FT Schools - Carlsberg's product strategy
IB syllabus links
| Syllabus unit | Key ideas for discussion |
|---|---|
| 1.5 Growth and evolution | External growth Acquisition Benefits vs risks of external growth |
| 4.5 The product life cycle | The relationship between the product life cycle, product portfolio, and the marketing mix |
| BMT 2 - Ansoff matrix | Diversification as a growth strategy |
| Concepts |
Introduction
Carlsberg is reducing its reliance on core beer brands by diversifying into soft drinks and non-alcoholic beverages, responding to changing consumer preferences and financial challenges, and seeking long-term growth despite economic and geopolitical challenges.
The full article can be found on the FT website here.
Case Study: Carlsberg’s changing product strategy
Carlsberg is a multinational drinks company founded in 1847 and headquartered in Denmark. For most of its history, the company relied heavily on its core local beer brands. However, in 2025, these core beer brands accounted for just 49% of total sales for the first time.
This change is largely due to shifting consumer preferences. Many consumers are moderating their alcohol consumption for health and lifestyle reasons. In response, Carlsberg has expanded into soft drinks and non-alcoholic beers.
Although the company has been diversifying, Carlsberg said it remains a brewer at its core. The aim is to protect its beer business by surrounding it with a diversified product portfolio, reducing risk and supporting long-term growth.
In 2025, Carlsberg reinforced this strategy by acquiring Britvic in the UK, almost doubling its soft drink sales. Britvic's brands include Robinsons, Tango, J2O, and Fruit Shoot. This external growth strategy contributed to higher sales growth and improved profit margins compared to key competitors Heineken and Anheuser-Busch InBev (the world's largest brewer, headquartered in Belgium, with a portfolio of over 500 beer brands, including Budweiser, Corona, and Stella Artois).
Despite these strengths, Carlsberg faces challenges from low global consumer confidence caused by inflation and geopolitical uncertainty. After exiting the Russian market, the company is now focusing on Asia, especially in countries with large and growing economies, as a key region for future growth.
| (a) | Define the term product portfolio. | [2 marks] |
| (b) | Explain two benefits for Carlsberg of acquiring Britvic. | [4 marks] |
| (c) | Explain two reasons why Carlsberg is focusing on Asia for future growth. | [4 marks] |
| (a) | Define the term external growth. | [2 marks] |
| (b) | Explain one advantage and one disadvantage of external growth for Carlsberg. | [4 marks] |
| (c) | Explain two ways diversification could improve Carlsberg’s long-term profitability. | [4 marks] |
Exam Practice Questions (1)
(a) Define the term product portfolio. [2 marks]
A product portfolio is the range of different products a business offers to the market, such as beers and soft drinks.
Award [1] for a definition that shows limited understanding of product portfolio.
Award [2] for a definition that shows clear and accurate understanding of product portfolio, similar to the example above.
(b) Explain two benefits for Carlsberg of acquiring Britvic. [4 marks]
Possible benefits include an explanation of any two relevant points:
- Rapid market entry – Carlsberg can expand into soft drinks faster than through internal growth.
- Established brands – Britvic provides well-known branded products, reducing marketing risk for Carlsberg.
- Existing distribution networks – Carlsberg gains immediate access to Britvic’s supply chains and retailers.
- Revenue diversification – The acquisition reduces Carlsberg's dependence on beer sales, lowering or spreading its overall risks.
- Accept any other relevant benefit to Carlsberg.
Mark as a 2 + 2.
(c) Explain two reasons why Carlsberg is focusing on Asia for future growth. [4 marks]
Possible reasons include an explanation of any two points:
- Large and growing population – Asia offers a bigger potential customer base for Carlsberg than mature European markets.
- Rising incomes – Economic growth in Asian countries increases demand for branded and premium beverages.
- Market saturation – Given core beer brands accounted for just 49% of total sales for the first time, Carlsberg's core business in Europe is saturated. Fewer established competitors in Asia also creates more growth opportunities.
- Higher long-term growth rates – Demand for soft drinks and non-alcoholic beverages in Asia could be growing faster than in Europe.
- Accept any other relevant reason, explained in the context of the case study.
Mark as a 2 + 2.
Exam Practice Questions (2)
(a) Define the term external growth. [2 marks]
External growth occurs when a business expands by merging with or acquiring another company, or forming alliances, rather than growing from within.
Award [1] for a definition that shows limited understanding of external growth.
Award [2] for a definition that shows clear and accurate understanding of external growth, similar to the example above.
(b) Explain one advantage and one disadvantage of external growth for Carlsberg. [4 marks]
Possible advantages of external growth for Carlsberg include:
- Faster expansion strategy – Carlsberg can grow quickly by acquiring established companies like Britvic.
- Immediate market access – It gains existing brands (including Robinsons, Tango, J2O, and Fruit Shoot), customers, and distribution networks.
- Economies of scale – Larger production and buying power can reduce costs and increase profit margins for Carlsberg.
- Accept any other relevant advantage, explained in the context of the case study.
Possible disadvantages of external growth for Carlsberg include:
- High costs – Acquisitions can be expensive and may require borrowing or issuing shares, even for large MNCs like Carlsberg.
- Integration problems – Aligning different company cultures and work processes and systems can cause disruption for Carlsberg, especially during the transition stage of the acquistion.
- Risk of failure – The acquired business may underperform or not fit Carlsberg’s overall business strategy (its core business remains in beer markets), reducing its long-term profitability.
- Accept any other relevant disadvantage, explained in the context of the case study.
Mark as a 2 + 2.
(c) Explain two ways diversification could improve Carlsberg’s long-term profitability. [4 marks]
Possible ways diversification could improve Carlsberg’s long-term profitability include:
- Revenue stability – A broader product portfolio reduces the impact of falling beer sales, creating steadier income for Carlsberg.
- Higher sales growth – Entering faster-growing markets (soft drinks and non-alcoholic beers) can increase total sales for Carlsberg.
- Economies of scale – Sharing marketing, distribution, and production resources across a larger product portfolio lowers average costs for Carlsberg.
- Reduced risks – By diversifying its product porfolio, Carlsberg is less exposed to risks from regulation if alcohol laws become stricter, i.e., non-alcoholic products protect its sales revenue.
- Accept any other relevant answer, explained in the context of the case study.
Mark as a 2 + 2.
Students can deepen their understanding of the ideas in this FT article and connect them to key terms from the IB Business Management syllabus by completing the accompanying Quizlet activity.
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Paul Hoang
FT Schools teacher advisor for IB Business Management
