Ladies and gentlemen, welcome to the COSPA Q3 2018 Trading Statement Call. Today, I'm pleased to present CEO case of heart. For the first part of this call, all participants will be in listen only mode and afterwards, there will be a question and answer session. Just a reminder, this conference call is being recorded and a transcript of the call will be made available online.
Good morning, everybody, and welcome to Carlsberg's Q3 2018 Conference Call. My name is Kate Hart, and I have Vismi, CFO, Heine Delguid, and Vice President of Investor Relations Peter Gold Group. I will go through the current state of the business and highlights of the quarter, and Henley will talk you through the regions and outlook. Before I go through the Q3 numbers, let me evaluate on the progress of our business. Internally, we apply 3 lenses and look at the financial, strategic and organizational health of our company.
Financially, the group continues the positive trajectory and we are confident that 2018 will be a year that delivers good top line growth, margin improvement and a very healthy cash flow. At the same time, We have been and are investing significant funds in the business to strengthen the growth profile of the company. For the outset of the year, Our ambition was to shift gears to growth. And after the 1st 9 months, we are very satisfied with execution of our plans for the year, albeit we have been helped by a very warm summer patients, which Heine will get back to. Strategically, we are making good progress on our growth priorities in Asia, and for craft, specialties and alcohol free brews as we continue to invest in further strengthening our capabilities within areas such as digital and data, sales and marketing as well as the rollout of DraughtMaster.
The organizational health of the business, we are also moving in the right direction. Although it is an ongoing journey, our winning culture has become much better and better across the group. Our pool managers and people in areas such as commercial, digital, data, finance, and supply chain, and strengthened, and is characterized by a winning spirit. In addition, we see very good traction behind bringing to life our purpose of brewing for a better today and tomorrow. Including our ambitious sustainability program together towards 0.
With that intro, let us now focus on the Q3 performance. Please turn to Slide 2. Organic net revenue grew by 9% in Q3. This was driven by 1% pricemix and a strong 7.6 organic volume growth, not pleased, driven by impressive results in Western Europe. For the 9 months, organic net revenue growth was 6.4%.
Reported volume growth was 100 basis points higher than the organic volume growth, due to the increased ownership of Cambrew, which was consolidated from the 1st August. Reported net revenue grew by 7.4% positively impacted by Cambrew and negatively by currency movements. The negative currency impact was broadly based, now with the largest impacts coming from Eastern Europe. Please turn to Slide 3 and a few comments on our international premium brands for which we saw good growth. 6064 Blanc continued its strong performance and grew by 49% We saw particularly strong growth in markets such as China, Russia, Ukraine and France.
Grimbergen continued its double digit growth and grew by 15%. The growth mainly came from Western Europe, with particularly strong results achieved in France. Our largest brand Tuborg grew by 11%, supported by strong growth in China and India. The brands also grew in several markets similar to Europe, such as Denmark, Serbia, Croatia, Bulgaria and Germany. In Turkey, 2 vertical tenets is strong performance, driven by our very dedicated partner.
In Q3, Carlsberg volumes were up by 9%, driven by strong results across many markets, including Denmark Sweden, UK, Poland, China, Malaysia, India, and Russia. Please turn to Slide 4 and a brief update on some of our strategic priorities. Scelity portfolio grew by 29 percent with positive contribution from many markets across the group. In particular, we saw very strong growth in markets, such as France, Denmark, Sweden, Poland, UK, Russia, and China. Now all three blues grew by 58% in Western Europe and by 50% in Russia.
In Western Europe, the growth was supported by the warm summer, and we saw very strong growth in markets such as Poland, France, Lithuania and Denmark. In September, we unveiled a new design for the Carlsberg brand along with a series of sustainable packaging innovations. The new design will be applied to all packaging and glassware, and will be available in the first markets in Q1 of next year. 1 high profile innovation is the pioneering step back solution, which is set to reduce plastic grade by more than 1200 tons per year. The reason for this reduction is that snapback glues together built it back instead of using plastic wrap.
In addition to the step back, we have made a number of other betterments for the brand. For example, caps which removed the oxygen so that the beer tastes fresher for longer and changed in the green color ink to a cradle to cradle certified ink to improve recyclability. We were pleased with the very positive feedback from our customers and the amount of positive publicity that we received globally.
I will now hand over to Heine
who will take us through the regions and outlook.
