Carlsberg A/S
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Carlsberg A/S
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Ladies and gentlemen, welcome to Carlsberg Q3 2021 Trading Statement. [Operator Instructions] This conference call is being recorded. I will now hand it over to the speakers. Please begin.
Good morning, everybody, and welcome to Carlsberg's Q3 2020 Conference Call. I hope you are all safe and well. My name is Cees ´t Hart, and I have with me CFO, Heine Dalsgaard; and Vice President of Investor Relations, Peter Kondrup. Let me begin by summarizing the key headlines for the quarter, driven by both volume and value growth, the group delivered solid top line performance for the quarter. The market development remains mixed with a recovery in many European markets, while many Asian markets were impacted by the pandemic. As you probably have noticed, we issued our Q3 announcement, including an upgrade of our full year earnings expectation already yesterday. The upgrade was done in light of a better-than-expected result across all 3 regions in Q3 and the start to Q4. Finally, we have launched the last quarterly buyback for the year. I will provide the headlines for the quarter and our performance against some of our SAIL'22 priorities, and Heine will take you through the regions and upgraded full year outlook. Please turn to Slide 3. It has indeed been a volatile and disruptive year for us as well as for the communities in which we operate. As a consequence, our performance has varied significantly between brands, categories, markets and regions. Given this backdrop, we are very pleased with our performance, both for the quarter and year-to-date. Organic revenue was up by 7% due to both volume growth and improved revenue per hectoliter. The 3.4% organic volume growth was supported by double-digit growth in markets such as China, the Nordics and India and also good growth in the markets across Central and Eastern Europe. In reported terms, volumes grew by 5.8% due to the Marston's and Wernesgrüner acquisitions. Comparing the volume growth to the pre-pandemic level in Q3 2019, volumes were up organically by around 6%. Revenue per hectoliter was up by 3%, digital driven by several positive factors, such as the reopening of the on-trade in Western Europe growth of premium products and growth of alcohol-free beverages, which more than offsets country mix and much higher soft drink sales. Please turn to Slide 4 and a brief update on some of our strategic priorities. Our SAIL'22 growth categories performed well. Craft & specialty grew by 5%. We saw strong growth in Asia, Central and Eastern Europe and certain markets in Western Europe, such as Denmark, Norway and the U.K. Our volume growth in the quarter was curtailed, primarily due to declining volumes for Grimbergen in France and Somersby in Poland. Key global craft & specialty brands were 1664 Blanc, for which volumes were up by 19% and Somersby, for which volumes grew by 4%. We have now launched Somersby in China. It is still very early days, but we see good initial results. On the back of strong growth of 29% in Q3 2020, alcohol-free brews were up by 10% for the quarter and 19% year-to-date. We saw particularly strong growth in Central and Eastern Europe in markets such as Russia, Ukraine and Belarus. Western Europe markets such as Finland, Sweden, Norway and Poland, also posted strong growth rates. Growth in the quarter was impacted by volume decline in France. The alcohol-free category has delivered consistent growth also during COVID. Compared to the pre-COVID level in 2019, volumes in Q3 were up by 41%. And year-to-date, they were up by 30%. Innovations are important for the continued relevance of our brands and for supporting the value growth of our portfolio. Examples of innovations launched this year include the alcohol-free Feldschlösschen Zitrone in Switzerland, Somersby, pina colada in Poland and 1664 Rose in China. In 2020, innovations accounted for around 10% of total group volumes. Speaking of Asia, this region is the third growth pillar in SAIL'22. Despite the COVID-related obstacles in many of our Asian markets, we benefited from our very strong business in China being a key driver of the regional results, which Heine will elaborate on in a minute. And with that, over to you, Heine.
