Carlsberg's Strategic Challenges in Emerging Beer Markets Report

This report analyzes Carlsberg's strategic challenges and opportunities in emerging beer markets, particularly in Russia, China, and India. It examines the company's current international business strategy, highlighting issues related to market entry, competition, and partnership management. The report identifies key strategic issues, including the impact of mergers and acquisitions, political instability, and competitive pressures from other major brewers. It applies theoretical concepts such as PEST, SWOT, and Porter's Five Forces analyses to assess the external and internal environments. The report concludes with recommendations for Carlsberg to strengthen its market position, focusing on enhancing marketing campaigns, building strong relationships with strategic partners, and adapting to the specific demands of each emerging market. It also explores the potential for growth in Western China and the importance of understanding consumer behavior in these regions. The report emphasizes the need for Carlsberg to review its international business strategy to achieve sustainable growth and increase its market share in these rapidly expanding markets.

Running Head: Carlsberg in Emerging Market
Carlsberg in Emerging Market
Report
System04104
9/15/2019

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Executive Summary
The executive summary has been prepared for the CEO of Microsoft. The report shows the
current strategic issue of Carlsberg regarding its marketing strategy in international market.
Carlsberg is a world-class brewery company that is facing strong competitive pressure in the
emerging beer market like Russia, China and India. The company is has huge opportunities in
Russia because of its growing market while China and India are two fastest growing market
for beer products. Carlsberg has done several mergers and acquisition in the past in EU and
China but their experience was not good because the decision of partnership affects the
financial situation of the company and increases its debt. However, the political instability
and barriers for international organisation in Russia and China are also two major concerns
for the company. The company has also faced strict penalty in China when its partner
company file sue against it. However, these all factors shows that company is facing issues
related with its international business strategy and managing its relationship with its partners.
Carlsberg need to focus on reviewing its international business strategy. The company needs
to strong its tie-up with its strategic partners in emerging markets. Apart from this, company
needs to establish itself as a brand name in the developing country like China and India. The
increasing income of people in Western China is also an opportunity for the company but the
company needs to assess exact demand and consumption pattern of people in these areas.
However, if the company strengthen its marketing campaign in the international market and
establish a good relationship with its strategic partners in emerging market, Carlsberg can
acquire a huge market share in these emerging markets. However, company needs to focus on
its promotional and advertising campaign.

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Table of Contents
Executive Summary...................................................................................................................1
1. Introduction.........................................................................................................................3
2. Summary of the Case..........................................................................................................3
3. Identification of Strategic Issues.........................................................................................4
4. Theoretical Concept............................................................................................................5
5. Application of Strategy Model...........................................................................................7
6. Conclusion..........................................................................................................................8
References..................................................................................................................................9

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1. Introduction
Carlsberg is the known for its best quality beer products and it is one of the world’s top five
brewers. The company known for its huge market share in EU but company is struggling in
the Chinese and Russian market. Despite being the growth opportunities in the Russian,
Indian, and Chinese market, company is facing strong challenges to increase its market share
in these countries. The purpose of this report is to identify the strategic issues of Carlsberg
and analyse the possible opportunities for the company in the emerging markets with the help
of various theoretical models. The report also includes that how company can use various
business models to increase its market share in the emerging market including China, India,
and Russia.
2. Summary of the Case
Carlsberg is the fifth largest brewer in European Union but facing extremely tough challenges
in the emerging market especially Russia, China, and India. The company has a concern
about its success in Chinese and Russian market. The company is also looking toward the
Indian market where large number of competitors already looking for entry. The major threat
for the company is tough competition, political scenarios, and barriers to enter in these
emerging markets. In such a scenario, it is really difficult for the Carlsberg to decide in which
emerging market the company has better chance of success to increase its market share.
However, the company faces extreme challenges in Chinese market, which is growing
continuously and will continue to do so.
Carlsberg faces extreme challenges in China because of various social and political barriers
for foreign brewery companies. Apart from this, while operating in south Chinese market
(which is relatively a well-developed market in China) the company lost a huge case against
their venture partner. However, now company focuses on Western China where beer
consumption is low and it is expected from the company that income of the people will rise
and so will demand of Carlsberg beer in future (Anderson, Meloni and Swinnen, 2018). This
shows that the marketing strategy of company in Chinese market is really problematic. Apart
from this, in the India market, which is also an emerging market in Asia, the political
stability, is not a real concern for the company. Apart from this, the current Narendra Modi
(Current PM) government is also favouring the international companies to invest and expand