Thank you, Keith. Please turn to Slide 5 in Western Europe. Net revenue grew organically by 8.5 percent as a result of total volume growth of 10.7% and pricemix of minus 2%. Reported net revenue grew by 7.7 percent due to a negative currency impact, primarily related to the Norwegian, the Swedish and the Swiss currencies. We saw solid pricemix in most countries in the region, but two reasons drove a pricemix into negative territory.
Firstly, The warm weather in the Nordics resulted in higher growth of non beer products, which have a lower net revenue per hectoliter than beer. Secondly, country mix in our export license business reduced pricemix. As we've reported throughout the year, we saw lower volumes to high priced export markets in the Middle East, but growth in the licensed markets such as Turkey. Adjusting for exported license, pricemix was around 0.5% positive for the region. The strong volume growth was supported by very warm weather in several of our markets, especially in the northern part of the region, largely the same markets that experienced a very bad summer last year.
We estimate that our market shares were slightly growing for the quarter. Looking at a few selected markets, our total volumes in the Nordics grew strongly by 11%, supported by the weather and cycling a particular bad month of July last year. As mentioned, the strong growth of non beer products led to a negative pricemix. In Denmark, we saw traction of all beer categories, including profit specialty, alcohol free and core beer volumes. Despite a price increase on the Tuborg brand earlier in the year, Brand volumes grew by 4%.
In Sweden, we saw very good growth of our process specialty portfolio and alcohol free brews. In Norway, volume growth and price increases led to A, very healthy top line growth. In Finland, pricemix improved slightly despite a negative channel mix with strong results achieved in the off trade. In France, our craft and specialty portfolio continued to develop particularly well. The French beer market grew slightly and our business had a very strong Q3 with high teen volume growth although this was also driven by a different timing of certain last campaigns compared to last year.
In Poland, we saw solid volume growth during the summer after a weak beginning of the year due to our price increase in Q1. This positively impacted pricemix along with our successful premiumization efforts. In the remaining markets in the region, we saw growth in the Baltics, the Balkan markets and the UK while volumes declined in Greece and in Italy. Please turn to Slide 6 and Asia. Our Asian region had another strong quarter, although growth as expected moderated somewhat compared to the very strong first half performance.
Net revenue grew organically by 11%, driven by 5.8% volume growth and a solid pricemix of 5%. Reported net revenue grew by 12.6% due to the acquisition of Cambrew which more than offsets the negative currency impacts. In China, volume growth slowed down as expected compared to the first half. Nevertheless, volumes grew by 6% and pricemix remains solid due to the continued excellent growth numbers of our international earlier, which grew by 11%. Our big city expansion in China is well on track, achieving volume and numbers ahead of our expectations.
Our Indian volumes grew by 15%, supported by strong growth of the Carlsberg brand, pricemix was positive in the mid single digits. As always, in India, market conditions varied significantly from state to state. Overall, we are seeing a rebound of volumes this year following the very disruptive year of 2017. The 1st 9 months market growth is estimated at 12% with our volumes growing ahead of the market. In other markets in the region, layers was hit by flooding and higher than normal rainfalls This happened beer volumes, although growth remained solid at mid single digit percentages.
In Malaysia, we saw good momentum in the quarter. The new sales and services tax was implemented on the 1st September, we have fully passed on the tax, leading to price increases of 5% to 6%. Consequently, our customers stocked up in August, while destocking in September October. Nicole growth was mainly strong in the strong beer segment and the economy segment. On August 1st, we gained control of Cambrew in Cambodia, and we are now in the process of upgrading our systems, our processes and our capabilities.
The foundation for turning Cambrew back into a strong business is certainly there. The brewer is new and efficient and the Anchor brand is well known by Cambodia and Consumers. We are very positive about the future for Cambrew, but it will require a few years of additional hard work before we believe we should be there. Slide 7 and Eastern Europe, please. Net revenue in Eastern Europe grew by 8.2% due to 4.2% volume growth and 4% pricemix.
Reported net revenue increased by 0.6% due to the weak currencies across all markets. With largest impact coming from the Russian ruble. The Russian market grew by mid, 4% for the quarter and 2% 3% year to date. The quarter was positively impacted by year was flat sequentially. Price mix was impacted by the continued high level of promotion activities in the PT segment and was plus 1% Results and Ukraine have been very strong in recent years.