Thank you, Cees, and good morning, everybody. Please turn to Slide 5 and Western Europe, where the volume and numbers were quite mixed across markets mainly due to bad weather and continued restrictions in certain markets. Revenue was up organically by 2.2%, driven by an increase in revenue per hectoliter of 2%. The revenue per hectoliter was supported by channel mix due to fewer on-trade restrictions, partly offset by product mix due to strong non-beer volume growth in the Nordics and also country mix due to volume decline in the high-priced markets of France and Switzerland. In reported terms, revenue was up by 17.1% and volumes were plus 8.6% due to the acquisition impact from Marston's and Wernesgrüner. We achieved strong volume growth in the Nordics with double-digit growth rates in Denmark, in Norway and in Sweden. Volumes were supported by strong growth in the on-trade and very good progress for craft & specialty and alcohol-free brews. In addition, non-beer volumes grew strongly in Denmark and in Norway. Revenue per hectoliter benefited from channel and product mix, partly offset then by the strong growth of soft drinks. Our business in Switzerland and our business in France were impacted by bad weather. In France, on-trade was open, but negatively impacted by the sanitary pass requirement and lack of staff. In the off-trade, our business was impacted by less promotional activity vis-a-vis competition. Brands such as 1664 Blanc, Brooklyn and Carlsberg grew. In Switzerland, the reopening of the on-trade was off to a slow start, also due to sanitary pass requirements and unable to offset the decline in the off-trade. Craft & specialty saw positive growth rates. On the back of top comps, alcohol-free brews were flat in Switzerland. Poland had a difficult quarter due to severe market declines following heavy rainfall and low temperatures. In addition, and specifically towards the end of the quarter, the beer market was impacted by growing inflationary pressure reducing consumers spending our business gained market share but not sufficiently to offset the market decline. In the U.K., the integration of Marston's and Carlsberg remains well on track. Our volumes benefited from good weather, the lifting of restrictions and the reopening of the on-trade. The latter also supporting a good development in revenue per hectoliter. Albeit from a low base, craft & specialty grew strongly with particularly strong growth for Somersby. Our market share in the U.K. for the combined business improved slightly. And now to Slide 6 and Asia, please. Where the impact of COVID was severe in many markets, revenue was up organically by 13.3%. The volume growth of 7.9% was driven by markets such as China, India and Cambodia. These markets also supported the revenue per hectoliter growth of 5%. In reported terms, revenue increased by 16.9%, mainly due to a positive currency impact from China. In a slightly declining market, our Chinese business delivered 11% volume growth, albeit this number was helped by easy comps as part of Western China was subject to severe lockdowns in Q3 last year. We have, in recent years significantly strengthens our market share in China. Compared with 2019, our volumes in Q3 were up by 15% and year-to-date by 20%. Key drivers of the volume and market share growth were again this year strong growth of 1664 Blanc and the local premium brands. Good results for our big city strategy and an increasing share in the modern off-trade channel. In a very volatile India, 30% volume growth was achieved on the back of relaxation of various COVID-related restrictions. We are encouraged to note that our Q3 numbers in India were almost back at the 2019 levels, albeit we see significant differences state by state. Our business in Cambodia benefited from very strong volume growth for the STING energy drink, while beer volumes were impacted by severe beer market restrictions. In Vietnam, our stronghold in the central part of the country was less impacted by COVID compared with other parts of the country and our volumes, therefore, declined significantly less than the overall market. The situation at Laos was very challenging due to a steep increase in infection rates during the quarter. This led to severe bans on the on trade and on alcohol sales in the off-trade in addition to move with restrictions and even curfews. In Malaysia, results in the third quarter remained negatively impacted by the mandatory closure of the brewery from mid-June until mid-August, preventing us from replenishing supplies for almost 2.5 months. The situation is now gradually normalizing. Slide 7 and Central and Eastern Europe, please. The region delivered another solid quarter. Revenue grew organically by 8.6%, driven by both volume and value growth. With the exception of Azerbaijan, all markets in Central and East Europe delivered organic volume growth for the quarter and total volumes were up by 2.6%. The revenue per hectoliter growth of 6% was the result of positive development in both markets, supported by pricing and product and channel mix. In Russia, we had tough comps due to the very good weather last year. But nevertheless, volumes were up by mid-single digits. Revenue per hectoliter was supported by strong growth of craft & specialty, and we also saw very good growth for alcohol free brews. Our market share increased sequentially in Russia. The overall pricing environment in Russia remains challenging, but to compensate for some of the higher input and logistic costs seen already in second half. And also the 1 ruble duty increase as of first of January 2022, we increased price towards our customers in late Q3. Volumes in Ukraine grew and we strengthened our market share. Our portfolio of alcohol-free brews delivered strong growth. Southeast Europe volume growth was supported by the return of tourists and our international brands, did well led by Tuborg, 1664 Blanc, Somersby and Carlsberg. Towards the end of the quarter, we saw signs of weakening beer markets in several countries in this region