Transforming Carlsberg into a cosmopolitan firm: the acquisition of scottish & newcastle

The Carlsberg “A case” (the first in a series of three cases on Carlsberg’s transformation journey) reviews the effects of the consolidation of the global beer industry on the strategic position of the Danish brewer. The case starts with a brief introduction of the Carlsberg Group, which is followed by a description of the main structural features of the global beer industry and how they evolved over a span of two decades. The industry heavily consolidated in mature markets as demand declined, retailer power increased and commodity prices surged. In response to those industry changes, several large beer companies adopted aggressive market consolidation strategies, which they pursued mainly through mergers and acquisitions. In addition, they looked for growth opportunities in emerging markets. In this industry context, Carlsberg’s strategic options in relation to geographical expansion were: (1) to limit its presence to core markets in the Nordic countries and defend those markets; (2) to become a regional player through a focused internationalization strategy; or (3) to work towards a top-three position on a global level. The case describes why Carlsberg opted for the second alternative and how it was implemented through large, cross-border, strategic alliances and acquisitions. The case focuses on the largest deal – the acquisition of Scottish & Newcastle and, with it, Baltic Beverages Holding (BBH) in Russia. However, what seemed to be a strategic masterpiece in 2008 soon became a strategic headache, as regulations suddenly turned one of the most attractive beer markets (i.e., Russia) into a problem child. As industry observers started to question whether the Scottish & Newcastle acquisition was the right move, Carlsberg was busy reviewing its M&A capabilities and planning its next move in the global beer arena.