In Q3, our volumes were down slightly impacted by less promotional activity and some destocking. Price mix was double digit due to price increases and growth of our craftman's specialty portfolio, Year to date, volumes in Oklahoma grew by 6% and revenue by 25%. In the remaining European markets, we continued to see solid volume and pricemix development. Please turn to Slide 8 and the outlook As you saw last week and also as Keith briefly touched upon at the beginning of the call, we increased our 2018 earnings expectations last week from high single digit percentage organic growth and operating profit to an organic growth of 10% to 11%. The upgrade was the second one this year and due to the strong third quarter results, which were driven by good progress of our strategic priorities continued strong execution of funding the journey and a warm summer in Western Europe.
We've received some questions as to why we issued the release last week in advance of our Q3 trading statement today. The reason is the EU market abuse regulation or MAR that came into effect in the beginning of 2017, which is very much a focus area for the Dan's FSA and of course, also for us. In spite of the strong Q3 and last week's earnings upgrade, we still expect second half profit to be lower than first half. Let me briefly reiterate the reasons for this. Firstly, in first half, Asia was impacted by the sell into the festive seasons and Eastern Europe witnessed an extraordinary strong month in June due to weather.
Secondly, we've been accelerating sale investments in second half, which especially will have an impact on central costs. And thirdly, there is a different phasing of certain costs mainly depreciations between first half and second half compared with last year. Based on the spot rates, on the end of October, we still assume a negative FX translation impact on operating profit of around -1000000 Remember, when you do modeling that there will be a 5 month acquisition impact in second half coming from Cambrew, This corresponds to close to $1,000,000 hectolitin volume and around $300,000,000 to $350,000,000 in net revenue and an operating profit loss in the magnitude of around DKK 50,000,000. The loss is due to the fact that we are increasing costs this year in order to bring the business back into good shape as fast as possible. Other assumptions for the year were also stated last week and are as follow Cavix is expected to be between CHF 4,500,000,000.
Last week, we adjusted that down from previous expectations of around CHF 4,500,000,000 due to currencies and slightly lower CapEx in Asia. Net finance costs, excluding FX and fair value adjustments are still expected to be around CHF 800,000,000 and the effective tax rate is still expected to be below 29%. Thank you, please.
Thanks, Heine. Before we open up for questions, a few final remarks from my side. The group delivered a strong Q3 with organic net revenue growth of 9% and organic volume growth of 7.6%. We see good growth in our key strategic priorities, We will be able to deliver good top and bottom line growth for 2018, and at the same time, we've had significant resources back into the business. Finally, the strong Q3 led us to increase our earnings outlook last week.
As with this, we are now ready to take your questions.
Thank first question comes from the line of Mikhail Rasmussen from ABG. Please go ahead. Your line is open.
Thank you very much. And well done, guys, I'll now take a really good sort of results. So three questions from my side. First about, can you talk a little bit about the momentum offer of Ground Martha, including how many of these have you installed now? What are the plans for the next 12 months?
And also maybe if you could share how large of a share of your On Trade revenues actually goes through the DraughtMaster System at the moment. My second question is on France. I know you I think you mentioned that volumes grew by double digits. I don't in the market grew by that much. So is this something which we should remember when we do our Q4 numbers and how large in perhaps volume or revenue terms is the timing impact?
And my final question goes to U. K. On the marketing practice spending going forward. What are you thinking here, for example, as a percent of revenues or any general comments that you can make on markets expanding? Thank you.
Thank you, Michael. Good morning. So with regard to DraughtMaster, we are rolling out DraughtMaster as we speak in, Denmark, and we're moving to Norway to Sweden. We have some installations, almost close to 1800 in the UK. So we're rolling that out.
And that means that in some of the markets, like that mark, we will totally convert in the goals of the coming 2 years. So that means that in these markets, indeed from the percentage of sales from the on traded will be slowly, slowly moving to 100% in 2020. We are going to roll these, draft master systems as well as in our big cities in China in the course of next year. And so we feel very confident about the momentum and the impact of DraughtMaster.
Yes. So good morning, Michael. So market share in France is flat year to date. We lose on Croninburg, So mainstream Lager is declining while we are gaining on going back in Total and Plunk. It is important to remember that the strong Q3 is also due to different timing of campaigns versus last year.
Get behind that.