due to increasing restrictions and lockdowns as infection rates are going up and the vaccination rates in many countries remain low. In addition, there is an increasing inflationary pressure, which may negatively impact consumers spending on beer. Slide 8, please, and an update on the share buyback. We have carried out the share buyback as quarterly programs this year due to the continued business uncertainty related to the COVID-19 pandemic up until Friday last week, we have bought back shares at a total value of DKK 2.75 billion. During the most recent quarterly program, which was initiated on August 18, 938,441 shares repurchased at a total value of DKK 1 billion, corresponding to an average price of DKK 1,065. The daily volume board represented an average of around 10% of daily traded volumes on NASDAQ Copenhagen. Today, we then initiate this year's last program which will run until January 28, 2022. The good results this year enables us to increase the value of these large brands to DKK 1.25 billion taking the total amount of the share buybacks for 2021 to DKK 4 billion or an average of DKK 1 billion per quarter. The Carlsberg Foundation will continue to participate in share buybacks on a pro rata basis. Further details on the share buyback can be found in the Q3 trading statement. Please turn to Slide 9 and the outlook for the full year, which we yesterday were able to increase to 10% to 12% organic operating profit growth. This is the previous expectation of 8% to 11%. The reason for sending out the announcement yesterday is to comply with the interpretation of the EU market abuse regulation by the Danish regulators. 2021 has again been a challenging year due to the pandemic, the visibility has been low, and the volatility has been high. During the year, as authorities frequently are adjusting lockdowns and restrictions in light of the local development of COVID-19 related infections. However, we are pleased that our employees and the company as a whole have been able to navigate well through these challenging times, enabling us to upgrade our full year earnings outlook twice this year. It is not one specific market driving yesterday's upgrade, but better-than-expected results across all 3 regions in Q3. The upgrade also takes into account performance so far in October. It is important to emphasize that the uncertainty remains very high in many markets across our regions. In many Asian markets, there are frequent changes in restrictions and lockdowns. The same is true in several European markets. In addition, we also see a risk for consumer behavior being impacted by the increasing inflationary pressure. The FX translation impact is now assumed to be minus DKK 100 million. This is DKK 50 million better than in August. We're also adjusting our assumption on the effective tax rate, which we now expect to be around 24% compared to the previous expectation of around 25%. The low tax rate is due to faster implementation of various tax initiatives. The assumptions on net finance cost and CapEx remained unchanged. Net finance costs, including FX are assumed to be around DKK 600 million and CapEx is expected to be between DKK 4 billion and DKK 4.5 billion. And now back to you, Cees.
Thanks, Heine. And before opening up for Q&A, let me summarize. Driven by both the volume and value growth, the group delivered solid top line performance by the quarter. The market development remained mixed, the recovery in many European markets, while many Asian markets were impacted by the pandemic. Yesterday, we upgraded our full year earnings expectations, and we have launched the last quarterly share buyback for this year. Please observe that we, again, this time will limit the number of questions to 2 per person to ensure that as many as possible get a chance to get through. And with this, we are now ready to take questions.
[Operator Instructions] The first question comes from the line of Edward Mundy from Jefferies.
Two for me, please. I think you flagged there's going to be a limited impact from higher COGS for the remainder of the year, given -- you've got good hedging in place. But is there anything you've got of show the outlook for COGS for 2022 at this early stage? And then the second question is, as you think about getting stronger revenue back, but given the inflation environment, what are the biggest levers that you're going to lean on across price premiumization, channel recovery and broader revenue growth management skills?
Thanks, Ed. Yes, indeed we are currently in -- you would say, a very volatile environment, which is impacting both the COGS and the logistics significantly. For many of our commodities, utilities and logistics services, we have seen prices at very high levels during the autumn. And therefore, to your point, the headwind for 2020 will be significantly higher than in 2021. And for 2021, we were indeed hedged. I'm afraid we will not at this moment in time, give you an estimate of the increase in COGS and logistics in 2022. It's still work in progress. We are still not fully hedged and volatility remains very high, both on commodities that can be hedged and inputs that cannot be hedged. Another reason is that for competitive reasons, as we are in the middle of customer negotiations, we cannot make further comments at this time. But as always, we will come back in connection with the full year guidance in February. With regards to your second question, and also maybe to give you some comfort, we started preparing for 2022 already before this summer, also at a market level, so very much country by country. COGS increases will vary significantly market by market, and plans, therefore, need to be locally based. And our operators are working on determining the right balance of mitigating actions. And the levers you're talking about are about value management, indeed, channel mix, especially in Western Europe vis-a-vis 2021 Q1. Pricing, of course, and also funding the journey, so the cost initiatives. I hope that service your question or answers your question.
