High household debt takes the fizz out of Thai beer market

[webfact]

High household debt takes the fizz out of beer market
KWANCHAI RUNGFAPAISARN
THE NATION


Bhurit Bhirombhakdi, director of Singha Corp.

BANGKOK: -- THE BEER market is projected to surge by only 3-4 per cent to about Bt180 billion this year.

The high household debt has hurt the sales of non-essential items, particularly beer, as consumers suffer a loss of purchasing power.

Chutchai Wiratyosin, marketing director of Singha Corp, the brewer of Singha and Leo beers, said last week that the beer market was flat in the last two quarters, but the company's sales grew 3 per cent last quarter.

Singha Corp is still the market leader with a 72-per-cent share, followed by Thai Beverage with 24 per cent and Heineken with 4 per cent.

Singha Corp targets Bt200 billion in sales this year, up from Bt120 billion last year, but beer will sink significantly to about 60 per cent of its sales from 80 per cent.

Bhurit Bhirombhakdi, a director of Singha Corp, said the group has spent about Bt5 billion on expanding its beer and bottled water plant in Nakhon Pathom's Bang Len district to serve the company's more proactive penetration into the CLMV (Cambodia, Laos, Myanmar and Vietnam) and other markets of the Asean Economic Community.

When the project is completed this year, beer capacity will zoom up by 50 per cent.

The company is preparing to install PET blowing machines at nine bottled water plants around the country. It will also build a central warehouse in Bangbuathong with a huge investment budget.

"The move will help the company reduce transportation costs and increase manufacturing efficiency," he said.

Vichate Tantiwanich, senior vice president for corporate affairs at Thai Beverage Plc (ThaiBev), the brewer of Chang beer, said food is one of the good indicators for the purchasing power of people.

ThaiBev posted an increase of about 10 per cent year on year in first-quarter sales, which showed that the company has been receiving a better response from consumers after building up its beverage portfolio with new brands such as Jub Jai herbal tea and 100 Plus carbonated isotonic sports drink for general consumers.

"We have seen a good increase in the sales of spirits and beers. For our beer products in particular, we have seen a significant increase in their profitability over the past four to five years," he said.

"For our non-alcoholic beverages, we have yet to witness any profit as they're in the 'market penetration' period. We also have seen a small profit in our food business," he said.

Based on the company's sales, people are enjoying greater purchasing power.

"If the government's economic-stimulus packages are successful and can put money into the hands of individual consumers, we believe that our sales will get better this year," he said.

The company's share in the Asean beverage market is about 10 per cent. Based on its vision to boost exports to 50 per cent of sales by 2020, the company plans to accelerate its export activities, starting with Asean. It has already streamed into many neighbouring markets, including Malaysia, Singapore, Myanmar and Vietnam.

It is quite difficult to anticipate the economic impact from the slowdown of the global economy, particularly to Europe, he said.

Many products and services in Asia, such as foods, beverages, apparel and even accommodations, are much cheaper than in Europe.

"As purchasing power has been dropping in Europe, consumers have turned to buying products from Asia.

"So, I cannot guess right now if purchasing power will shift to Asia or slow down. However, I don't believe that purchasing power in Thailand and the rest of Asia will absolutely disappear.

"The implementation of the Asean Economic Community will help integrating purchasing power from one member country to another," he added.

Source: http://www.nationmultimedia.com/business/High-household-debt-takes-the-fizz-out-of-beer-mar-30260826.html


-- The Nation 2015-05-25

[colinneil]

We have no household debt, maybe beer market not doing so good because i do not drink anymore.

[craigt3365]

The beer market here isn't great due to regulations. It would be wonderful to have micro brews like most other countries have. Or at least cheaper beer!

[kalbo123]

Was in the Netherlands last week, also a country with high "fun" taxes, still the price of a case of beer, 24 bottles is 10 Euro, about 360 Baht, so 15 Baht per bottle.

Could it be that the price of Thai (lower quality) beer is a bit to high?

[JOC]

A national emergency!!

Household dept has got so bad, that the the citizens can't afford to increase their beer consumption!!

If Art 44 was ever needed, it is now.........................

[farmerjo]

60 baht for a big leo in my village now.But most of the locals drink lowcal whiskey anyway.

[LuckyLew]

I do not drink and I do not care if Singha goes bankrupt

Seen their silly beer beer patios take over too many festivals with their load music playing and massive empty beer gardens

Wish them nothing but slow sales

But 72% market share ,,, not much competition

[RichardinHuaHin]

As for Singha they should look at their pricing. They eliminated the Large bottle and now only have the small size and medium size bottle. At the same time of eliminating the large bottle they raised the price of the medium bottle more than the large one. More like greed.

[shirtless]

Beer is now to expensive seems like the big players have the whole market i hope they wake up soon as the beer here is crap and overpriced.