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market in the country. However, the open policies of India also attract the other competitors
to enter in the Indian market that is a major concern for Carlsberg.
3. Identification of Strategic Issues
The company is facing strong challenges in the Asian market while it has huge market share
in EU market but acquisition with Scottish company leads to high debt for the Carlsberg.
However, the major issue with the company is to decide the focal point where it can enhance
its market share. Carlsberg needs to review its idea of international business strategy.
Company lost three years in China that can be helpful to establish the company as the market
leader in Asian region. The company’s strategy of partnership and acquisition was really not
helpful for the company as it bring financial loss for the company (Garavaglia and Swinnen,
2018).
The major threat for the company is hard competition in brewery industry and company find
difficulties to face the competition. It is really important for the Company to face the political
and governmental challenges in Russia and Chinese market (Grünig and Morschett, 2017).
The company tried to jointly operate its business in these emerging markets but faced
extreme difficulties while it was operating its business in China with is joint venture (Grewal,
et. al., 2018). The acquisition failure in EU market with Scottish brewer shows its business
strategy failure because it increased the debt of the company. The high competition in the
brewery market is really a concern for the company. However, these issues show that
company is facing stream issues related to its international marketing strategy (Buckley and
Ghauri, 2015). The Carlsberg was failed to identify the real opportunities in Chinese market.
However, it is not possible in short-term that in Western China, income of the people and
demand of Carlsberg product will be rise in same proportion. The assumption of company
that consumption will grow might or might not be possible in short term in Western China.
The company is facing problem from the Russian political support and from the barriers
imposed by Chinese in its market. Both companies are not known for supporting the foreign
companies and their rules and regulations regarding the international companies are also not
supportive. The income of people in China and India are continuously increasing and they are
most populated developing countries. Therefore, it is really essential for the company to

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assess the market opportunities for the future growth and development in these markets
(Ghose, Heiman and Lowengart, 2017).
The uncertainty and instability in the government in China and Russia may cause problem for
the country. The company already faces some serious issues in China and paid heavy penalty
in South China. Apart from this, the Russian government is also not known for the supportive
business environment for the foreign companies. However, the company can get greater
support in India but here the company will face the fear of strong competition because large
numbers of competitors are looking to enter in the Indian market (Hatch, Schultz, and Skov,
2015). From the above analysis, it can be said that Carlsberg is facing extreme issues related
to its international strategy and problems related to acquisition and merger. However, the
major part of the strategic issue of the company is related with the international strategic
issue.
4. Theoretical Concept
Carlsberg was facing issues related to its international strategy in the EU and Russian market.
However, the company was failed to decrease its debt because the merger with Scottish
company only aims to increase the market share and it is really a problem for the Carlsberg. It
means the company ignored the current market situation of the Scottish company and its
financial position. However, the merger and acquisition strategy of the company was really
painful for the company in both EU and Chinese market (Grünig and Morschett, 2017).
The company was failed to analyse the political and competitive situation in the Russia and
Chinese market. However, if the company analyses the situation with the help of PEST
analysis, it might help the company to understand the situation of Carlsberg in the
international market. The PEST analysis helps a company to analyse all the macro
environmental factors (political, economic, social, and environmental) to enter in the market
(Armstrong, Kotler, Harker, and Brennan, 2018). The PEST analysis can help the company to
known exact support from the political parties and governments to enter in the Chinese and
Russian market. Carlsberg failed to know the economic conditions in the Western Chinese
market for its products and if the company used the PESTEL analysis, the company can know
the economic situation of this area that will help the company to invest in the Chinese market.
The company has strong market position in Russia and EU but the strong competition in
these markets shows that how company has been failed in its international business strategy.

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The failure of acquisition and merger is also a major issue for the company (Grünig and
Morschett, 2017).
If the situation of the company analyses under the SWOT analysis then it can be easily found
that company is lacking in its international business strategies (Verde, 2015). The company is
one of the popular brands in the world and having sufficient amount of financial and capital
resources to expand its market in the emerging markets like China and India. However, the
merger and acquisition of the company in Europe and Chinese market was nut successful.
The opportunity in the Indian market will attract for investment but the major threat for the
company is large number of competitors are also looking to enter in the Indian market
(Buckley and Ghauri, 2015).
SWOT Analysis of Carlsberg
Strengths
 World’s top Five Brewers
 Huge capital Resources
 Strong Brand image
 Strong hold in EU market
 High sales volume
Weaknesses
 Failure to Identify the international
opportunities
 Failure to identify the situation in international
market
 Weakness in controlling overseas holdings
 Failure in acquisition and merger with other
companies in EU and Chinese market
Opportunities
 Growth opportunities in Russian market
 Increasing income of Western Chinese
People
 The increasing demand of beer in India
due to increasing population
 Increasing tax on Vodka allows
Carlsberg to establish itself in Russian
market
 Economies of scale in China and India
Threats
 Strong competition in all emerging markets
 Debt position of the company
 Expansion of Competitors in the emerging
markets such as Heineken, SABMillier,
Tsingtao, AB InBev etc.