It does. But I mean there's one element as well, that you didn't mention that premiumization and favorable product mix, your low alcohol and some of these other products as well. Is that going to be a further tool?
No, so far. So if you look at it in totality, it's indeed a value management. It's a product and pack mix. It's channel mix. It is the further growth of alcohol-free beers, especially in Western Europe. It's the further development of craft & specialty and alcohol-free beer in Eastern Europe, especially in Russia. So it's basically the continuation of the premiumization journey we do. And on top of that, extra attention on the ones that I said earlier, value management, channel mix, pricing and funding the journey.
The next question comes from the line of Simon Hales from Citi.
Two for me as well, please. I know you don't want to be drawn on COGS inflation outlook for 2022 at this point, so I understand. Are you able to say anything about how you are hedged now into 2022 generally, have you continued to hedge your core input costs where you can at the normal rate that you would do through the second half of this year? Or are some of the raw materials, you may need a little bit more under hedged than you would normally expect at this point? So anything you could say there, is my first question. And secondly, I wonder if you could just talk a little bit about the performance in Southeast Asia, some of those more challenging markets since we came through the end of Q3 and into the beginning of Q4, where you're seeing the recovery starting to come through, some easing of restrictions. Any more color there would be much appreciated.
Thanks, Simon. Heine, with regards to the COGS, if you...
Yes. So for the hedging, at this point in time, we are approximately 80% covered for Bali for 2022 with a higher proportion in Western Europe and in Asia than in Central and Eastern Europe. Since Central and Eastern Europe, to a bigger extent, is a spot market. For aluminum, we also covered around 80% for 2022 with the highest level being in Western Europe and the lowest again being Central and Eastern Europe. For sugar, we are almost 100% hedged. And then you have some commodities such as PET and paper that are very difficult to hedge.
Then with regard to your question -- with regard to the Southeast Asia countries. So it is very different country by country. Malaysia had in Q3 volume development of minus 33%. Parts of Malaysia were closed. There's now a national recovery plan for 4 phases, and most of Malaysia is now in Phase 3. So they are developing into the right direction. 90% is vaccinated. Interstate traveling is going to be open again. So in that respect, we move into a better situation. Q3 was -- as the volume indicate, very poor also because the brewery need to be closed between June and mid-August. We had, by that lower stocks in the market. So we also lost some share. But we are really getting close to basically move into a bit more normal times, although it is still very depending on the recovery province by province in Malaysia. With regards to Cambodia, that situation was very different. You probably have heard about what they call [indiscernible], which is a soft drink and some basically very good improvement or growth of our nonalcoholic portfolio there. And then Laos is at this amount of time, probably one of the countries where we have the most concerns with regards to converting of the local currency, their lockdowns and the vaccinations are very low. Then to Vietnam, minus 8% in Q3. Basically, I think it's fair to say that in Vietnam, we had to feel that COVID was not so much impacting the country a year ago. Now at its worse since the outbreak. There are lockdowns also there. The market was down in -- with almost 40% in August. We did relatively well. We are more in Central Vietnam, as you know, where the issue is a bit less concerning as in the big cities. Luckily, the Vietnamese government is really focusing on vaccination, they now move from a kind of spirit of stop COVID kind of -- the stop COVID campaign, then I have a new campaign, a life with COVID. And by that, we hope also that there will be more reopenings in the foreseeable future. So it's a bit patchy. It's a very different country by country. But maybe separate from Laos, we think that most of the countries are now moving towards recovery, and we are hopeful that by the end of Q1, most of these countries are back more or less on track. Hope that answer?
That really helped. Can I just check within some of the Southeast Asian market, did you see some restocking in September as some of the restrictions were easing? Or is that something that you perhaps might see if restrictions continue to ease into Q4?
Well, not that I have particular information about that. In Malaysia, as I said earlier, we were out of stocks, at there we're trying to restock, that's more about the stock building after reopening of our brewery and I don't have very specific remarks from our people on that. So probably that means also that it's not a big issue at this moment of time.
The next question comes from the line of Laurence Whyatt from Barclays.
