Carlsberg managed to deliver strong results in the first half of 2023, during a turbulent year for beer companies amid rising costs and waning demand. But then things took an unexpected turn for the Danish brewer in July, when its Russian business was seized by government authorities before Carlsberg could sell it. 

As the year draws to a close, Carlsberg now plans to continue hiking beer prices and shift its gaze to double-down on other geographies as it finds ways to offset its lost Russian breweries.  

Carlsberg’s CEO Jacob Aarup-Andersen, who took over from Cees ‘t Hart in September, told Bloomberg in an interview that consumers “will see price increases from us again next year.” The cost of producing beer is ticking up as its has in the last two years (although at a slower pace), making price hikes inevitable. 

“I don’t think anyone in the industry will be able to maintain that in the coming years but we will continue to take price,” Aarup-Andersen told the outlet. He made similar comments following the release of third-quarter earnings in October, where he mentioned impending price hikes in 2024.

A spokesperson for Carlsberg told Fortune that the anticipated price hikes won’t be too dramatic.

Earlier this year, the company said it was eyeing a “high single-digit” percentage increase in prices to make up for inflated costs. The strategy has helped the company deliver strong sales through a period when consumption volumes took a hit in some regions and product categories. 

Carlsberg lifted its full-year profit guidance in August as it recorded “solid business performance.” The company saw a slight drop in sales volumes in the third quarter by 3%, although the brewer’s overall revenue rose 5.8% on an organic basis. 

The year of ‘renewed energy’

Carlsberg has had to navigate a number of challenges in recent years, including COVID-19, the Russia-Ukraine war and inflation. But it’s looking to have a fresh reset in 2024, the group’s spokesperson told Fortune.

“Now, a new day is dawning. There’s renewed energy. We are setting a renewed strategic direction that will be released with our full year results. And there’s an opportunity to inject investment in our long-term growth priorities,” the spokesperson said. “Looking at our Q3 numbers, we outperformed in the premium segment across markets, thanks to our strong brands and therefore we see limited impact on brand mix.”

In the upcoming year, the world’s third-largest brewer is also looking to grow its investments in its Asian markets, including China, India and Vietnam, while also expanding its marketing initiatives. 

“We’ll continue to have strong financial discipline, but we’ll be normalizing investments in key areas such as marketing and branding,” banker-turned-brewery-chief Aarup-Andersen told Bloomberg. “There are certain areas and geographies where we’ll be pushing harder.”  

The CEO will lay out further details of his strategy in February to update the “Sail ‘27” strategy laid out by his predecessor in 2022, accounting for the seized Russian subsidiary, Baltika Breweries.

Coping with the impact of the lost Russian operations

Despite the robust earnings until the third quarter, Carlsberg has had to grapple with the financial impact of its “stolen” Russian business, Aarup-Andersen told Fortune in October. Baltika, which produced a significant share of Russia’s beer, employed more than 8,000 workers in eight different breweries and accounted for roughly 13% of Carlsberg’s group revenue in 2021. The Tuborg beer-maker had announced its intent to depart from Russia in March 2022 and had already laid out plans to sell the company in June before it was taken over by Kremlin authorities. 

Hart, Carlsberg’s CEO at the time of the seizure, said he was “shocked” at the move and feared the sprawling brewing operations might get nationalized under Russian authorities.

“We are taking the full financial hit in this year’s financial accounts so we can, from next year onwards, move on without Russia on the books, which is [a] very, very sad and unfortunate turn of events,” Aarup-Andersen said, adding that the full-year results would show the extent of the impact of Baltika’s seizure. He also said in a statement announcing third-quarter results that the company was on a strong financial footing.

The ordeal between Carlsberg and the Russian authorities continues as the Danish company still has title to the shares of Baltika but no operational control. Last month, two Baltika employees were arrested under fraud charges—a claim that Carlsberg denies, according to the Financial Times. 

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Original: Fortune | FORTUNE: Carlsberg CEO: Expansion, prices hikes on beer to offset ‘stolen’ Russian business