Carlsberg Fights Tough Times in Malaysia

Carlsberg is going through tough times on the Malaysian market these days. Not only is the Danish beer giant seeing strong competitors run off with valuable market shares, it also has to deal with sky-high beer taxes as well as diligent smugglers who have sent the legal beer market in Malaysia on quite the rollercoaster ride.
     ”When it comes to sold, tax-subjected measures, the beer market in Malaysia went down about six per cent last year, and that decrease has continued this year for the entire industry. As a result, both we and our competitors expect an additional decrease in profits of about six to eight per cent in sold measures in 2006,” Director Mogens Joenck from Carlsberg Malaysia tells the Danish business daily Borsen this week.

The rapid profit reduction comes in the wake of three years with dramatic tax increases, which have made it approximately 50 per cent more expensive to buy beer in stores in spite of the more moderate 2.9 per cent increase in Malaysia’s overall consumer prices last year.
     ”The government has decided to give the beer market a real blow within the last three years by introducing tax increases on 10 per cent at first, then 28 per cent, and then another 10 per cent last year. This means that beer has gone from being expensive to being really expensive for the average consumer,” Mogens Joenck tells Borsen.
    
Even though Malaysia has a predominantly Muslim population, the country is known to be the biggest market for Carlsberg in Southeast Asia, where high growth rates in general and a frequent flow of tourists help keep the beer sales alive. But the industry has recently come under additional pressure due to smugglers, who have been given lucrative working conditions in creating an illegal market because of the rapidly increased taxes which have been imposed on the legal market.

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