A couple from me. In Russia, you mentioned that your positive revenue actually it was driven by product mix and there was some hope that we might be able to get some price through the Russian market after the problems over the past couple of years. I was wondering if you could give us an update on whether you're able to or have been able to recently and your current expectations are taking price, in particular, in the Russian market. And secondly, over the past few years, we've seen a number of guidance increases during the year, the guidance given at the beginning of the year has been raised, I think, a couple of times now for the past 3 years. How does that change your ability to give guidance at the beginning of the year? How do you think about the guidance at the beginning of the year? And how do you think that will change going forward?
Thanks for your questions, Laurence. And let me try to answer your Russian question. And then with regard to the guidance, Heine will take over. With regards to Russia, we had the mid-single-digit volume growth. It's continuing to be a very difficult competitive environment with high level of promotions. We had low single-digit price mix, as you alluded to. And that was driven by craft & speciality. So what we see is that we have broadened our portfolio, put more focus on premiumization and that helped driving the mix. We also have the brand Flash Up a very popular energy drink which is also helping to grow our volume and improving our mix. On average, we have been able to land close to 4% -- in fact, 3.7% price increase. We announced it in September, we have closed most of the negotiations with the customers. And in that respect, that is a good step, although it does not yet at all cover for the high cost of inflation in Russia. Then with regards to the market share, which is, of course, very important with regards to the strategic health of our business. That is -- that was in August at a level of even 29%. And year-to-date, it's 27.6%, which means and the 20 basis points up versus last year. So with regards, to let's say, the strategic health, I think we made a good progress in Russia. Then, Heine, guidance.
Yes. So there is, as you know, a lot of uncertainty and a lot of volatility due to COVID-19, which really makes it difficult for us in the beginning of the year for good reasons to see how all the different moving parts sort of pans out throughout the year. And if you look at our performance throughout the year. There are really a lot of moving parts, a lot of processes and a lot of minuses, which makes it really, really difficult, in particular for good reasons in the beginning of the year to give full year guidance. And what you see is also that some of our peers are not giving full year guidance, which probably has to do with exactly that effect. We do give full year guidance also because, as you know, due to the Danish regulators view on EU regulations, but also because we fundamentally believe that we should give the market, we should give you guys as analysts and our investors sort of our best guess, which just comes with a lot of uncertainty, in particular, in the beginning of the year.
The next question comes from the line of Richard Withagen from Kepler Cheuvreux.
I have 2, please. First of all, with the cost inflation in the back of our mind. Can you share some thoughts on price increases and how that might affect volumes in the different regions that you operate in? And then secondly, can you talk a bit about the dynamic of alcohol free, does that change much as the on-trade opens? Or do you still see sort of the similar dynamics as before?
Thank you, Richard. But what we said with regards to price increases, we don't give a direction of that one. In total, I guess it will depend on the attitude of the price decrease or yes, the attitude of the price -- got sorry, the altitude of the price increase. So with regards to the impacts on volumes, very difficult to say. And as we said earlier in the call, it will not only -- when we talk about mitigating actions for the cost increases. It will not only depends on price increases, there will be a channel mix, value management and pricing. And also, we continue with our premiumization, as we said earlier. That brings us then to the mix and especially your question on alcohol free. We think that by reopening of the on-trade, we only have more opportunities to grow alcohol free. We have seen a very good takeoff of alcohol free in especially off-trade over the last couple of years, on-trade followed a bit later. Our DraughtMaster for example, in the Scandinavian markets also now is able to have alcohol-free beer on-premise which will help to further develop this category. And going forward, we are very confident that the trend on alcohol-free beer will continue and that the percentage of alcohol beer as part of our total portfolio, especially in Central Eastern and Western Europe will be significant. We also started in Asia, Chongqing, brand has now 0.0. It's not yet big, but it's encouraging. And the next step for expanding alcohol-free beer will be in Asia. So all in all, confidence in that category, and that also will help us in the steps that we need to take to mitigate the increased costs for 2022.
The next question comes from the line of Trevor Stirling from Bernstein.
My 2 questions are the following. First one, concerning Western Europe, I think my calculations are right, Q3 is still about 1% below 2019 in terms of volumes. Just wondering if you can give us a little bit of color on which countries in Western Europe are trading ahead of 2019. And where is there still some catch-up to be had? And the second one concerning the pricing environment, I appreciate Cees it's very, very early days. But you've mentioned in the past that the Russian price increases went through slightly easier than normal. Any indications as yet about the general pricing environment in Europe -- in Western Europe given the inflationary environment, given the price increases that have already gone through in soft drinks, are the grosses just a little bit more amenable than they were maybe in previous years?
