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Carlsberg A/S
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Ladies and gentlemen, welcome to the Carlsberg Q1 2019 Trading Statement. Today, I am pleased to present CEO, Cees 't Hart. [Operator Instructions] Just to remind you, this conference call is being recorded and a transcript of the call will be available online. Speakers, please begin.
Good morning, everybody, and welcome to Carlsberg's Q1 2019 Conference Call. My name is Cees 't Hart; and I have with me CFO, Heine Dalsgaard; and Vice President of Investor Relations, Peter Kondrup. I will go through the highlights of the quarter, and Heine will talk you through the regions and outlook.Please turn to Slide 2. Q1 is traditionally a very strong quarter for our businesses in Western and Eastern Europe due to seasonality, while Q1 for our Asia business is an important quarter due to the festive season. We delivered a solid start to the year in all 3 regions, with broadly based organic top line growth.Organic net revenue in the quarter grew by 6.4%, and this was driven by a 3% price/mix and 3.4% organic volume growth. The order volumes grew by 6.7% due to the last year's acquisition of additional 25% of Cambrew in Cambodia. Reported net revenue grew by 9.3% as well due to the acquisition of Cambrew and a very strong positive currency development. We confirm our full-year expectations for organic operating profit growth.Please turn to Slide 3 and a few comments on our international premium brands for which we saw good growth. 1664 Blanc grew by 30%, this by cycling a very strong Q1 last year with volume growth of 44%. The continued expansion in our Asian markets remains the key driver, but Russia and Ukraine were also significant contributors to the impressive growth momentum.Grimbergen grew by 4% in the quarter as it was impacted by phasing of commercial activities and shipments in France in Q4 versus Q1. The brand strengthened its market share slightly in its biggest market, France, and saw good growth in markets such as Russia, Switzerland, Italy, Poland, Germany, Belarus and China.Our largest brand, Tuborg, grew by 7%, supported by strong growth in China, India, the Balkans and the Turkish license market. We just kicked off this year's Tuborg Open music activation with Grammy Award winners Clean Bandit. The Carlsberg brand grew by 2% with strong growth achieved in several Asian markets, particularly in China. In Western Europe, we saw strong growth in markets such as Poland, France and Germany, while volumes in the U.K. were soft, ahead of the launch of the new Carlsberg Danish Pilsner brew in April.Across the globe, we continued the rollout of the new Carlsberg visuals and communication, the environmental-friendly packaging and line expansions. Please turn to Slide 4 and a brief update on a few of our strategic priorities. The growth trajectory in the craft & specialty category continues, as we grew our craft & specialty portfolio by 18%. We saw growth across most markets with particularly strong results in Poland, Ukraine, China and Russia.Alcohol-free brews grew by 15% for the group. The category and our brands are showing good progress across basically all markets in both Western and Eastern Europe. To mention a few other activities, we have expanded our offerings for our proprietary one-way keg system, DraughtMaster, to include alcohol-free brews and Somersby. The availability of alcohol-free brews on tap is an exciting proposition as we have not previously been able to offer our customers this option.Within our digital activities, we launched a couple of new on-trade applications that will support our customers in terms of training and quality. In China, our e-commerce business is showing strong results, more than doubling volumes year-on-year in Q1. After just 2 years of e-commerce operations in China, our market share in the online beer market exceeds our off-line market share.With that, I will hand over to Heine, who will take us through the regions and outlook.
