Malaysia’s brewery sector delivered a mixed start to 2026, with analysts cautioning that softer consumer sentiment and uncertain tourism trends could weigh on beer demand in the months ahead, according to a sector report by HLIB Research.
The research house said first-quarter earnings from the country’s two major brewers painted contrasting pictures. While Carlsberg Brewery Malaysia Berhad posted resilient performance in its Malaysian operations and achieved 3.3% year-on-year earnings growth, Heineken Malaysia Berhad fell short of expectations on both a yearly and quarterly basis.
HLIB noted that Heineken attributed the weaker performance to a deliberate reduction in sales ex-brewery to align with challenging market conditions. However, analysts said the explanation lacked clarity and contrasted with Carlsberg’s stronger domestic showing.
The market reacted negatively to Heineken’s results, with the brewer’s share price declining 8.5% following the announcement as investors questioned whether the weakness reflected temporary inventory adjustments or broader demand concerns.
HLIB believes the softer performance was likely due to distributors reducing replenishment orders after building inventories in late 2025 ahead of a November excise duty-driven price increase. Heineken had reported exceptionally strong results during that period compared with Carlsberg.
Given Heineken’s sizeable market position, accounting for about 60% of Malaysia’s beer volume, HLIB has lowered its forecast for Malaysia’s 2026 beer industry volume to approximately 1.93 million hectolitres, representing a 0.5% decline from a year earlier and the lowest level since the post-pandemic reopening period in 2022.
Second Quarter Seen as Key Demand Indicator
Analysts expect second-quarter results to provide a clearer indication of underlying demand as the period will be free from distortions associated with Chinese New Year sales.
Market attention will focus on whether consumer spending remains resilient amid geopolitical uncertainties, including the ongoing conflict involving Iran, which could affect tourism arrivals through flight disruptions and weaker travel demand.
HLIB also expects limited benefits from the 2026 FIFA World Cup, noting that match schedules are likely to fall during less favourable viewing hours for Malaysian consumers.
The research house said convincing evidence of volume stabilisation or recovery would be needed before investors reassess the sector more positively.
Singapore Emerges as Potential Growth Driver
Singapore could become an increasingly important contributor to brewers’ growth prospects, albeit through different pathways for each company.
For Carlsberg, the impact is expected to be more immediate as the company expands its brand portfolio to capture additional market share. Recent product introductions include Birrificio Angelo, Garage, Wu Su Red and Chong Qing, broadening exposure across premium, contemporary and Chinese beer segments.
HLIB projects Carlsberg’s total sales volume to increase 0.9% in 2026, supported largely by a projected 2.5% growth in Singapore.
For Heineken, analysts see potentially larger upside from exports to Singapore, although earnings contributions are expected to materialise only from the third quarter onwards.
HLIB estimates that Heineken’s new export arrangement could generate around 300,000 hectolitres of annual supply volume between its Malaysian and Vietnamese operations. If 80% of that volume is allocated to Malaysia, it would represent approximately 240,000 hectolitres, equivalent to about 20% of Heineken Malaysia’s current domestic volume base.
The research house has yet to incorporate the potential upside into its forecasts pending further clarity on volume allocation and export margins, with management guidance expected during a September investor briefing.
Earnings Resilience Supports Positive Outlook
Despite a more muted volume outlook, HLIB maintained its Overweight call on the brewery sector, arguing that current valuations remain attractive following share price weakness triggered by the excise duty hike announced in November 2025.
The sector is currently trading around 1.2 standard deviations below its five-year average valuation.
Analysts highlighted that brewers have historically demonstrated an ability to protect profitability through pricing strategies, product mix optimisation and cost discipline.
In 2025, the sector recorded record earnings despite an 8% decline in sales volume, supported by favourable pricing and operating cost management.
HLIB continues to rate both Heineken Malaysia Berhad and Carlsberg Brewery Malaysia Berhad as Buy, with Heineken remaining its preferred exposure due to the potential earnings upside from its emerging export model.
