116770 Project Obelix Pt1.qxp - Carlsberg Group

which they are sold, resulting in changes in demand for its products. Increases in the levels of excise and othertax (either on an absolute basis or relative to the levels applicable to other alcoholic beverages) could have asignificant adverse impact on sales volumes. In addition, there can be no assurance that the operations of theGroup’s breweries and other facilities will not become subject to increased excise duties and taxation by local,national or foreign authorities. Changes in corporate income tax rates or regulations on repatriation ofdividends and capital could have a material adverse effect on the Group’s business, results of operations, cashflows or financial condition.Seasonal consumption cycles and adverse weather conditions may result in fluctuations in demand for the Group’sproducts, adversely affecting the Group’s business, results of operations, cash flows and financial conditionSeasonal consumption cycles and adverse weather conditions in the markets in which the Group operates mayresult in fluctuations in demand for the Group’s products. Accordingly, demand for beer is normally moredepressed in the Group’s major markets during the first three months of each year. As a result, the Group’sconsolidated net revenue is normally lower during these months. Moreover, exceptionally cold summertemperatures or hot summer temperatures in certain key markets of the Group, particularly in Western andEastern Europe, may have a temporary negative impact on the demand for the Group’s products as consumerssubstitute beer with alternative beverages, contributing to lower sales of beer and, therefore, could have amaterial adverse effect on the Group’s business, results of operations, cash flows and financial condition.The Group is exposed to the risk of litigationCompanies in the beverage industry are, from time to time, exposed to class action or other litigation relatingto alcohol advertising, alcohol abuse programs or health consequences from the excessive consumption ofalcohol or soft drinks. Increasing legislation increases the risk of non-compliance while more regulatorysupervision and the growing claim culture potentially increase the impact of any non-compliance. If any ofthese types of litigation result in fines, damages or reputational damage, it could have a material adverse effecton the Group’s business, results of operations, cash flows or financial condition.Negative publicity may adversely affect companies in the beverage industryNegative publicity regarding alcohol or soft drink consumption, publication of studies that indicate asignificant health risk from consumption of alcohol or soft drinks, or changes in consumer perceptions inrelation to beer or soft drinks generally could adversely affect the sale and consumption of the Group’s productsand could harm the Group’s business, results of operations, cash flows or financial condition as consumers andcustomers change their purchasing patterns.Competition in the beverage industry may lead to a reduction in margins and may affect the Group’s profitabilityAlthough the Group has a leading position in the beer market in a number of its key markets, the Group issubject to competition from existing competitors and new entrants, as well as from substitute beverages, andmay be affected by further consolidation in the sector. There can be no assurance that significant increases inadvertising and promotion costs, loss of sales volume, price discounting or a combination of these and otherfactors that may occur as a result of increased competition would not have a material adverse effect on theGroup’s business, results of operations, cash flows or financial condition.The Group’s ability to borrow from banks or in the capital markets may be materially adversely affected by afinancial crisis in a particular geographic region, industry or economic sectorThe Group’s ability to borrow from banks or in the capital markets to meet its financial requirements isdependent on normal market conditions. Financial crises in particular geographic regions, industries oreconomic sectors have, in the recent past, led and could in the future lead to sharp declines in the currencies,3