Carlsberg: always aiming to deliver more

Carlsberg UK chief executive Dr Isaac Sheps is the Morning Advertiser's guest editor this week. Here he answers readers' questions.

Are you happy that tied licensees get sufficient support to promote your product?​

Glassware, beer mats and promotional material seem hard to get hold of at times.

Carlsberg UK (CUK) has done a lot of work looking into the support it offers its on-trade customers. As a result we are looking at investing more money to provide better and more bespoke promotional support for our customers.

We want to help improve their business. So we will provide them with promotional materials that help drive sales and footfall — much better this than simply sending out 1,000 point-of-sale kits at random.

We have a first-class field sales team around the country that give tied licensees this support — they ensure that licensees get everything they want.

And on top of this we have We Deliver More — our initiative to provide pubs with the tools to improve their businesses.

So licensees can go to www.carlsbergwedelivermore.co.uk​ and order whatever glassware, beer mats and PoS they need.

Do you think that the beer category is being punished by consumers in the on-trade because of the prices that tied licensees have to charge?​

Price is not the only factor that influences the behaviour of consumers in the on-trade.

There are tied licensees who are very successful and non-tied licensees who are not. The success of a business is more a result of it meeting and then exceeding the needs and expectations of its consumers.

Why are Carlsberg UK products so cheap in supermarkets and what do you think of rock-bottom pricing levels?​

This is not a situation that is unique to Carlsberg. All big brands across all drinks categories find themselves heavily promoted in take-home — and that is both in alcoholic and non-alcoholic drinks.

That is the nature of the supermarket business model: they promote big brands because they are the ones that the consumers want.

The difference in pricing between take-home and the on-trade is a result of the different margin requirements of the different business models.

Is Carlsberg committed to the pub sector despite falling beer sales?​

We are highly committed to the on-trade and there is a huge amount of support we deliver to demonstrate this. We have established We Deliver More as a way of doing business. It is a customer-focused principle where we help licensees drive sales and footfall, and make more money through our knowledge, expertise and marketing assets.

Added to this, more than 75% of our employees help service the on-trade; we are the only major brewer that still delivers direct to our customers through our own distribution network; we also provide distribution services through our logistics network to some of the biggest pub operators in the UK. There can be no doubt, the on-trade is at the heart of our business.

Do your bosses in Denmark see a long-term future in the UK beer market?​

Absolutely they do. While they appreciate it is one of the more challenging beer markets in the world, they also see it as one of the biggest and most influential. If you take the Carlsberg family of brands alone, 45% of total global volume is sold in the UK. It is massively important to everyone at Carlsberg and there are great historical ties to the UK market.

After all, the very first Carlsberg beer to be exported from Denmark was imported by the UK.

Do you think that cheap beer prices in supermarkets have led to social change with many choosing to drink at home or pre-load?​

Just to say that price is driving social change is very simplistic. The fact that people don't go out to the pub as much as they used to cannot only be explained away by lower supermarket prices. There is a wider cultural change going on here.

In all walks of life customers have become more demanding when it comes to choice.

Look at coffee shops, for example. There you have an out-of-home outlet that charges a greatly inflated price for its core product compared to at-home, but they have worked very hard to understand their consumer and have become unbelievably successful.

Has anything surprised you about the pub trade since your arrival at Carlsberg UK?

I am still new to this market so everything surprises me!

But I think what has interested me most is the role of the pub in the community — that it has a role of a community hub. That is very unique and I like it very much.

There is also the very special situation with these excellent smaller, local brewers having pub chains. That again is unique — I have worked all over Europe and seen nothing like that. For example, in Germany and Belgium you have many excellent small brewers, but none of them own chains of pubs or bars.

Is there anything you can do to stop Carlsberg products being heavily discounted by the supermarkets before and during the World Cup?​

We cannot control the price retailers choose to sell our brands at. The supermarkets will see the World Cup as a major opportunity across the whole store.

So you will see heavy price promotions across lots of brands in many different categories, not just beer and drinks, to drive footfall.

Do you agree with minimum pricing for alcohol?​

No. Governments should not interfere with normal, competitive behaviours in markets.

Is Carlsberg committed to the cask-ale category?​

Absolutely. We are continuing to innovate with Tetley's cask, which continues to be one of the biggest cask brands in the UK. We have introduced a range of new seasonal Tetley's cask ales, which started with our Christmas beer, Northern Cracker, last year and this is continuing in 2010 with our Easter ale, Greenshoots, and our summer beer, Midsummer Madness. There will be another before we return to Northern Cracker this Christmas.

We help the freetrade through our wholesale business where we sell cask-beer brands from 16 regional and family brewers across the UK — from Timothy Taylor in Yorkshire, to St Austell in Cornwall.

This is done through our Tapsters Choice programme.

Plus we provide a route to market for many more cask-beer brands through our logistics business, enabling smaller brewers to tap into our distribution network so they can get their beers to pub companies quickly, efficiently and in top quality condition.

This year we launched a new training programme for licensees called We Deliver More Live — and one of the three different courses focused on cask ale. We Deliver More Live Cask has trained more than 300 licensees this year with the help of cask quality experts Cask Marque; CUK is also one of the original members of Cask Marque.

I could go on! We are very passionate about cask ale.

Why is Tetley's Cask to be brewed in Wolverhampton, so far from its Yorkshire homeland?​

Our preference was always to brew 100% of Tetley's in Yorkshire. Now, while we managed to secure a deal for the brewing of keg Tetley's in Yorkshire, unfortunately we could not find a cask brewer in Yorkshire that could fulfil our capacity needs for Tetley's Cask. So the next step was to secure a credible cask-ale partner that brewed great quality cask ale, using traditional methods.

In Marston's we have found an excellent partner. It is a quality cask-ale brewer, which uses traditional brewing processes and we are confident it will brew Tetley's to the same level of quality and taste.

Do you think that falling sales in pubs are predominantly due to Carlsberg and other lagers being seen as overpriced at the bar, while being sold so cheaply in the supermarket?​

Again, I think just to say that price differential is responsible is too simple for me. The fact that people don't go out to the pub as much as they used to cannot only be explained away by lower supermarket prices and higher prices charged in pubs. There is a wider cultural change going on here.

What do you th​