Carlsberg Make Cuts as Danish Beer Industry Suffers
The Danish giant said that sales of beer in Denmark fell by more than 5% in the first half of this year, which is more than twice as far as expected.
17/08/05 Carlsberg Danmark to announce staff cuts equivalent to 95 full-time jobs as a result of falling Danish beer sales. The staff cuts announced will reduce costs by around DKK 40 million a year. The Danish giant said that sales of beer in Denmark fell by more than 5% in the first half of this year, which is more than twice as far as expected. Following the reduction in duty on spirits in Denmark in 2003, beer has lost market share to spirits while wine's market share has been largely unchanged, according to figures from the Central Customs and Tax Administration.
"Since spirits became cheaper, many Danes have replaced beer with spirits," says Jørn Tol-strup Rohde, CEO of Carlsberg Danmark. "Sales of spirits have climbed 33% since the re-duction in duty in October 2003, but beer sales fell by 6% in 2004 and 5% in the first half of this year. So now we must once again adjust our cost base to a lower level of sales."
The redundancies will mainly affect white-collar staff across the organisation. Union jobs, mainly in production and logistics, have already been cut back gradually in line with falling beer sales. Earlier this year Carlsberg launched a strategic plan for the next three years which aims to continue streamlining the business in a period of dwindling beer consumption both in Denmark and across Western Europe. But developments during the first half of this year have made it necessary to cut costs as early as this year.
"We still expect to meet the targets of our strategic plan for the next three years," says Jørn Tolstrup Rohde. "But the continued decline in the beer market during the first half means that the assumptions made about costs are no longer valid. We're now doing something about this so that we can follow the course set out in our strategy."