Yes. Thanks, Trevor. With regard to Western Europe, you're almost full on. It is -- if you take year-to-date September 2021 versus 2019, year-to-date, we are 0.9% plus for rest of Europe which is, in that respect, I think, very encouraging. Total group, we are up 5.2% reported. So in that respect, if you look at whether we have been able, we would like to survive COVID so to say and to improve further and to increase our volume, then we can only say that vis-a-vis 2019, which was the last -- between like as normal year. We have grown by 5.2%. And then for the record, 6.1% in Asia, 0.9% in Western Europe and 7.7% in Central and Eastern Europe group. So in that respect, I think, positive news. With regards to your question about Western Europe, there it is a bit different country by country. So when we look at France, Switzerland, we are down versus 2019. They came, as you know, a bit slower out of COVID and also had some very bad weather impact during the season. Denmark is still below, but it has a lot to do with the border trade. But we are very, very happy and positive about our development in Denmark. We are improving significantly our share there. The Norway is in a very positive outlier, the same as in the U.K., but it also that has to do, of course, with our joint venture. However, if you look September sales in 2021 versus September 2019, the new group, the joint venture who you like during center grew by 8%. So that gives you an impression that we are on the right track there. Also, Poland is positive and Germany is very positive. So that gives you a bit of a feel that, in general, we are close to 1%, but there are some underperformance and some severe over performance there.. Then with regards to pricing, yes, I don't know whether it's a bit easier, but you could argue indeed that it took less time in Russia than normal in order to land these prices. Normally, we get delisted for quite a while, and the negotiations are tough. I wouldn't say that it was less tough but at least, it was shorter in terms of the period that we could land the new prices. For the rest, I must say, what I hear from the colleagues in the countries that it is, yes, a conversation that, of course, the trade colleagues are really waiting for in terms of their expecting us to come up with our proposals. This is very different country by country and also the some of the chains react in a normal way. So the French trade is reacting fiercely against any proposal. And in other countries, there is a bit more understanding that we need to move. So also there, it's very, very local. And I think it's very much -- it's much too early to take any conclusion there, other than that in Russia, at least, we landed the price increase.
The next question comes from the line of Soren Samsoe from SEB.
I have 2 questions. First of all, regarding if you take the guidance now versus what it was in the beginning of the year, a decent increase. This increase, would you say this is more due to higher top line growth than you expected back then? Or is it more due to higher efficiencies and better execution on cost or is it something completely different. Then the other question is just regarding the tax rate, the 24% level. Is that a sustainable level going forward? Or are there any extraordinaries in there that we should count on?
Thanks, Soren. And we seem to be 2 questions for Heine. Heine, over to you.
So the guidance sort of improvement in the 10% to 12% versus where we started in the beginning of the year really comes from both top line but also further efficiencies. So it is, in particular, of course, the top line that it is difficult to predict in the beginning of the year. But as we also said, we knew this was going to be a difficult year. So also on the cost side, we initiated sort of further scrutiny and further attention already from the beginning of the year. And we were right in saying that the start of the year and the recovery in particular, in Q2 in Western Europe came a bit later than we expected. And that's the reason why we initiated these different cost initiatives in the beginning of the year. So it really comes from both top line coming in better, and that comes in better across many of our markets. And then it comes from further focus and further attention to some of our structural costs. As you know, the one cost area that we are not sort of scrutinizing with a target of reducing our cost. That is indeed investments into marketing and investments into product and to innovation, but structural costs. have been sort of at a further review also from the beginning of the year. So it's both top and efficiencies when it comes to tax. Then as we have discussed before, tax is a priority for us in Carlsberg, both in terms of continuing to strengthen the tax compliance, but also in terms of optimizing the effective tax rate. The results or the reason why we are able to improve our outlook from around 25% to around 24% has to do with a lot of different sort of tax initiatives that we have launched over the last 5 years. And that is really the reason why we are able to sort of reduce our full year outlook. And our outlook then for the coming years remains at approximately the same levels around 24%.
The next question comes from the line of Olivier Nicolai from Goldman Sachs.