That's exactly what I was asking into. So how big was this timing impact? And I understand that that will obviously be a negative in Q4?
Yes, we don't split it. As we said in Q2, France was not that strong in to now France is very strong in Q3. So, it is difficult to take out 1 quarter. So, The key message here is that there is a different timing of campaigns. Q4 is not the biggest quarter, as you know.
Okay.
Thank you, Heine.
And Michael, with regard to the marketing spending, the percentage this year will be slightly up. In the second half of the year, we will, as well, continue to invest in sales 22 in order to keep the good momentum We allocated money very much to DraughtMaster, to craft specialty, and to alcohol free beer.
Thank you very much.
The next question comes from the line of Sanjeet Osha from Credit Suisse. Please go ahead.
Hi, Jason Heine. Can you just give us some early indications on how you're thinking about the input cost environment into 2019? What plans you might be taking on pricing or incremental costs to try and mitigate that? And secondly, just on the UK business in particular, with the Carlsberg relaunch there. How long do you think that business will take to turn around?
Good morning, Sandy. Thank you, Ed.
Yes, good morning to this. So on 2019, for good reasons, we cannot give detailed comments on 2019 for we'll come back to this in February 2019. But it is clear that with a very positive start of 2018. We will have a tough base for next year. We don't comment specifically on 2019.
If clear on the positive side, that we have good momentum from our strategic priorities, our tight cost control, our performance management is very strong. We will enter 19 with a strong underlying momentum. We've been able to and we'll continue to be able to invest into our brands activities and also capabilities. And then as you're saying on the negative side, there are 2 main main factors. 1 is the high input costs, which will require price increases.
As we will pass on the high input costs to our sales price and then the top comps in particular in Western Europe and Eastern Europe. But the conclusion is from our side that the business has a very strong momentum. We believe that we are very well prepared for 20 and we should be able to continue to grow both top and bottom line.
With regards to the UK, indeed we just started, and until frankly, I think it will take an investment of 2 to 3 years, at least. As we said earlier, we are declining with our brand in a declining mainstream segment. Obviously, we cannot halt the declining declining of the mainstream segment because we should be able to hold the decline of our market share. We have upgraded the visual identity of the brand. We have updated the logo.
We have a new bottle We have several sustainability innovations on packaging. So we're pretty confident that we will be successful with this relaunch not only in the UK, but across the globe. However, please remember that the UK business for us is not that significant, significant. It is only 1.5% to 2% of group EBIT, but obviously, we do want to change the cost of the Carlsberg brand there.
And the next question comes from the line of Jonas Guilbo from Danske Bank. Please go ahead.
Yes, good morning. Thank you for taking my questions. I have 2. First of all, if you could put some more words on the upgrade last week in where is it coming from? Is it primarily Western Europe and and the good weather or or what is driving it?
And then the other question would be on Russia. And if you're seeing any change in the competitive dynamics and in that market after the merger to an API and EFS. Thank you.
Good morning, Jonas. So, on the question of the upgrade, last week, there are 3 elements We don't split specifically sort of on 3, but there are 3 main elements here. 1 is the fact that our sale investments are coming through. So that means top line investments into craft and specialty alcohol free, DraughtMaster, China India is coming through. Second is the continued success and good traction of our from the journey initiatives.
We continue to be focused unfunding the journey. We continue to be focused on tight cost control. And then the 3rd element, as is very clear, is the unusual weather on top of an unusual back weather last year in particular in the northern parts of Western Europe. So these are the 3 main reasons.
Okay. And in regard to Russia, I can say that the, obviously, here, that the merger is moving on between ABI and FS, we have seen a very strong program in July in relation to the World Cup. And in that month, our share declined a bit, but in August September, we were back on a positive trend So the merger so far has not impacted us in our share. And obviously, we're prepared for the better in 2019.
Thank you very much.
Thank
you very much.
And the next question comes from the line of Hans Clayson from Nordea. Please go ahead.
Good morning. You mentioned that China, yet that you are growing ahead of expectations. Could you provide a little bit further insight to your commercial development And also if you could sort of indicate to us how many new cities you're going to add on to 2019? That's the first question. In Asia also in India, can you give a little bit more insight into the growth profile and your market share?
And then finally on Western Europe, if I got it right. You stated that excluding the license and export, you had a positive pricemix of 0.5 percentage point. I do imagine that soft drinks and water has negative pricemix impact. So if we adjust for the extraordinary weather impact, what would the pricemix have been? And then finally, you mentioned on Kemper, $50,000,000 in extra cost.
