I know sales of Carlsberg have been falling for some time. Earlier this year it was overtaken by Budweiser. So it’s now the fifth-biggest lager by sales in the off-trade. But still. The decision by Tesco to delist all but a couple of lines is a shock. The official lager of the England football team 2016. A brand that has delivered PROBABLY the most famous slogan of all time. That calls for… closer examination. 

It was only in February that Carlsberg was creating a very different vision. In ‘If Carlsberg did Supermarkets,’ the latest in a series of ads, the supermarket was reimagined for men only - with the entire beer aisle given over to Carlsberg. Oh the irony. If Carlsberg did supermarkets…’ they DEFINITELY wouldn’t look like Tesco’s reset of the beer fixture.

So what’s happened? Some have suggested it’s a penalty for Carlsberg’s decision to get into bed with the discounters. In that sense it acts as a warning shot to other brands that undermine Tesco. On the other hand discounters stock brands besides Carlsberg. Carling and Stella to name but two.

CERTAINLY cutting the price of Carlsberg last Christmas, in a bid to match the likes of Lidl, hasn’t worked, both in terms of average price per litre (see graph) or sales. By delisting Carlsberg (so the theory goes), Tesco no longer feels obligated to match Lidl’s prices. So it can go back to ripping off its customers on the leading lagers - Stella, Foster’s, Carling and Budweiser etc - with impunity.

But how do you square with the stated aim of Tesco to do what’s right for the shopper? The rationale driving Project Reset is that by stripping out SKUs it can simultaneously cut supply chain costs, improve availability, deliver a simpler shopping experience, and offer a more compelling price on the remaining brands, therefore resulting in greater volume. (In theory.)

Or to put it another way, by kicking Carlsberg into touch, it can go to the other suppliers and - with higher share effectively guaranteed - demand a lower price. It certainly wouldn’t be the first supermarket to adopt a three-brewer strategy.

It’s a question of balance and probability. Right now Carlsberg is PROBABLY the weakest link. Balanced against this, Tesco can keep more premium bottled ales, in the belief that this will deliver greater differentiation, improve footfall and ensure the beer fixture is an appealing destination for as wide a customer base as POSSIBLE.

INEVITABLY some shoppers will be up in arms. But most won’t even notice. Not unless Carlsberg come up with a particularly attractive gift-based promo (either for Christmas or the Euro Championships in 2016).

That’s not to disparage Carlsberg by the way. A study in 2014 found that consumers couldn’t tell the difference between Heineken, Stella Artois and Czechvar. I watched a similar taste test play out unflatteringly (for the super premium Grey Goose vodka at least) on Jimmy’s Unwrapped this week (Channel 4, 29 September) on a smaller scale. Three of the six testers opted for bog standard Glen’s, two for Absolut. Only one preferred Grey Goose.

carlsberg graph

So what are the prospects for Carlsberg? Well, it’s not all doom and gloom. First, there will be brand-loyal drinkers who switch to another retailer, who will be looking to take advantage. And then there’s the prospect of a merger of SAB Miller and AB InBev.

In this week’s issue we’ve examined the prospects for the UK if the proposed merger goes ahead. And it’s intriguing to imagine how the combined entity would manage its premium lager selection: a ‘Magnificent Seven’ comprising Stella, Bud, Corona, Becks (from ABI) plus Peroni, Pilsner Urquell and Grolsch.

The consensus among bankers, competition lawyers, suppliers and retailers is that the UK won’t need to be meddled with along anti-competitive grounds. POSSIBLY. (I can easily see some price points going up.)

But managing a portfolio of overlapping brands like that won’t be easy. ABI has always been very good at developing a distinctive approach to its beers, based on different shopper types. It will be far harder to differentiate in the event of a merger. Simililarly, SAB Miller has done a great job of seeding Peroni using selective distribution via the on-trade. Will a merged entity be able to bring that same level of focus?

As four becomes three Carlsberg (and Heineken) might be that much more nimble and more focused. Cutting costs while scaling volume is a sure-fire way to increase profits. But you also need to grow the top line. That’s about inspiration and clear-headedness. And the biggest players don’t have a monopoly there.