Chinese New Year brings prosperity to breweries

  • Business
  • Saturday, 29 Jan 2011

THE Chinese New Year (CNY) festive season is generally viewed as an auspicious occasion for rejoicing, but for many, it's also a time when businesses see brisk sales.

This fact especially holds true for local breweries Guinness Anchor Bhd (GAB) and Carlsberg Brewery Malaysia Bhd (Carlsberg Malaysia) as CNY is more often than not, the biggest period in terms of volume.

Because of this, GAB managing director Charles Ireland says it is important for the brewer to come up with special marketing campaigns to capitalise on this auspicious, festive season.

“The CNY quarter is usually the biggest (quarter) for us in terms of volume perspective. We usually get a spike (in volume) during this period, usually more than 10%,” he tells StarBizWeek.

GAB's current financial year ends June 30, 2011 (FY11). This year, CNY falls on Feb 3 and 4, right smack in the middle of the company's third quarter (for the period ending March 31, 2011).

However, Ireland adds that because of CNY's (early February) timing this year, some of GAB's sales would have been achieved in the preceding (second) quarter ending Dec 31, 2010 a period which includes Christmas, a time when beer sales peak as well.

Carlsberg Malaysia managing director Soren Ravn also concurs that the CNY period generates a spike in volume demand for the brewer.

“Yes, it's usually the peak of the year for us. But because it's in early February, we saw the bulk of our sales take place earlier. Some of it even started during the Christmas period,” he says.

Carlsberg Malaysia's financial year ends Dec 31. Again, because of the earlier timing of CNY, sales could split between the fourth quarter and first quarter of the company's FY10 and FY11 respectively, say analysts.

Realising the importance of how festive seasons like CNY can help boost sales, creative advertising and marketing campaigns are key, say Ireland and Ravn

However, both the brewery bosses are keeping mum about how much they invested in CNY-related advertising and promotional (A&P) campaigns for this year.

Both Ireland and Ravn admit that the amount spent on CNY-related A&P campaigns is substantial so as to be able to “hit the point home.”

Says Ravn: “Percentage-wise (compared to total A&P budget allocated for the whole year), it's pretty much the same year-on-year. But perhaps this year it might be a bit higher.”

Ireland also says the amount that GAB is investing in CNY-related A&P for 2011 was similar to how much the company spent last year.

Ireland adds that although volume consumption spikes during the CNY period, profits may see correlating increases.

“The reason is because a bigger proportion of our CNY sales comes from off trade and the margins are lower (in off trade) than they are during on trade.

“A&P investments also peak during CNY, so overall the (CNY) period is a little bit more important from a volume perspective than from a profit perspective.”

For this year's CNY season, both GAB and Carlsberg Malaysia have launched marketing initiatives that penetrate deep into the Chinese culture.

Carlsberg Malaysia is ushering the Year of the Rabbit with a promotional campaign that is themed on the Chinese word “Hei,” which means happiness.

The brewer officially launched its CNY campaign on an auspicious date Jan 11, 2011 (or 11.1.11) by unveiling an elaborate float procession at Carrefour Kota Damansara in Selangor, making its way to Giant Hypermarket Kota Damansara to bless shoppers before ending the procession at Tesco Kepong, KL, later the same day.

The 28 ft by 12 ft float is decorated with prancing horses, which symbolise the outpouring of success in the new year, and 10 statues of metal rabbits, as it will be the Year of the Rabbit, says Ravn.

Chinese traditions

“The way we approach CNY is to build on the already exciting Chinese traditions. It's about family, friends and treating each other well; and focusing on the good things in life.”

Ravn says the float will continue to make appearances at prominent locations within the Klang Valley and create more hype not just about CNY, but also the Carlsberg brand.

“We're now going to the media, wet market and supermarkets to get this Hei' feeling to consumers,” he says.

GAB's CNY campaigns this year are anchored around the number 9 as it is an auspicious number for the Chinese, Ireland says.

“Then again 9, or “Jiu”, also sounds like beer in Chinese, he adds.

Riding on the auspicious “9” theme, GAB officially launched its CNY campaign earlier this month at Pavilion Kuala Lumpur with a performance comprising nine dragons and 99 drums.

“It was of great interest to the foreign tourists,” Ireland says, laughing.

GAB's other CNY-related promotional campaigns include more activities anchored around the number 9, at pubs and coffee shops.

Ireland says the company's CNY campaigns have been quite successful, with GAB recently having to place advertisements in major publications and list down hotline numbers for consumers to call if they are having problems finding certain products.

“Consumer responses have been really positive (and) many of our products have already sold out,” he says.

Apart from CNY, global or continental football events also tend to drive up sales and demand for beer.

This is usually because outlets such as pubs and coffee shops tend to have viewing parties and televisions respectively that telecast football events live most of the time stretching into the wee hours of the morning leading to longer opening hours for the outlets.

Last year, both GAB and Carlsberg Malaysia saw sales improve with the FIFA World Cup that took place in June/ July in South Africa.

With the World Cup coming only once in four years, do both GAB and Carlsberg Malaysia see a drought post CNY?

Ravn says it would naturally need to work harder to create more brand awareness in the absence of a global football event like the World Cup.

“Volume does pick up in a football year. (But) it's about being relevant to the consumers than anything else. It's about creating more highlights by using our brands for all relevant occasions.

“So that's the challenge we're giving ourselves. Obviously we want to sell more this year than last year even with no World Cup.

Main sponsor

Carlsberg Malaysia is no doubt looking forward to capitalise on the 2012 UEFA European Football Championship (or Euro 2012) next year a European-based football tournament that, like the World Cup, also comes around only once in four years.

“We're excited about Euro 2012 next year, as Carlsberg is the main sponsor. The event will be jointly hosted by Ukraine and Poland, which are two, strong Carlsberg markets.

“We're doing a lot of activation in conjunction with the event. We can send consumers there and do a lot of promotions.”

Ireland says the World Cup, together with CNY (last year) was a huge boost to GAB.

“Events such as CNY and the World Cup give us a natural advantage to build our campaigns, but the malt liquor market (MLM) has remained robust even without those events.

“CNY comes around once a year and the World Cup only comes once in four years but we're now into our 10th consecutive year of growth. These occasions are great to have but we still need to continue to perform to build the brand and the business regardless of festive or global events.”

Going forward, both GAB and Carlsberg expect the MLM to be fairly stable in 2011.

Ireland says the local MLM closely correlated with overall economic performance in Malaysia, and with its gross domestic product expected to see strong single-digit growth this year, operating market conditions are expected to be good.

“The MLM market doesn't grow and fall massively. It's generally quite stable. I forecast in 2011 that it (MLM) will grow between 5% and 10%,” he says, adding that GAB has more than 50% of profitability of the market currently.

“I wouldn't expect it to be much bigger (or smaller) than that, unless something happens that would create a big disruption in the market, such as massive price hikes because of commodity price inflation or massive retail prices escalating because of big excise tax increases,” Ireland says.

Ravn is also optimistic about the Malaysian MLM this year.

“We'll still see growth. The economy is good and this will generate healthy competition.

“With competition, there will be lots of activity and this will create plenty of excitement in the market.”

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