Thank you, Cees. Please turn to Slide 5 and Western Europe. Net revenue in Western Europe grew organically by 2.4% as a result of plus 1% price/mix and total organic volume growth of 1.6%. Reported net revenue was in line with the organic development due to an insignificant currency impact.We saw positive price/mix in almost all markets driven by both price increases and a continued positive mix due to growth of premium products. The volume growth was particularly strong at the beginning of the quarter, most profoundly in France, Denmark, Norway, Germany, Bulgaria, Poland and Croatia. Whereas the end of the quarter was softer, impacted by the later sell-in to the Easter versus last year.Looking at a few selected markets. Our volumes in the Nordics grew by low single-digit percentages as they were impacted by the later sell-in to the Easter compared with last year. In Denmark, our beer business developed well, and our volume and value share showed solid improvement. March was weak due to the aforementioned Easter effect.In Norway, the positive momentum continued, with particularly solid results for craft & specialty portfolio, alcohol-free brews and soft drinks businesses. In Sweden, we saw good growth for our craft & specialty and alcohol-free portfolios, while total volumes were impacted by the later sell-in to Easter.Our French business delivered solid volume growth in the quarter. Pricing remains challenging, whereas mix continues to improve. Our craft & specialty brands developed positively with growth of brands such as 1664 Blanc and Grimbergen.In Poland, our volumes grew by mid-single-digit percentages. And even more importantly, our price/mix improved by double-digit percentages following price increases and a continued strong performance of our premiumization brands.As already mentioned by Cees, volumes in the U.K. declined by high single digits, ahead of the launch in the U.K. of the new Carlsberg Danish Pilsner brew at the beginning of April, following the launch of new visuals and packaging for the brand in Q1. Please note that the Carlsberg Pilsner sold in the U.K. is different from the rest of the world, containing a lower ABV of 3.8%. In some of our smaller Western European markets such as Bulgaria, Croatia and Germany, we saw solid growth. In all markets, price/mix developed favorably.Please turn to Slide 6 and Asia. Q1 was another strong quarter for our Asian business despite the Chinese New Year being earlier this year and, consequently, with part of the sell-in happening already in Q4 2018. Net revenue grew organically by 15.3% as a result of plus 5% price/mix and total organic volume growth of 9.5%.Reported net revenue grew by 27%, positively impacted by currency movements, in particular the Chinese, the Malaysian and the Lao currencies, and also the impacts from the Cambrew acquisition. The price/mix improvement was the result of price increases and premiumization, with our international brands delivering strong results in most markets in the region.We achieved strong results in our largest market, China. Volumes here grew by 11% following strong execution of Chinese New Year activities and strong growth of our premium portfolio, supported by big city expansion and leading to a very healthy price/mix.Our Indian volumes grew by mid-single digits despite very tough comps with a strong Q1 last year. We had a very strong start to the year, but March was weak in India.In most of the other markets, we saw good business momentum, with particularly strong performance in Vietnam, Laos and Malaysia/Singapore. In Cambodia, our work with rebuilding the business is ongoing and will continue in the coming years.Please turn to Slide 7 and our smallest region, Eastern Europe. Net revenue in Eastern Europe grew by 5.1% as a result of strong price/mix up plus 8%, which offset the volume decline of 2.4%. Reported net revenue grew by 1.1%, impacted by weaker currencies compared to Q1 last year.In Russia, our volumes declined by 4%, while our price/mix developed favorably, resulting in flat organic net revenue. Market conditions in Russia are challenging.In Q4 2018 and Q1 this year, our shelf prices increased by 5% to 6% due to the one -- sorry, due to the 2 percentage point VAT increase as at January 1 and additional price increases to offset the higher input costs. We lost market share due to a temporary delisting in some outlets in connection with our negotiations with certain retailers and higher-than-anticipated price premium vis-à-vis competition. We monitor the situation very closely and we are taking appropriate actions.Our craft & specialty and alcohol-free portfolio delivered solid growth, which also supported the healthy price/mix. We achieved very strong net revenue growth in Ukraine due to price increases and continued growth of our craft & specialty, while volumes were down.Please turn to Slide 8 and the outlook for the year. We started the year well. And based on the Q1 performance, we confirm our key priorities for the year as well as our full year financial outlook. Consequently, we still expect to deliver organic operating profit growth of mid-single-digit percentages.Based on the stock rates on May 1, we assume a positive translation impact of around plus DKK 150 million compared to the previous assumption of 0 currency impact. The change compared to February is primarily due to the strengthening of the Russian, the Chinese and the Ukrainian currencies.Other relevant assumptions remain unchanged: finance costs, excluding FX, of DKK 700 million to DKK 750 million; an effective tax rate of below 28%; and CapEx of around DKK 4.5 billion at constant currencies.Our SAIL'22 financial priorities also remain unchanged for 2019, meaning that we want to grow operating profit organically, increase ROIC and secure an optimal capital allocation.Our share buyback program, which was launched on February 6 and executed according to the safe harbor rules, is running smoothly. As at April 26, 1,041,000 shares have been purchased at a total value of DKK 849 million. The daily volume bought represents an average of around 7% of daily traded volume on NASDAQ Copenhagen.I also just want to remind you that in April, we sold the former brewery site in Trondheim, in Norway. That will result in a gain of approximately DKK 400 million both in special items and a net cash flow effect of slightly less than DKK 500 million.And now back to you, Cees.