Just 2 questions, please. First on Western Europe. Could you give us an update on your on-trade performance during Q3? And how does the entree channel today at the end of Q3 compared to 2019? Are you back to 80% of it, 90% of it, but it would be great to have a bit of an idea there to see how much upside is for next year. And then just on the U.K., could you perhaps give us a bit of an update on the progress you've made on the milestone integration in terms of cost savings, if you believe is both come, but also what's your plan when it comes to unlocking revenue synergies?
Thank you, Oliver. With regards to the on-trade, where we were in Q3 2021 versus 2020, it's 8% up in the on-trade and minus 2% in the off-trade and the index over 2019 for the on-trade is 90 -- index 90. So basically, we're still below 2019. What we see is the further developing of the on-trade during -- also indeed during Q3. Switzerland and France, for example, were a bit later in the game of reopening, and there were more restrictions there than in some other countries. And we see the consequences of that back in our volume, but also, of course, in our margins because as you know, traditionally, on-trade has better margins. With regards to the U.K., there's positive news in my view. First of all, we see an organization post COVID in the U.K. I know there are some new maybe some clouds there with regards to COVID, but Q3 was very good. We had a 4% volume increase and even 11% net revenue improvement, so good mix. And it was a strong September due to the weather. And what we see there, to your earlier question about on-trade, the on-trade in the U.K. in September was only between record, 2% below the development in September 2019 in the on trade. So that's good. Our joint venture grew by 8% in September versus 2019 September. So that also shows that we are on the right track. In general, year-to-date, the share is stable. And with regards to the integration to your point that goes well, we get the synergies through. We as now also margins is reopening. We start to see some revenue synergies. That, of course, need to be driven further at the moment that the total market has been reopened. So we are positive about our development in the U.K.
And the next question comes from the line of Andre Thormann from Danske Bank.
I just have one question, and that's just in terms of the guidance for 2021. Can you please elaborate on the assumptions for both the top end and the bottom end of your current updated financial guidance?
Thanks, Andre. Heine, would you?
Well, the outlook for the remainder of the year is best -- is sort of best guess at this point in time. That includes a lot of risks and a lot of opportunities that make both positive and negatives materialize in the remainder of the year. At this point in time, we will not comment sort of in further details on all the different moving parts, all the different positives and negative. But the outlook is, as I said, we tend to focus on our assumption in terms of the COVID outlook is that it continues at approximately the same level as it does today.
Thank you, Andre. And could we have the last question, please.
And the last question today is from the line of Fintan Ryan from JPMorgan.
Two for me, please. Firstly, I appreciate you say that the on trades that opening within France has been a bit slower than other countries, but those are set of promotional intensity seems to be getting worse. Just trying to get a sense of like how do you see the French market evolving for you over the next few years? Like are you intending to increase your level of promotional investments next year or are you just purely focused on the profit and serve value within that market rather than sort of absolute volume share? And secondly, I noticed in the presentation, you made a number of references to your energy drinks portfolio in both Asia and Central Eastern Europe. With the upcoming strategic update in early next year, should we anticipate that energy drinks become another one of your strategic pillars along with alcohol free and craft & specialty?
Thanks, Fintan. Thanks for your questions. Well, with regard to France, it is a -- we had in Q3 a double-digit decline in a declining market. the market was heavily impacted by bad weather. The market share loss we had was, to your point, due to less promotions versus competitors that resulted for us in good price/mix, and we also got a good premium development. The Kronenbourg brand is a high-volume brand, as you know. And at the moment, we start to promote it a bit less. We immediately see that back in our market share. So we need to get a better balance, if you like, between volume and mix and the total, if you like, our famous Golden Triangle needs to be rebalanced in France. So it's one of our countries under scrutiny as we speak to see what kind of mix we need to go further. In terms of the weapons we have in that market with is Grimbergen and 1664 Blanc and some other brands, we really feel we have enough ammunition, but again, we need to get the balance a bit better. Then talking about energy drinks, yes, we are excited by the development in -- well, we were talking earlier in the call about Cambodia also about the impact of energy drinks in our portfolio in Russia. And you will not be surprised that it will be one of the work streams that we have with regards to our SAIL'27 program. It's far too early to say whether we are going to put, let's say, more focus on that. And we will come back to you at mid next year with regards to SAIL'27 and then we will talk about the priorities in our portfolio in terms of geographies and in terms of subcategories going forward towards 2027. So that is basically news to come. Thank you and thanks for the questions, Fintan. This 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 for now.