Should we read your EBIT guidance that we have the 10% to 11% organic growth minus FX Should we also deduct 50,000,000 for Kemperol? Thank you.
Thank you, Hans, and good morning. With regard to China, yes, we have a good momentum in China. We're rolling out our big city strategy there. And by the end of 2018, we will be in 21 Cities with 10 added during the year. And for 2019, we expect to have an additional ten cities, meaning that by the end of 2019, we should be in 30 one cities.
We are quite successful in the premium brand segment. Our total international premium brand portfolio is 11% and Carlsberg grew by 9% and Tuborg by 10% and 6064 blanc even by 38%. Our shares up by 70 basis points in that segment, and we are, as we said earlier, pretty indeed positive about the development in China as well, positive about the development in India. The market went up. But we outgrew the market.
We estimated our market share is a slightly above 18%. Q3, we looked at a 15% volume increase and more than 20% value increase. We are now number 1 or 2 in 6 states, and number 3 in 3 states, and we serve 37,000 outlets versus the universal 64,000. So that's an update on maybe I'll hand over to you.
Yes. Good morning, Hans. So we don't split the sort of pricemix impact further. What we said is that if you take out an important license, It is 0.5. We don't split it then further on soft drinks and on beer, but but in total, it's So that means you take the 10% to 11% and then you take the FX out, the 500,000,000 and then you take the acquisition impact, the 50,000,000 from can prove out.
But I could just go back to your comments on pricemix. It is right to conclude that there's been a negative mix impact from more sales of water and soft drinks due to this warm summer weather?
Yes, absolutely right.
So the underlying performance is quite good also in Western Europe?
Yes.
Thank you.
And the next question comes from the line of Richard Mitthagen from Kepler Cheuvreux. Please go ahead.
Yes, good morning. I've got two questions. First of all, coming back on the UK on the new Carlsberg launch that you did or the relaunch that you did there. Can you talk a bit about how that has been taken up by your trade partners and also perhaps by consumer because obviously it's a new liquid, as you've stated before. And the second question is, yeah, to come back on, on India, what do you see in terms of mark growth?
I know that 2 borkers by far your biggest brands, but is the mainstream market growing as well? And what does it grow differential between premium and mainstream in India? And how is the competition with the Indian whiskies?
Good morning. Thank you very much. Spillaguard to the UK, we are we just announced it, we had a trade visit of some very important customers here to Copenhagen and to inform them about the changes that we showed them at what we call the better ones. They were very enthusiastic. And we have gotten already to the big promotional spot for the snapback in Tesco.
So that's a good pickup. With regard to the consumers, it's far too early to that. First of all, it still needs to almost hit the market and then we need to see as well the repeat sales. So I think by June, July next year, we will give you a bit more we can give you a bit more information about how the consumers appreciated the new betterments. Of course, we have tested this And we see very, very encouraging, very good results out of that.
So we are really optimistic and self confident on that With regard to India, well, that's a big question because, the price indexes are not that different in the market, if you like, Carlsback is between 120 and 150 index and Tuborg index is 100 So basically what we see in that market is the further development in terms of penetration. As you know, we go from state to state. We want to be number 1 and number 2 in the state. And as the moment that we are, there's a SFO, we only then moved to a next state, as said earlier, really, totally now in 9 states. The Carlsberg brand, as such, has a 30% of premium in India.
We see the market still growing. And obviously, that is, in some areas on the expense of the hard liquor It's how we call it a converging market. And in that respect, we feel that the market growth will continue in the coming years. We said earlier, it will not be a kind of straight line to continuous growth. There will be some hiccups It's 3 steps forward and sometimes 2 steps back, but 2018 so far has been 3 steps forward with in Q1, 30% growth and Q2, so far, 7% growth in total.
Yes. And then the, in terms of your brands, Carlsberg and Tuborg, I mean, not specifically for Q3, but maybe for the 9 month period, which one grew faster in India?
I don't have that information because basically, both of them move in the same kind of direction. So I can't give you that detail. It doesn't make difference. Thank you, Richard.
And the next question comes from the line of Sean Samsu from SEB. Please go ahead.
