This article first appeared in The Edge Financial Daily on April 21, 2017 - April 27, 2017

KUALA LUMPUR: Carlsberg Brewery Malaysia Bhd expects growth in revenue this year despite poor consumer sentiment and contraband alcohol affecting sales.

Managing director Lars Lehmann said the group plans to drive growth through the introduction of a new revenue stream this year, and the fortification of its premium brands.

"We believe we can still grow the market. If you look at our top line, our premium brands are growing faster than the market at double digits due to the higher price, and our Carlsberg Smooth Draught is doing well in our mainstream segment market.

"So, we are looking at some opportunities despite a tough market environment. This is also the same for the Singapore market which contributes 25% of our revenue," he told a press conference after the group’s annual general meeting.

In addition, Lehmann said that he does not think the unfortunate events that “plagued” Carlsberg's business last year would repeat this year.

“I don’t think we would see a repeat of the floods that hit our Lion Brewery (Ceylon) PLC in Sri Lanka, and an increase in customs and excise duty on alcoholic drinks this year. Also, consumers are getting accustomed to the higher pricing,” he said.

For the financial year ended Dec 31, 2016, Carlsberg reported a 5% fall in net profit to RM204.98 million, from RM215.91 million in the previous year, though revenue grew 1% to RM1.68 billion from RM1.66 billion.

Net profit was impacted by the group's share of loss in an associate, one-off tax adjustments, and deferred tax expense.

Premium brands such as Somersby cider and Kronenbourg 1664, and mainstream including Carlsberg and its extensions Carlsberg Smooth Draught and Special Brew, contributed roughly 20% and 80% of its revenue.

Lehmann did not discount the possibility of Carlsberg launching new products to stimulate the market this year, saying the group has set aside RM40 million as capital expenditure for this purpose.

On the government’s plan to introduce the use of security ink markings on beer products to reduce illegal beers, he said such a move is costly and will affect efficiency of the brewery.