Malaysia: The short-term impact of price hikes on sales is safeguarded by two major benefits for the beer industry
(Kuala Lumpur, Oct 29) It is inevitable that the price increase of beer products will impact sales, but the two favorable factors of the Malaysia Tourism Year next year and the FA World Cup are expected to provide support for beer stocks.
Hong Leong Investment Bank released a report pointing out that the 2026 budget is not friendly to the beer sector. The proposed 10% increase in the tax rate on alcoholic beverages will raise the overall cost base by approximately 5.8% to 6.0%.
Analysts believe that beer manufacturers may pass on the entire cost of tax rate hikes to consumers.
After all, the measure of reducing alcohol content to ease the tax burden is not feasible, as it would affect the taste and market acceptance.
Analysts believe that in order to reduce the tax burden pressure, beer manufacturers may raise the average selling price by about 6%, which may cause the product sales volume to temporarily decline by about 5.5% to 5.7%.
However, this impact is of a short-term nature. As consumers gradually adapt to high prices and given that beer is the most price-advantaged alcoholic beverage, sales are expected to resume growth.
He gave an example, saying that this trend is similar to the consumption tax increase in 2016, when sales stabilized in just two quarters and drove growth for many years to come.
Entering 2026, the bottle eoe beer sector will still face two key catalytic factors that can help alleviate the pressure of potential sales decline, namely the Malaysia Tourism Year and the FIFA World Cup.
Analysts pointed out that the Malaysian government plans to attract 43 million tourists this year and increase the number of visitors to 47 million by 2026. This huge number of tourists will bring a significant boost to beer sales.
The World Cup boosts sales
Meanwhile, the World Cup, which will be held from June 11th to July 19th, 2026, has always been an important catalyst for stimulating beer demand.
Looking back at past World Cup cycles (2014, 2018, and 2024), the turnover of beer companies in the relevant quarters all recorded year-on-year growth of more than 10%.
It is worth noting that these increases occurred in adverse circumstances, such as the consumption tax hike in 2014, the Sino-US trade war in 2018, and the period of high inflation in 2024. However, beer sales still received a significant boost.
Therefore, we believe that this growth trend will repeat itself in the third quarter of 2026.
In summary, Hong Leong Investment Bank maintains its "overweight" rating on the beer sector and has named CARLSBG Malaysia (2836, Main Board Consumer Goods) as its preferred stock.
"Because Carlsberg Group Malaysia has diversified profits, with 30% of its sales in Singapore, it can to some extent diversify local market risks." "
In contrast, Heineken Malaysia (HEIM, 3255, Main Board Consumer Goods) has a high weekly dividend yield of 6%, but its sales are mainly concentrated in Malaysia, facing higher risks and posing challenges to short-term profits.
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