Basically, if you could, tell us whether this strong weather we've experienced has led to take some costs that you were probably not taking it through on a normal normal weather season. So you sort of have taken this opportunity to take more costs through. And then secondly, if you could comment, I mean, you've seen some of your colleagues in the industry cut dividends, maybe you could elaborate a little bit on your journey you are on and what you, your thoughts here? Thank you.
The weather impact has it thought of and whether we've taken additional costs as a consequence of that. I would say, no, we haven't we've continued, as we've said, all through the year, we've continued to invest into future growth we've continued to stay focused on making sure that we get the benefits from funding the journey coming through. And then being relatively bold as to how much it is that we invest into future growth initiatives, just this year, we will, when we close the year, have invested more than 500,000,000 Dkk into future growth. It's clear that had Q3 been catastrophe from a sales point of view, we would probably have some of the opposite, which is then to cost because we also protecting our bottom line But the weather has not sort of led us to sort of step up anything because these are investments that are carefully thought through and are part of a bigger plan. In terms of the dividends, we can say that we have no plans of according our dividends as you, as you know, we set out a journey a few years ago with a few very clear priorities in terms of capital allocation The first one is to continue to invest into organic growth.
We've done that this year with more than 1,000,000 into real organic growth initiatives within craft and specialty alcohol free craft market, India, China and so on. 2nd priority was that we said we're going to reduce our leverage below 2. We've done that. You saw the half year numbers, we're below 2, well below 2. And then we said, we will increase our payout ratio so increase our payout ratio, not the opposite.
We've done that from a historical level of 25% now to 50 percent. And that is the level for ordinary dividends that we will maintain. Then the 4th priority, where we said that we will come back in February is what we call additional shareholder returns in order to keep the leverage sort of comfortably around 1.5 to 2 times And that's something we will come back with in February, but and it's something we're discussing. We have discussed with the May shareholders we have discussed with our Supervisory Board. And it's a it's a topic that we will come back to in February.
So we're doing the opposite.
Okay. Good to hear. Thank you.
The next question comes from the line of Trevor Stirling from Bernstein. Please go ahead.
Just one question from my side. Achilles Spectacular results in Western Europe, I guess, best weather ever in Denmark reflected in the best ever volume growth in Western Europe. But if you strip out the good weather and the easy comp, Do you have a sense of the underlying volume growth in your mix of markets? Is it still broadly flat or are we starting to creep into a little bit of growth?
Yes. No, we we if we take out the weather impact on that, definitely weather impact. But if we take that one out, there's still an underlying growth in particular, within craft and specialty and alcohol free, but also now we see positive trends within some of our core beer portfolios.
Great. Thanks very much, Haina.
And the next question comes from the line of Ed Mundy from Jefferies.
Good morning, Casey. Good morning, hi. Good morning, everyone. Two questions, please. The step up in alcohol free within the third quarter.
Is that just whether or are there new markets and new brands that are driving that? And then just coming back to the guidance again of 10% to 11 percent EBIT growth for the year. I think that implies broadly flattish margins in the second half. I know you said that the second half won't be as strong as the first half, but why shouldn't we some operating leverage in the 2nd half.
Thanks, Ed. Good morning. With regard to the alcohol free, whether it's just weather between back as well. It grew by 58% in Western Europe and by 50% in Russia only. So what we see is the increasing momentum of both the category and now people, there's themselves to really put now focus on that.
We started this 2 years ago in articulating this as one of the priorities. Obviously, it always takes some time to really get the momentum. And we feel that we have really now hit the momentum of the market with the right rules, the right intentions and the right investments. So it's more than the weather in our view, but that's what we need to prove to you and to ourselves in 2019.
Yes. Good morning, Ed. On the question on the guidance and second half, first of all, Since 11% growth in operating organic operating profit is a from our point of view, a strong outlook and it does require also growth in the second half. But it is right that second half growth in organic EBIT is lower than first half. And there are three reasons for that.
One is the fact that in first half Asia was impacted very positively in the beginning of the year, by the sell in to the festive season, Secondly, as you know, we have accelerated rather aggressively our sale investments in the second half. For instance, to BraughtMaster, to BRL, which is our, as Keith mentioned, sort of, our alcohol free brands, and also into expansion in China and into digital. So that's the second. And then thirdly, there is a different phasing of certain cost elements, including depreciations versus last year in first half versus second half.