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To enter in any emerging market, it is essential for any company to analyse the competitive
forces. According to the Porter’s five-force model, the five forces that can affect the business
strategy of a firm are Bargaining power of customers, bargaining power of suppliers,
substitute products, competitive rivalry and possibility of new entrants in the market (Purves,
et. al., 2017). In the case of Carlsberg, the company is facing strong competition in the
Russian, European, and Chinese market. Apart from this, the opportunities to enter in the
Indian market also create fear for the company as there are large numbers of competitors are
looking to enter in the market. In the Chinese market, Guangdong is known for its best
quality beer products (Melewar and Skinner, 2018). Carlsberg is one of the popular brands in
the world and it is really essential to know that Somersby and Beo are two strong substitutes
of Carlsberg beer in China. Apart from this, the Indian market shows the threat of new
entrants in the market because large economy of scale. Chinese and Indian markets are two
most populated country and people consume beer products in high quantity. To enter in the
emerging markets, Carlsberg was failed to analyse these factors especially in China and
Russian market (Madsen, 2019). However, knowing the culture and market is compulsory
factor in expanding the market in an international market. The company has adequate
resources for operation in the European market and that is why company has adopted the
strategy of merger and acquisition. Poor availability of funds, increase in debts, and poor
quality products are some of the real issues for the Carlsberg in both Western and European
market. It is also considerable that in the EU market people are ready to pay extra because of
the brand name and convenience. However, the Carlsberg failed to take the market of its beer
product to the people in China and Russia while entering in Indian market creates fear for the
company. In Chinese market, Carlsberg is dominated by other brands of beer such as CRB,
Tsingtao, AB InBev and Yanjing etc.
5. Application of Strategy Model
To establish in the emerging market company need to work on its international business
strategy. Apart from this, the merger and acquisitions of the firm should be based on the
overall analysis of the company such as financial situation, operational situation, market size,
debt position, and image of the company in the local market. China and Indian are the
world’s fastest growing beer market and the growth of beer products in Russia is well known.
However, these countries have imposed high taxes on the liquor products like Whisky, Rum,

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and vodka etc. Such situation creates the opportunities for beer products in these emerging
markets (Kjeldgaard, Askegaard, Rasmussen, and Østergaard, 2017).
There are three main factors behind the decision of consumer to spend on beer products in the
emerging market. The first is initial brand consideration, which is likely to be less important
in developing countries in compare to developed country’s market. Therefore, Carlsberg
needs to focus on develop a brand image in the emerging market. The second is world of
mouth technique of advertising because a large number of buyers will buy the beer products
of Carlsberg in emerging market. It has been noted that more than 40% people try the beer
from the recommendations of friends and colleagues (Kumar, 2019). The world of mouth
campaign can be a best idea to spread awareness about the products among the people.
However, the third and most important point is to analyse the market situation and political
scenario in the country to support Carlsberg in the country. It will be really good idea for the
company to focus on establishing itself as an international brand image and for this the
company needs to tie up with local brands of beer. However, considering the financial and
operational situation of these brands should be the first priory of the company before making
entry in the emerging market (Søderberg, 2015).
6. Conclusion
In conclusion, Carlsberg’s international strategy is the major cause of its failure in the
Chinese, European, and Russian market. Apart from this, the company’s strategy of
partnership and acquisition of weak organisation is another serious cause of its decreasing
market share and increasing debt on the company. However, the major fear of the company is
to compete in the international market with existing local competitors. The company have
great opportunities to enter in the Russian and Indian market if they analysed the market
demand and taxation on alternatives and substitute products. The company can also use the
word of mouth technique to establish itself as a brand name in the emerging markets. China
and India are the fastest growing markets for beer in the world because of increasing
population and large number of young generation people. If the company, analysed its
international strategy, review its pricing strategy, and assess the risk of competitors, then it
will be definitely success in the emerging market of Asia including China and India. In
Russia, Company can export the Baltika brand outside of the country and can give a strong
challenge to SABMiller.

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References
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Consumption Patterns, Regulations, and Industrial Organizations. Annual Review of Resource
Economics, 10, pp.105-132.
Armstrong, G.M., Kotler, P., Harker, M.J. and Brennan, R. (2018) Marketing: an
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Buckley, P.J. and Ghauri, P. (2015) International business strategy: theory and practice. UK:
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Buckley, P.J. and Ghauri, P. (2015) Case study I: Internationalization of brewery companies:
the case of Carlsberg. International Business Strategy, pp. 122-128.
Garavaglia, C. and Swinnen, J. (2018) Economics of the craft beer revolution: A comparative
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Management Discoveries, 1(1), pp.58-90.

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