Thank you, Heine. Before we open up for questions, we've a few final remarks from my side. We delivered a good start to the year in Q1. We see solid growth in our key strategic priorities such as craft & specialty and [Audio Gap] and we maintained the outlook for the year.And with this, we are now ready to take your questions.
[Operator Instructions] Our first question comes from the line of Jonas Guldborg from Danske Bank.
Questions from my side. First of all, if you could just talk a little bit more about Russia. You're losing market shares and you're saying you're taking appropriate measures. Could you talk a little bit about what measures you're taking? Then looking at the 11% volume growth in China, are you able to say how much of that is due to the expansion into big cities? And then finally, my third question is on this sale of brewery site in Norway and the capital gain of around DKK 0.5 billion, will that affect your current share buyback program or will it affect it next year, so to speak?
Thank you. With regard to Russia, as you know, we increased prices in late 2018 and in Q1 2019. We now see on the shelf that our price premium vis-à-vis competition is increasing and therefore we're losing market share. This was the start of the season, so we are able to correct that when we move into the season. As always, we need to balance this in the [ although logical ], the Golden Triangle. And therefore, we take measures in such a way that we balance market share, operating profit and margins. What are we going to do? Of course, we are not going to delve here, but you can assume that we will correct our first quarter with regards to market share.Then with regards to China, we're not giving specific underlying figures with regard to the big cities. However, we can say that the big cities, as such, continue to grow significantly. And we have -- in terms of our total international premium brands portfolio, and that's highly depending as well on the rollout in the big cities, we now see a 12% volume. That's 12% of our total portfolio. Within that, Carlsberg grew 10%; Tuborg, 11%; 1664 Blanc, even 42%. And we are gaining market share in the premium and the sub-premium segment in China. And that shows that we are making good progress in our cities. Then the third one, Heine?
Yes. Jonas, so the question on Trondheim in Norway, so that gain is specialized and so approximately DKK 400 million and, as you say, a cash flow -- positive cash flow effect of slightly less than DKK 500 million. And to your question, no, it will not affect our share buyback plans for this year, just as a small acquisition of DKK 500 million would not have affected it either. So it is something that we will take into consideration for next year when deciding on share buybacks.
Our next question comes from the line of Søren Samsøe from SEB.
Just a question regarding Asia. If you could elaborate a little bit on what brands specifically have driven growth in Asia and if you can quantify the growth of these brands a bit. And secondly, some comments around your incremental margin in Asia. Is there any reason to believe it should be lower than for the rest of the group?
Thank you, Søren. Well, with regard to the brands growing in Asia, we see -- well, just the Chinese market being very favorable for us was our international premium brands. So they grew at a level that I've just quoted. Then we have a very good start in Vietnam, and that is basically across our total portfolio. And a very good buy-in at the beginning of this year of that at a very good throughput for the Chinese New Year in Vietnam. And then we have as well a good momentum in India, especially January, February with regards to our Carlsberg and Tuborg portfolio. So these are the brands that were growing in the different countries. When we look at it from an Asian perspective, Tuborg grew by 9% and Carlsberg by 6%. Then the second thing on -- in terms of the margin, Heine?
Yes. No, so I didn't -- frankly, I didn't really get what the question was. But as you know, we don't comment specifically on the development in the margin development sort of region per region. So for the full year, we maintain...
No, no, no. But it was more a general question, whether your margins in Asia -- your incremental margins in Asia is generally lower than for the rest of the group. So when you're growing in Asia, is that -- on that incremental volume, is the margin lower than what you see for the rest of the group as well? That was the question.
No, no, it's the opposite.
Okay, great. And then finally...
It's just in Asia.