Okay. Thank you. And then, Kate, just to follow-up again on the alcohol free, are you seeing change in consumption more people drinking at lunch as opposed to maybe substituting it for normal beer in the evening?
Yes, it's early days, but then you see at least the segment going pretty quickly. And we are taking share in the segment we are really coming in with a broad portfolio, so not only as line extensions of our local power brands. But as well from some of our international brands like Carlsberg and on top of that derail as Haynes said. So, it's a cumulative effort on that that really grows that segment. We see the consumers being interested in it, and we see them using alcohol free beer in more and more more and more moments, which is, of course, very good for the potential growth of that segment.
And it's margin enhancing for us. So that respect, we are really keen to continue this steep growth.
Great. Thank you.
And the next question comes from the line of Olivia Leclay from Morgan Stanley. Please go ahead.
Just two questions, please. Firstly, on Russia, how big is a premium beer segment today as a percent of the market? And essentially, where do you see the in, let's say, 5 years' time, just trying to have an idea of the growth potential of the craft and specialities and brands like Greenberg and Russia. And second question, it's about the tax rates. You maintain your tax rate guidance.
I think you've mentioned in the past that there was some efficiencies potentially to get in China between some of the subsidiaries which were loss making and some were making profits How far are you in this journey and could be material to group tax rates going forward?
Thank you. Well, what we see at the moment in Russia is that the premium segment is slightly higher than 30%, so 31%, the super premium is 6.5%. And actually, we see some, growth in, in these segments. We are, overrepresented with our brands in the premium. We are better represented in the super premium.
But for 2019, we have a program for that. So we're positive about the development of these two segments, which of course is good news trial business in Russia?
Thanks. Yes, good morning over here. So on the tax rate, you're right. We are maintaining our guidance of an effective tax rate below 29%. We are running, as you know, several initiatives within tax The big one is actually to increase the focus and the attention and the discipline around tax, both when it comes to the effective tax rate but also when it comes to tax compliance.
The different initiatives that we are running, including the one in China is, and they're all sort of progressing well. And we feel confident that we will also ask them 2018 continue the journey of strong focus on compliance and focus on ensuring a continued reduction in our effective tax rate.
Thank you.
Can we
have the last question please?
The last question comes from the line of Andrea Pistacchi from Deutsche Bank. Please go ahead.
Good morning. I have 3 brief questions, please. First one on Switzerland. If you could just say a few words on your performance in Switzerland, the important market for you in your Second on Poland, please, on the competitive environment there, if that, how that has evolved through the year, if it's improved. And finally, just a technical thing in Asia about shipments, the Chinese New Year, the sort and festivities will be a bit earlier this year, whether this will impact your shipments?
Should we expect, in the last year, Q1 benefited in to follow will there be a shift this year to Q4 of shipments, please?
Okay. Thank you very much, Andrea. With regard to Switzerland, there we saw a kind of modest growth, but still in a stable market, very good result in our view. Organic growth was around 1% in Q3 and the net revenue 1.4% with more or less stable market shares. So in that respect, we are still, really satisfied with the performance in Switzerland.
Poland showed very different figures, 6.8% in Q3 volume, 15.5% in value. We had a tough start to the due to our price increases. The market is 4% up year to date, in August. 7% devalue. And for e to date, we are losing a bit of market share, but we had a very strong Q3 in terms of market share.
We have a strong pricemix due to the price increases in the beginning of the year, and we have very good performance of our upper mainstream and that basically impacting our value market share, upper mainstream brands and premium brands in Q3, like Okathemburg, Greenberg, and Blanc and Brooklyn. So, good performance and progress in Poland. With regard to Asia, we indeed had the sell in from Christmas sorry, from Chinese New Year in Q1. And Chinese New Year in 2019 is a bit earlier. So we will have part of the impact in Q4 and part of the impact in Q1 for 2019.
So it's difficult now to see which countries will have an early sell in and which run slightly later. So it's difficult to adhere to assess at this moment of time the impact of that.
Great. Thanks for all that color.
Thank you very much. And before I close, I owe Richard a detailed answer. In India, Tuborg grew by 12% year to date and Carlsberg by even 37% year to date. That was then the final answer for today. Thank you for listening in and thank you for your questions.
Look forward to meeting some of you during the coming days and weeks. Have a nice day. Bye bye.
This now concludes our conference call. Thank you all for attending. You may now disconnect.