Following a review of the strategic priorities in late 2023 and early 2024, we are announcing a refresh of the SAIL’27 strategy: Accelerate SAIL.
The Group’s strategy, SAIL’27, was developed by a broad group of leaders and employees in late 2021 and early 2022 – before the war in Ukraine and subsequent high inflation. These significant events, in addition to COVID-19, meant that the focus in the past few years has been on successfully navigating through these shorter-term challenges.
With the impact from these major disruptions decreasing, it is now time to sharpen the longer-term focus on, and ensure sufficient investments in, our future growth. Consequently, the Executive Committee and extended leadership team conducted a review of the SAIL’27 priorities in late 2023 and early 2024, leading to the refreshed Accelerate SAIL strategy.
SAIL’27 set the strategic frame for Carlsberg. Accelerate SAIL builds on this foundation, setting higher growth ambitions by increasing investments in and support for selected growth drivers within portfolio, geographies and capabilities, improving supply chain efficiency, developing a growth culture and continuing the well-embedded cost focus.
The key elements of Accelerate SAIL are explained in the following.
STEP UP PREMIUM GROWTH
The premium category remains attractive across our markets, where we see appealing growth and margin opportunities. Premium accounts for 20% of the Group’s total volumes and is a key revenue growth driver. In recent years, our strong portfolio of international and local premium brands has outperformed our mainstream portfolio despite the significant external headwinds. By increasing investments in marketing and brand building and further developing our execution capabilities, we believe that we can accelerate growth of our premium portfolio and significantly increase the premium exposure.
ACCELERATE BEYOND BEER
Our opportunities in Beyond Beer will initially be captured through the Somersby and Garage brands, which are well established in many markets. The category currently accounts for 2% of our total volumes. We aim to grow the Beyond Beer category in our business through increased investments in brand building, innovation, footprint expansion and execution. We will also explore opportunities to expand our Beyond Beer portfolio through partnerships and local brand extensions, leveraging our strong route-to-market.
ACCELERATE GROWTH IN ASIA
Asia has been and remains a key volume and value growth driver for the Group. As part of Accelerate SAIL, we remain committed to growing in China, which is our largest market. We still see attractive volume and value growth opportunities in this market in the coming years for our strong premium portfolio of local and international beer and Beyond Beer brands, both in our strongholds in the western part of the country and in the big cities. We will strengthen our presence and market share in existing big cities by developing and advancing our route-to-market, while continuing to seed for the future in recently entered and new cities.
In Vietnam, we will continue the execution of our multi-year transformation strategy with its clear ambition to accelerate momentum by increasing investments and achieve growth through focus on key brands, regions and capabilities. In India, we will investigate an acceleration plan when possible.
DRIVE PROFITABLE GROWTH IN STRONGHOLDS
We will maintain our focus on driving profitable growth in our stronghold markets, such as the Nordics, Switzerland, France and Laos by leveraging our strong portfolios, our scale and leading route-to-market set-up.
DRIVE DIGITAL TRANSFORMATION
We have identified the key capabilities and enablers for the delivery of our Accelerate SAIL ambitions. These require improved tools, processes and digitisation in areas such as value management, sales execution and eB2B to drive revenue growth, and in the areas of supply chain management end to end and transactional processes to drive productivity. We will ensure the right investments behind these capabilities and enablers.
FUNDING OUR JOURNEY
Over the coming years, we intend to restore gross margins to pre-COVID levels to enable the step-up in investment levels required to capture the growth opportunities. The opportunities lie in supply chain areas such as procurement, value engineering and standardisation of raw and packaging materials across markets. The Group already has a very strong and well-embedded cost focus across the business, centred in particular around SG&A costs and enabled by the operating cost management (OCM) framework, which will be maintained.
BUILD A GROWTH CULTURE
Carlsberg has a strong performance- and cost-focused culture. Building on this strong foundation, we will develop our corporate culture to become more growth-oriented and reward calculated risk-taking. We will do that by developing our Leadership Charter to show how our values translate into behaviours, ways of working and leadership profiles, and design employee incentive programmes to support a growth culture. Our growth culture will also encompass a systematic approach to talent development across the Group and increase global mobility to ensure the right capabilities at the right time in the right place.
TOGETHER TOWARDS ZERO AND BEYOND
We remain committed to our ESG programme - Together Towards ZERO and Beyond - and our ambitious targets for carbon emissions, regenerative farming, packaging, water, irresponsible drinking, accidents and diversity.
RAISING OUR FINANCIAL AMBITIONS
As a result of Accelerate SAIL, we are raising our long-term growth ambitions (with 2024 as baseline):
The financial health of the business is strong and provides a good foundation for Accelerate SAIL. In the coming years, we will increase our commercial investments to support our growth ambitions. Consequently, we expect marketing/revenue to reach around 9%. We will increase sales expenses, but aim to keep SG&A/revenue flat through continued tight G&A cost control. The higher commercial investments will be financed by gradually restoring the gross margin to pre-COVID levels through supply chain productivity improvements.
Our capital allocation priorities – in place since 2016 – remain unchanged:
CEO Jacob Aarup-Andersen says:
“We’re announcing an exciting new chapter for Carlsberg. With Accelerate SAIL, we’ve identified our key strategic growth levers, are increasing our growth ambitions and building an even stronger company.”