Okay, interesting. And then finally, just on India, you grow 5%. But given you had a comparable 30%, what -- how should we think of the underlying growth in India currently?
Søren, the 30% in Q1 was vis-a-vis very easy comps in the year before because of the highway ban. When we look at the first quarter in India, our volume growth was almost 7%. So that was good. We have a bit of a soft March. But we remember that India has a volatile business due to the differences per state. And what we see, as well, are some lower sales in some states in anticipation of dry days due to the elections and as well we have changed some prices in some states. So all in all, we started off in India with in terms of 6.7% volume growth and 16.6% net revenue.
Our next question comes from the line of Andrea Pistacchi from Deutsche Bank.
A couple of questions, please. Firstly on Russia, if I could ask for a little more color here, in particular on the pricing situation. I mean, from what you're saying, it seems that, I could be wrong, of course, that the competition hasn't followed at all really the price increases you put through. And then you alluded to some delistings. Is this set one or several players? And what is the situation there? Are you -- I mean, can you get back in and now as you adjust prices? Or does this mean you're out for the year with those retailers? And if I can please ask you on China, on your local business there, which I believe is also growing. Is the -- and I think you're taking share, but is the market backdrop -- some of the Chinese brewers are talking about improving market conditions in mainstream. Are you seeing this?
Andrea, thank you very much. With regard to Russia, yes, indeed, the cause of -- basically, the conclusion is when we look at Nielsen, that we see some competitors having a widening gap between volume and value. That means indeed that competition seems not to have increased their prices.With regard to the delistings, it's good to say that we are back on all the shelves. But at the moment, you can negotiate price increases. Sometimes a retailer delists you just to increase the pressure. But basically, we've been able to successfully increase our prices, and we are back on the shelves. However, what I said earlier, we lost some market share and we need to review that in line with our Golden Triangle.Then with regard to China, yes, indeed, our local business is -- or the local brands are growing. It's fair to say, I think, in terms of the mainstream brands that they have easy comps versus last year because, in general, we had some lower inventory last year at the start of Q1. However, we saw as well a good share development in Yunnan. We had a stock up for Chongqing Extra Malt. That's a new product launch that we will see in April. So there was a combination of factors, where, as well, the mainstream brands had a very good start of the year. With regard to the general outlook, we see indeed some pricing in the mainstream segment. And indeed, that would give an indication that the underlying circumstances as well on that segment are a bit better than what we have seen over the last couple of years. So in total, we are, yes, positive about Q1 in China.
Our next question comes from the line of Hans Gregersen from Nordea.
Two quick household questions. You guide FX -- sorry, interest ex FX. Can you guide to what the FX will be based on current exchange rates? DraughtMaster, you gave back in Q4 a growth rate of, I think it was, 35%. What has the growth been in the first quarter? Then to the real questions. If we look on Cambodia, what is the integration update there and how is the 3-year outlook? On Russia, we have seen a very aggressive campaign activity especially from some of your key competitors in the last couple of years. Any easing there? And then finally, on India, when should we expect the next brewery expansion?
Good. First question for you, Heine.
So I'll take the first one. Hans, so you're right, we're guiding for net financials, excluding FX, of DKK 750 million. And then whether we comment on where it would look with the FX as of today, no, we don't comment on that.
Can you say whether it's a positive or negative figure at least?
No, it's not something we comment on. We end up with all kinds of speculations, and it's basically a nonsense number.
Then your second question about the DraughtMaster growth, we grew 30% in the number of installations, and we had as well 30% volume growth and especially then in Nordics and Germany. As well, Italy had a growth, but it was a bit more modest. Then, Hans, due to some mic issues here, we didn't get your third or fourth question. So can you briefly repeat that one?
Yes. Cambodia, can you give integration update and sort of outline where the company is going to be in the 3-year outlook? And then on India, given the strong growth, when should we expect the next brewery expansion?
Right. Okay, thank you. With regard to Cambodia, I was there 2 weeks ago and got a total update on the business. It's fair to say that there's a lot that we need to do there and put in place. And we see that more as a kind of 3-year program rather than a short and sweet success turnaround in a few months. So we need to get the fundamentals in place. However, it's a very attractive market. We see as well that the brands that we have, have a good base and have a good relation, if you like, with customers and consumers. So I think we will get there, but it takes -- indeed, like you say, it's a 3-year plan rather than a 3-month turnaround.
