A variety of high end and affordable types of beers, constant upgrading of the offer and rising exports are helping Carlsberg post good results and navigate its way through a declining Serbian beer market
The Carlsberg Company has been operating successfully on the Serbian market for a full 12 years and during this period has managed to build a stable business system, which has been constantly upgraded. In this interview Andrej Beslać, the company’s newly appointed CEO discusses Carlsberg’s plans on the local market.
What goals did you set for yourself at the beginning of your term?
My primary goal is for the company to remain on a good path, to continue being one of the biggest players on the beer market, to provide quality products, to be a desirable employer and, of course, a responsible member of the community in which we operate.
In the last 11 years, you have worked in key positions in the company. How much does the experience you gained during that period help you when it comes to running the company today?
I think that my work experience in Carlsberg, not only in Serbia but working on foreign projects too, gives me a great advantage in understanding the internal system of the company’s operations. When you work in different sectors in an organisation, you gain a much more precise and wider picture about all the processes within that organization; how they are interconnected and how changes in one segment influence all other segments.
On the other hand, the people I am working with have been my colleagues for many years and, in that respect, there has been a high degree of trust and understanding from the first day in my new position.
With a declining Serbian market, Carlsberg’s trump card is its wide portfolio of beers, beginning with domestic lagers like Lav, Dundjerski and Merak, to special beers like Guinness, San Miguel, Brooklyn or Erdinger
You started managing the company at a time when the purchasing power of the people in Serbia is continuing to decline.
Yes, the purchasing power of consumers here is declining and this can also be seen in the overall consumption of beer, which dropped by approximately 30 per cent in the last five years. In such a situation, all beer companies have been searching for the best way to remain sustainable and, if possible, boost their operations. If we are talking about Carlsberg, our trump card is the portfolio of our products. I can say with certainty that, for years now, Carlsberg has been a pioneer in terms of innovations in the beer segment.
Today, we offer to our consumers a wide portfolio of beers of different tastes and characters, beginning with domestic lagers like Lav, Dunđerski and Merak, to special beers like Guinness, San Miguel, Brooklyn or Erdinger. Also, in addition to beers, Carlsberg is the first company to offer ciders in Serbia, which have quickly become very popular and continue to be successful year-on-year.
However, and despite these additional activities, the fact remains that it is very difficult to maintain volume and profit at the expected level. In that respect, exporting to Carlsberg’s other markets does help a lot with the total balance. In 2015 alone, Carlsberg Serbia exported approximately a quarter of its total annual production.
One of the most important segments of the socially responsible behaviour of the Carlsberg Company is investing in science and education, and we have been doing this successfully for years
At the same time, Carlsberg also started revising its global strategy. How will this new decision impact on your operations in Serbia and Montenegro?
Due to the fact that Carlsberg has been facing huge global challenges in the last two years, with the biggest problems pertaining to our biggest market – Eastern Europe, the company is currently revising its existing strategies, which – once revised – will result in consolidated operations and foundations for further development. As far as the local market goes, we are certainly going to adapt to potential changes of our current business model, but in a way that we see as being the best fit for the domestic market.
How has the Serbian market changed since 2008, and in which way has it become segmented, in terms of the product range and purchasing power?
In the last seven years, the domestic beer market has been constantly declining, with the fall amounting to 30 per cent in 2015. If we compare the year 2015 to 2014, the market did grow by some six per cent, according to reports compiled by AC Nielsen, but considering that we experienced severe flooding in 2014, this growth cannot be viewed as a significant recovery.
In terms of industry trends, in the last year or so there were two predominant trends in Serbia, which are characteristic for the markets dealing with economic challenges – we have cheaper beers and premium beers which carry higher prices, while the mainstream beer segment is declining.
It seems that, back in the day, beer was just beer, while today there is a whole range of different beer-based products. There is also a growing trend in micro-brewed beer and we even have beer sommeliers now. What caused these changes?
The growing popularity of craft beer or, as we in Serbia call it, artisan beer, has been happening for quite some time now in European countries, and especially on the American market. When it comes to Serbia, consumption of so-called special types of beer is still not at that level, but it is growing. Today Serbian lovers of this kind of beer can find three different types of craft beer in our portfolio – Brooklyn Lager, Brooklyn East IPA and Sorachi Ace.
Following the adoption of the land conversion law, investors like Carlsberg in Serbia, which up until then only had the right to use the land, can now own it. How does the implementation of this law look in practice?
One of the positive aspects of the new Law on Land Conversion is that there is now legal security in this segment, meaning that the issue of land ownership is resolved. Furthermore, this law contributes, to an extent, to better regulation of the land market. It is true that the law was passed only recently, but we do hope that it will be implemented promptly and efficiently, otherwise, there is always going to be a possibility of encountering problems when applying for building permits which, potentially, can slow down additional investments. This surely wouldn’t be good for investments in the domestic market.
The Carlsberg Foundation has been providing scholarships for top students, as well as opportunities for successful graduates to gain work experience.
One of the most important segments of the socially responsible behaviour of the Carlsberg Company is investing in science and education. We have two ongoing student projects – providing scholarships for the best students of the University of Novi Sad’s Faculty of Law, Faculty of Economics and Faculty of Technology, which is carried out via our Foundation, and our Future Leaders Programme, through which we have been hiring some of the best students to do a two-year work placement at the company.
Although financial assistance is very important for young people during their student years, I personally think that having experience of working for an international company is of immeasurable value to future experts in any segment. Our activities should not only set a good example but also become an everyday practice in terms of companies cooperating with educational institutions in the country.