Carlsberg is to axe 2,000 staff, including up to 100 in the UK, where it plans to cut lager production after Tesco said it would stop stocking its beers.
The Danish firm said it would cut production at its Northampton plant after its strategy of using price promotions to deliver higher supermarket sales fell flat.
The world’s fourth-largest beer producer announced the overhaul on Wednesday alongside a £438m loss in the third quarter, largely caused by problems with its Russian business.
Approximately 2,000 white collar jobs will be cut – 4% of its global workforce of 46,800 – as part of a recovery plan Carlsberg calls Funding the Journey.
The plan is expected to threaten nearly 100 jobs at its Northampton brewery, Leeds office and 12 regional distribution depots.
Union sources said the move was particularly difficult for staff after the company imposed a global pay freeze in 2014.
The brewer, whose adverts proclaim it to be “probably the best beer in the world” has 13% of the UK market through brands such as Carlsberg, Tuborg, Tetley’s and Somersby Cider.
Carlsberg has previously tried to bolster sales by selling its products at bargain prices in supermarkets such as Tesco. But the retailer’s decision to stop stocking Carlsberg has rendered that strategy obsolete.
It has also been hit by overcapacity among major brewers, with mass-market brands coming under pressure from more premium “craft” beers. Carlsberg acknowledged the so-called craft beer revolution this year by expanding its Crafted range of quality ales, lagers and stouts that it sells to pubs.
These include third-party brands such as the Californian ale Lagunitas IPA, as well as some from its own stable such as the Backyard Brewery, part of its Falkenberg operation in Sweden.
It plans to cut production volumes and focus on improving its image, which has suffered despite sponsoring the Premier League and England football team.
Analyst Trevor Stirling, at Bernstein, said: ‘‘In order to stay in Tesco they were putting money into price promotions instead of investing. They need to put more money behind the brand.”
Carlsberg UK’s difficulties led it to it ask suppliers to wait an extra three months for payment, a request branded “grossly unfair” this week by the Forum of Private Business. The company said on Tuesday it was starting a “formal review of its customer supply chain operations”.
Michiel Herkemij has been appointed interim chief executive to oversee the planned job cuts and strategic shift. “Unfortunately the proposed restructuring process may result in redundancies in some areas of the business and we will support the impacted employees through the consultation period,” he said.
Union officials are due to meet with Carlsberg management next week to discuss the proposed cuts.
Carlsberg’s third quarter loss was largely caused by a £732m cut in the value of its Russian and Chinese businesses, part of £948m in anticipated impairments by 2017.
Drinkers in Russia have been switching to cheaper brands amid dismal economic conditions and a tumbling rouble, which has made foreign imports even more expensive. A turnaround plan in China also failed to bear fruit amid the twin challenges of a declining market and more intense competition.