Are you still seeing a negative market share trend?
No, no. We grew in the first month after we took over, and so we're gaining some market share. But frankly there as well, we need to get this Golden Triangle right so we're not obsessed by only -- by market share only. It is as well a review of the good margins and the profitability. So in total, for us, potentially a very good market. But we need to see through the consequences of initiatives we take now. We have an excellent team there. So I'm really confident that we're doing there the right things and that the results will be, over time, will be seen and additive to Carlsberg.With regard to India, for the time being, we don't have new plans for a brewery. As you know, we have this kind of logic that we continue with our growth by first making sure that we have the #1 and #2 position in a state and then continue to invest in another state. The last state we did was Karnataka. We opened the brewery a half year ago, and that's what we are now focusing on. So with regard to capital investment, we do not see, short term, any expansion there.
Our next question comes from the line of Michael Rasmussen from ABG.
First of all, can you quantify if India turned around in April? My second question, a follow-up on DraughtMaster. Can you quantify how many systems by numbers that you have installed at the moment? And what is the ambition by 2020, as an example, please? Then finally, on the relaunch of the Carlsberg brand, firstly, can you share a bit of the initial thoughts from the trades in the U.K. here about a month in? And secondly, please confirm if the rollout plans into the other markets are following the plans that you've set out.
Thank you, Michael. Well, turnaround in India in April feels as if there's a disaster in India. That's not at all the case. March was a bit more soft, as I said. April is doing okay. We -- again, what we said earlier, there are elections in the coming period in India. That means that we have, in some of the states, some dry days. We have as well changed some prices. We see the consequences of that. But in that respect, there is no new news to say at this mode of time with regard to India. With regard to our DraughtMaster system, I don't think we are going to move into these details openly. Competition is listening as well. What we do in Denmark as we speak is we are converting from steel to DraughtMaster. That conversion is going very well. We are going to move further, as you know, in Sweden and in Norway. We got a very good review and feedback from customers on this. Consumers get more fresh beers. So this is a system which really helps us to serve our customers and consumers better. And as we said earlier, we see that in the figures.Then with regards of the U.K. relaunch, we launched, as we said, Carlsberg Danish Pilsner with a new brew, new design, new pack format and as well now in Snap Pack. We have received very good customer feedback. And we are pleased to say that now Carlsberg Danish Pilsner, including the Snap Pack, is listed in Tesco, with in-store support from the 5th of May. Very early days, but it will be the first time that a core Carlsberg variant has been listed since 2015 in Tesco. And we are delighted by this support from a key customer. We've secured distribution of all major targeted off-trade retailers, including then the Tesco, indeed, ASDA, Morrisons, and Aldi, Lidl and so forth. So basically, we got the full support for this from the trades.When you talk about rollout, I would like to highlight that the relaunch of Carlsberg in the U.K. is of a different order of magnitude because there, we have a different brewer. As you know, if it improved the brew, of this [ indiscretion ] is the consumer. And we have this famous 3.8% ABV with not a huge appreciation of the taste from our consumers. That is very, very different in the other countries. There's no reason to significantly change the brew there. There, we talk more about new design and some new pack formats and new advertising. So there are different -- if you like, these are 2 different projects. Both are early days. We got very good feedback that we want to see it now in the figures.
If I now just can ask a follow-up question on the Snap Pack. I think that in the Nordics at least, we've heard kind of a little bit mixed feedback in the media. Can you please confirm that everything is going as planned on the Snap Pack, please?
Yes, I can fully confirm that especially in Denmark, we saw an uplift of our volume of that format of 19% in Q1. So that shows that it's good, and I'm not talking about the Eastern impact to that yet. So yes, there are some maybe small complaints about how to unlock, if you like, one of the cans from the total pack. And maybe we need to do the communication a bit better because it's a bit of a trick but relatively easy to learn. So we are not at all afraid for that. And in fact, we see in the figures again very good throughput.
Our next question comes from the line of Ed Mundy from Jefferies.
