Carlsberg's beer volumes in China fell almost 10% in the third quarter, the Danish brewer said, as a wet summer, inventory cuts by distributors and years of cautious consumer spending hit its largest Asian market. Organic volumes across Asia fell 6.7% and organic revenue in the region dropped 4.6%, even as the group kept its full-year profit forecast.

For investors in Asia, the numbers show where the beer trade is splitting. China, long the growth engine for global brewers, is now a drag that companies have to explain away each quarter. Southeast and South Asia are doing the opposite: Carlsberg reported growth in Vietnam and Laos and a mid-20s percentage jump in South Asian volumes, and it is preparing a possible stock market listing of its Indian business.

Carlsberg's China problem: rain, destocking and a tired consumer

Chief Financial Officer Ulrica Fearn told analysts on the Oct. 29 conference call that China volumes were down 5% for the year to date, in line with the market, before the sharper third-quarter decline. She pointed to subdued consumer sentiment, bad weather in July and August and the destocking that followed. Restaurants and bars, the on-trade, stayed soft, while e-commerce, modern retail and 1-liter cans kept growing.

There were bright spots inside the slump. Big cities and premium beer did better than the company's traditional strongholds and mainstream brands, and the Carlsberg brand itself grew 15% in China, according to the transcript.

Chief Executive Jacob Aarup-Andersen declined to split the decline between weather, destocking and demand. He said the company did not see a further deterioration in Chinese consumers, describing a weak consumer that has lasted "several years." He said September was better than July and August, and that distributor inventory at the end of September was back to roughly the level of a year earlier. He also reminded analysts that the fourth quarter is small in China, so the weak base should make comparisons easier next year.

The China weakness rippled through the group's brand portfolio. Premium beer volumes fell 3% overall and the 1664 Blanc wheat beer dropped 5%. Tuborg volumes were flat, but rose 4% excluding China, the company said.

Pressure on Chinese drinkers is not limited to beer: baijiu maker Kweichow Moutai's latest numbers are covered in Capital Times' report on Moutai's third-quarter profit and i-Moutai sales.

Vietnam, Laos and South Asia carry Carlsberg's Asia growth

Outside China, Carlsberg's Asian volumes grew 1%. Revenue per hectoliter in the region rose 2% on price increases and mix, and a favorable currency effect, mainly from China, lifted reported Asian revenue 1% to 5.07 billion kroner, according to RTTNews.

In Laos, volumes rose by a high-single-digit rate, led by soft drinks growing in the low teens, while beer grew by a low-single-digit rate. Vietnam delivered mid-single-digit volume growth, helped by exports, with market share estimated to be flat.

Aarup-Andersen said the Vietnamese business had returned to good growth after a year spent reworking its distribution, using fewer partners and shifting resources toward the center of the country. He said market share had risen in strongholds such as the Hue region, where its Huda brand is strongest, and that the company expects double-digit growth in Vietnam for the full year and a strong fourth quarter there.

South Asia, which Carlsberg reports with Central and Eastern Europe, was the fastest-growing part of the business. Volumes there rose in the mid-20s, driven by Carlsberg, Tuborg and the Gorkha brand in Nepal. The wider region posted organic revenue growth of 11.7%.

Guidance held as Sapporo deal and India listing approach

At group level, third-quarter revenue rose 4.9% to 25.28 billion kroner, or 3% on an organic basis. Total volumes rose 0.3% organically to 40.8 million hectoliters, with beer down 3.5% and soft drinks and other beverages up 8.5%, RTTNews reported. Revenue came in slightly above analysts' expectations of about 25.2 billion kroner in a company poll, but volumes fell short of the 41 million hectoliters analysts expected, according to Reuters.

Carlsberg still expects organic operating profit to grow 4% to 6% this year from 13.69 billion kroner in 2025, and now assumes currency movements will add about 100 million kroner. Aarup-Andersen said in the statement that the multi-beverage portfolio "more than compensated for the challenging trading environment in China." Shares fell 1.45% to 949.40 kroner in Copenhagen on the day, RTTNews said.

Two Asian transactions sit behind the balance-sheet story. Carlsberg expects its Sapporo joint venture in Southeast Asia to complete by the end of the year, and Fearn said that deal plus second-half cash flow should bring net debt close to its target of below 2.5 times EBITDA by the end of 2026, a year ahead of schedule. That excludes any proceeds from India: an updated draft red herring prospectus for a possible listing of the Indian unit was filed with the Securities and Exchange Board of India on Oct. 28. The company said it could not comment on the outcome or timing of the offering, and declined to discuss Indian trading during the call.

The next markers for its Asian business are the closing of the Sapporo joint venture and any move by Indian regulators on the prospectus.