India And China Expansion Will Unlock Premium Market Potential

Key Takeaways

• Expansion in premium and health-focused beverage segments, plus entry into new categories, is driving sustainable revenue and margin growth across diverse markets.
  
• Digital transformation, supply chain efficiencies, and sustainability investments are reducing operating costs and regulatory risks while supporting profit growth.
  
• Declining mature-market demand, emerging-market execution risks, regulatory costs, and Britvic integration challenges threaten margins, earnings stability, and future revenue growth.

Catalysts

Produces and markets beer and other beverage products in Denmark, China, the United Kingdom, and internationally.

• The rapid expansion and premiumization of Carlsberg's business in high-growth markets such as India and China, driven by rising middle-class consumers and favorable demographic shifts, is positioning the company for robust long-term revenue and earnings growth as these economies return to stronger consumption and as premium segment share increases.
  
• Carlsberg's continued focus on premium offerings (craft, specialty, and premium brands), as well as its strong growth in alcohol-free and low-alcohol brews-particularly in Western Europe and Asia-leverages evolving consumer health preferences, supporting both higher average selling prices and margin expansion in the medium
• to long-term.
  
• Integration and scaling of Britvic's soft drink portfolio, alongside Carlsberg's own alcohol-free, premium, and Beyond Beer categories, are increasing the company's exposure to underpenetrated segments and categories with structurally higher growth rates, which should drive revenue growth and improve gross margins as consumer mix shifts.
  
• Ongoing supply chain efficiencies, digital transformation, and scale synergies realized under the SAIL'27 program (with particular traction in Asia and Western Europe) are leading to sustainably lower operating costs and improved net margins and EBIT, even amid volatile macroeconomic or currency environments.
  
• Carlsberg's proactive investment in sustainability and environmentally-friendly packaging positions it to capture incremental demand from ESG-conscious consumers and mitigate future regulatory risks, creating the potential for both top-line growth and reduced compliance costs, positively impacting net profit over the coming years.

Carlsberg Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Carlsberg's revenue will grow by 7.2% annually over the next 3 years.
• Analysts assume that profit margins will increase from 8.1% today to 10.0% in 3 years time.
• Analysts expect earnings to reach DKK 10.1 billion (and earnings per share of DKK 76.49) by about August 2028, up from DKK 6.7 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as DKK8.4 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 14.4x on those 2028 earnings, down from 15.4x today. This future PE is lower than the current PE for the GB Beverage industry at 15.2x.
• Analysts expect the number of shares outstanding to decline by 0.77% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 4.92%, as per the Simply Wall St company report.

Carlsberg Future Earnings Per Share Growth

Risks

• Declining beer volumes in mature European markets and ongoing pressures in mainstream segments (e.g., Carlsberg and Tuborg in Denmark and Malaysia) highlight the risk that long-term stagnation in core Western European beer demand will continue to restrain organic revenue growth and could weigh on group earnings.
  
• Emerging market execution risks are material, particularly in Asia; Carlsberg's weakness in Vietnam's central region and soft consumer sentiment in China-with falling on-trade volumes and ongoing macro headwinds-could undermine revenue and profitability goals if these markets do not rebound as anticipated.
  
• Currency devaluation and geopolitical volatility in key growth regions (e.g., China, Laos, Ukraine, Kazakhstan, India) are already negatively impacting reported revenue and profit; continued FX pressures or escalation of geopolitical tensions could compress net margins further and add earnings volatility.
  
• Rising regulatory costs, including EU packaging waste directives and extended producer responsibility laws, will require sustained investment in ESG and compliance; if Carlsberg cannot offset these costs through pricing or efficiencies, operating margins may come under pressure.
  
• The Britvic acquisition has increased leverage (net debt/EBITDA at 3.46x) and added exposure to new categories (soft drinks), but its lower margins and integration/restructuring costs have already led to a significant decline in ROIC and free cash flow; prolonged underperformance or delayed synergies could jeopardize the company's financial flexibility and future earnings growth.

Valuation

• The analysts have a consensus price target of DKK972.947 for Carlsberg based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of DKK1350.0, and the most bearish reporting a price target of just DKK723.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be DKK101.1 billion, earnings will come to DKK10.1 billion, and it would be trading on a PE ratio of 14.4x, assuming you use a discount rate of 4.9%.
  
• Given the current share price of DKK777.8, the analyst price target of DKK972.95 is 20.1% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.