Three questions, please. First is on Poland, where you, I think, you grew volumes mid-singles and have a double-digit price increase. This is quite different to the Poland of old. I was wondering whether you could provide a bit more color around that. The second is your acquisition, the Chinese craft brewer Jing-A. Beijing, I think, it's a challenging market for you. What does Jing-A do to help to get your distribution in this market? Or are you planning to sell this beer around your other territories? And then third question is on Vietnam. I think the Hanoi Times is reporting there have been some breakthroughs in negotiations on the stake sale. I was wondering whether you've got any comments on that.
Yes, thank you. We -- in Poland, yes, we had a volume increase of 2.6% and our value is 12.6%. We go ahead with our value-oriented strategy. It means that we are indeed very possible to increase our prices. We are focusing very much at the higher end of the market, and that improved significantly our mix and has a very good quarter for Poland and a continuation, if you like, of the success in Poland of our more premium portfolio, part of the portfolio.With regard to Jing-A, we just got it. We have our plans. We are not going to announce that. But let's first make sure that we get the further momentum of Jing-A in China. As you know, the craft brands in China picked up, so we're really excited by this acquisition and how we maybe roll out that further in the globe. We will see, but first, we wanted to make it a further success in China.Then with regard to Vietnam, the Habeco, the business or the brewery in Hanoi. I can't say we had a breakthrough. The only thing I can say is we continue our good conversations with the government. And in that respect, we are basically progressing slowly, slowly, but no breakthrough, but good talks.
Great. And just as a follow-up. I think in Western Europe, you said that volumes dipped a little bit at the end of the quarter, largely due to the timing of Easter. And given the better weather in April and the shift in Easter from Q1 to Q2, is it fair to assume that our Q2 started well in Western Europe?
Yes, that's fair to assume. We had a good April. The Easter impact in Q2 is always a bit less than in Q1. Q1 is a smaller quarter. Q2 is always a bigger quarter. And there you have the, well, the spring and the early summer impact. So don't exaggerate these kind of things in your expectation for Q2, but we had a good April. And the totality of March and April shows that we had a more than good Easter.
Our next question comes from the line of Tristan Van Strien from Redburn Partners.
Just 3 questions. One, just to follow up on Cambodia from Hans' question, can you just maybe give some color on the pricing environment there and to what extent has that market down-traded? The second one, in Western Europe, I assume that your Tuborg license in Turkey is outperforming the rest of Europe. So what impact has that had on your price/mix in the region? And then lastly, Heine, just in terms of your tax rate, as your business shifts away from Russia towards Asia, is it fair to assume that it enhances your tax rates in a positive manner for you?
Okay, thank you. With regard to pricing in Cambodia, yes, the level of promotions is huge in Cambodia, especially because of the ring-pull promotion. That's -- I think around that reduces the value in the market. And while the things we are resuming now, how to move away from that kind of very deep promotion in such a way that we don't massively lose the market share, gain margin and improve our profit. So that's the kind of review we have as we speak. So that's with regard to Cambodia. With regard to Tuborg in Turkey, it has a slightly negative impact on the mix. That's why I need you to read that. And with regard to tax, I hand over to Heine.
Yes. Tristan, so actually the tax rate in Russia is slightly below the average for the group. So good profit in Russia is good for our overall tax percentage. So as profit goes down, that does put a big pressure on our outlook for tax. We do remain confident in what we said all along, which is that we can, over the next few years, see a tax rate of around 26%, and that sort of remains the case.
Just to follow up on that, Heine. I mean, I assume your Asian tax rate then is above the group rate. Are there possibilities to work on that or is it just what it is?
No, that -- you mean specifically for Russia?
For Asia.
No. But there's a lot of different opportunities for us to work on optimizing -- further optimizing our tax rate also in Asia. It's clear that for a lot of the Asian markets, the growth rates -- or the tax rates are sort of negative versus group average. But there is a lot of different optimization projects we're working on in order to optimize both our structure and also specific initiatives within tax. So if you balance all these different things out, and as you know, we are working on, let's say, 10, 15 different tax initiatives every year, then the outlook remains the same.
Our next question comes from the line of Simon Hales from Citi.
