Carlsberg ‘could Find It Hard To Get Re-establishe

[george]

Carlsberg ‘could find it hard to get re-established’

BANGKOK: -- Despite the settlement late last month of a bitter dispute between former joint-venture partners Chang Beverages Co and Denmark’s Carlsberg Co, the Danish beer will find it difficult to resurrect itself in the Thai market, given the large number of players in all price segments and its dented image among Thai drinkers, market observers said in interviews last week.

The Bt80-billion local beer industry is dominated by two major players.

Thai Beverage Co, the maker of Chang Beer and the newer Archa Beer, has a combined market share of 50 per cent. Boonrawd Brewery Co, owner of Singha and Leo beers, controls about 40 per cent.

For many decades, Singha had a market share of over 80 per cent, until the introduction in 1994 of the lower-priced Chang, or Elephant, brand.

The conflict between Chang Beverages, a subsidiary of whisky tycoon Charoen Siriwadhanabhakdi’s Thai Beverage, and Carlsberg Breweries started when Carlsberg dropped Chang representatives from its Asian joint venture Carlsberg Asia Pte based in Singapore in June 2003.

Carlsberg said the venture - a Thai sales and distribution company - had not “developed according to expectations”, with the activities that Chang was supposed to contribute being “smaller and different businesses” than originally assumed.

In February 2004, Carlsberg Brewery (Thailand), a joint venture between Carlsberg and Charoen, halted local production and sales of its beer because of the dispute with the parent company in Denmark.

After the disappearance of Carlsberg from the Thai market for nearly two years, Carlsberg and Chang last month announced in Copenhagen that they had agreed on an “amicable” settlement of the matters in dispute between them.

In the August 31 settlement, Carlsberg agreed to pay Chang Beverages US$120 million (Bt4.9 billion) in return for full ownership of the Singapore-based Brewery Invest Co, the Hong Kong company Carlsberg Brewery and minority stakes in breweries in South Korea and Laos. The settlement ended legal proceedings in London and Bangkok.

In a press release, Carlsberg announced that it had also been agreed that the parties would explore the possibility of working together in the markets of Thailand and Malaysia. Nils Smedegaard Andersen, Carlsberg chief executive, told the Financial Times in London that the settlement was a good step in Carlsberg’s expansion programme for Asia.

Running a successful beer business in Thailand requires many crucial factors, among them an in-depth understanding of Thai consumers and their drinking habits, a strong dealer network and deep connections with opinion leaders, particularly in upcountry communities.

“It will be tough for Carlsberg to find a knowledgeable, experienced partner in the Thai beer market,” the source said. He said that it was impossible for Carlsberg to join with Thai Asia Pacific Brewery, which makes and distributes Heineken beer in Thailand, as both compete in all international markets.

It would also be difficult for Carlsberg to join with Boonrawd Brewery as Boonrawd has a strong business relationship with Asahi beer of Japan.

“Carlsberg itself did not withdraw from the Thai market as the winner, but the loser. The brand has been damaged in the consumer’s eyes,” said the source.

He said that existing players would think very carefully about whether a partnership with Carlsberg would be worth it.

“For myself, it would be quite difficult to try to make Carlsberg Beer return successfully in Thailand,” said the source.

Thanit Thammasukkati, a former adviser to Thai Beverage, said the settlement would not effect Chang Beer.

“Our Chang factory is now running to fill a shortage of domestic supply. We right now have no plans to produce for somebody else,” said Thanit.

Somchai Suthikulpanich, managing director of Chang International Co Ltd, said the settlement was a good ending between the two parties. He added that if Carlsberg and Chang ever re-established a partnership, they would have to “start from zero”.

--The Nation 2005-09-13

[carlthailand]

Arh. 2 of my favourite drops. Green and elephant.

Looks like it won't be reappearing in any great hurry.

Carl

[terdsak_12]

They can certainly count on my support.

[Tufty]

They can certainly count on my support.

<{POST_SNAPBACK}>

Mine too

I would drink Archa but it's difficult to get at the beer bars

[sonthaya]

Even Chang is difficult to find in Beer Bars