginal for both brewery players.

This is as consumers are willing to pay more for beer, especially during special occasions such as festive seasons and major sports events such as soccer tournaments.

Overall, the brewery players seem to have successfully navigated the pricing changes while still enjoying significant growth and improved profitability.

The report added that in Malaysia, beer volume was not disclosed on a quarterly basis.

However, it expected Heineken N.V. and Carlsberg A/S’s consolidated global beer volume to maintain an average of 60mhl and 30mhl, respectively for both the second quarter and third quarter of 2024.