Wondered if I could just follow up on your comments around the Easter impact. I mean, could you quantify a little bit more how much of a shift we've seen in hectoliters perhaps from Q1 to Q2, just to help us think about the underlying Western European trend as we move forward? And then secondly, the non-beer volumes performed quite well in the first quarter. I wonder if you could just flesh out a little bit what was going on in some of the regions there. And finally, Cees, just on China. I mean, how many big cities are you now in, in China? And what's been the sort of the delta in Q1 versus where you were at the end of 2018?
Okay. Thank you, Simon. The Easter impact, well, first of all, well, we talk about Western Europe, because the rest of the globe, if you like, doesn't show that big Easter effect. The Easter effect or impact in Europe is -- Western Europe is mainly coming from the northern part of Western Europe. And there, we saw a very good -- a strong April. As I said earlier, it's always more visible in Q1 than Q2. And when the larger spring and the early summer volumes dilutes to Easter volumes, an exact number is always difficult to estimate. And how we do that internally is putting March and April together, vis-à-vis last year. And then I can just tell you that we are very satisfied and basically in line with what we see in Q1. Then on the non-beer, I'm afraid I need to -- oh, Heine has the answer on that.
No, I don't have the answer. But I -- first, to give you an answer, Simon, so you're absolutely right that the non-beer part is performing well in -- across Western Europe in particular, and it is something we see across the region. So that's absolutely right. When you look into the percentages for Eastern Europe, you have to bear into mind that it's very, very small numbers. So if you look at the Q2 -- Q1, sorry, numbers, even though we're growing 17% in non-beer, we are talking about 0.2 million hectoliters, so it's small numbers.In Asia, you have to take into account, when you look at the total growth of non-beer, you have to take into account that a significant part of that growth comes from Cambodia, where we have a very strong soft drink business.
And then, Simon, with regard to the big cities in China, as we said earlier, it's a rolling program. We started almost 1.5 years ago with 5 cities, and then we opened in new cities at around when we were really seeing the success in the first 5 cities. By the end of 2018, we were in more than 20 cities. At the end of 2019, we expect to be at least in 30, 32 cities. So it's -- we are adding up or adding cities towards our current program. And the good thing is that we see still continued growth in the cities we opened 1.5 years ago, at the first 5 cities. And in that respect, it helped -- if you are really interested in the year-over-year, of course, it helped in Q1 because we opened several cities in the second half of 2018 to build up to the 20 cities where we were at the end of 2018.With this answer, I suggest we have the final question, please.
Our final question will be from Trevor Stirling from Bernstein.
Two quick questions from my side. The first one on China, I think you commented on healthy price/mix in China. I think last year, price/mix was 7%. Is it reasonable to expect that, that broad trend to continue? And second question, perhaps broader. I think towards the end of last year, we're talking in terms of your ambition to take sufficient price and cost cuts to offset input cost inflation. Looking at a pretty healthy price/mix you're achieving around the world, it seems like you're well on track to do that.
Thank you, Trevor. With regard to the mix in China, yes, of course, it depends on, if you like, 3 different parts. These need to come together in order to continue this very good price/mix, that's to further roll out to the big cities. I think it should take the further rollout or the further volume development of our international premium brands. I think there, we show as well very good momentum. And the third thing is then, of course, our mainstream brands. And as we said earlier in the call, it seems that we see there are some better circumstances with regard to taking price. So yes, it's not at all a statement here, but the 5% to 7% mix should be possible there in China. Then with regard to taking prices in [ India now ], that's over to Heine.
Yes. Trevor, the short answer is yes. And the little bit longer answer is that, as you know, we've been well hedged for '19. I don't disclose the exact hedging, and that we expected, as we also said some months ago, the cost per hectoliter to increase by 2% to 3% net-net because of these significant price increases in raw materials, then offset by the hedging. We will aim at mitigating the cost impact through pricing and through mix. And then to the conclusion, so far, so good. Yes, we are getting pricing through.
Thank you, Trevor. That was the final question for today. Thank you for listening in, and thank you for your questions. We are looking forward to meeting some of you during the coming days and weeks. Have a nice day. Bye-bye.