[Guest]

This article is absurd and is a meaninglss piece of business trend / economic "word salad." Complete rubbish.

if the author wants to get his :thank you money" getting his rich friends in the newspaper .. please just stick to pictures of them at 5 Star hotel openings etc.

[konying]

The beer market here isn't great due to regulations. It would be wonderful to have micro brews like most other countries have. Or at least cheaper beer!

Archa only 27 baht

[JOC]

I do not drink and I do not care if Singha goes bankrupt

Seen their silly beer beer patios take over too many festivals with their load music playing and massive empty beer gardens

Wish them nothing but slow sales

But 72% market share ,,, not much competition

The 72 % number is picked from the air......................

Chang Beer, which started production in March 1995 at their brewery in Bang Ban district ofAyutthaya Province, is the top-selling brand in Thailand. It managed to win 60% of market share in Thailand after a hard market fight with the previously leading brand, Singha. In 2006, the company's beer market share was 49%, according to research company Canadean.

[AlQaholic]

The beer market here isn't great due to regulations. It would be wonderful to have micro brews like most other countries have. Or at least cheaper beer!

There are a number of microbreweries in Pattaya, I went into one of those once, beer tasted like shit!

[jlwilliamsjr18]

A couple years back, lived in Myanmar. My question is why is Thai beer cheaper there, than in Thailand? Oh, one more...thought Junta-Daddy was cracking down on monopolies.

[JOC]

Beer is now to expensive seems like the big players have the whole market i hope they wake up soon as the beer here is crap and overpriced.

The good news!!

It is not compulsory to buy it.....................

[bim]

"Surge by only"? Who writes this. Hardly a surge. It looks as though the outrage brigade with there emotive language exsist in Thailand like they do in the West. Poor journalism.

Edited May 25, 2015 by bim

[TheAppletons]

I do not drink and I do not care if Singha goes bankrupt

Seen their silly beer beer patios take over too many festivals with their load music playing and massive empty beer gardens

Wish them nothing but slow sales

But 72% market share ,,, not much competition

The 72 % number is picked from the air......................

Chang Beer, which started production in March 1995 at their brewery in Bang Ban district ofAyutthaya Province, is the top-selling brand in Thailand. It managed to win 60% of market share in Thailand after a hard market fight with the previously leading brand, Singha. In 2006, the company's beer market share was 49%, according to research company Canadean.

Bangkok Post, in an article dated 21 May 2015, also says Singha Corp - a division of Boon Rawd brewery - has 72% market share. (Can't post link here re: forum rules.) Considering Boon Rawd has both Leo and Singha, I'm thinking that may just be close to the truth.

[AlQaholic]

I wonder what kind of preservatives they put in Thai beer? because it seems the beer can be kept forever in 36+ degrees Celsius temperatures?

[trogers]

Beer is now to expensive seems like the big players have the whole market i hope they wake up soon as the beer here is crap and overpriced.

The good news!!

It is not compulsory to buy it.....................

The alcoholic can go for soda and Lao Khao...

The soda for the fizz...

Edited May 25, 2015 by trogers

[Lupatria]

Another example of failed protectionism. Go ahead Thailand...

[recycler]

It's not just debt, the price of beer went up like crazy!

At the small shop around the corner a big bottle of Chang was 40 Baht a bit over a year ago, now it's 52, 30% increase in a bit over a year makes a lot of people less thirsty certainly if you would be making 300 Baht a day.

[madmitch]

The three corporations mentioned have 100% of the Thai beer market, according to the statistics. Effectively this means that imported beer and the rare Thai microbrews account for under 1% of beer sales in this country. Sad, but unlike the craft beer boom in many countries, I just can't see anything changing in a country where the biggest players have so much political influence.

[kkup]

They are probably going for the cheaper option with more kick - lao khao

[metisdead]

Off topic deflection posts and replies have been removed, we're talking about the beer market in Thailand, not about problems in Russia.

A post commenting on moderation has been removed. It would be a good idea to quit making off topic deflection comments in the comments that are not relevant to the situation in Thailand.

Edited May 25, 2015 by metisdead

[steelepulse]

Nice how the excise tax was raised for foreign booze when asean free trade agreement kicked in. Nice protectionism .

[KuhnPaen]

What's a pet blowing machine? Prob not what I'm thinking

[FloridaExport]

The beer market here isn't great due to regulations. It would be wonderful to have micro brews like most other countries have. Or at least cheaper beer!

There are a number of microbreweries in Pattaya, I went into one of those once, beer tasted like shit!

Those micro breweries are 100% illegal due to Thai law. Much like other illegal activities, they are somehow missed by the authorities. Unlike other illegal activities, the people that want it to be illegal (Chang and Singha) have the money to make sure the authorities will act if the micro breweries start stealing any significant market share.

[quandow]

"BANGKOK: -- THE BEER market is projected to surge by only 3-4 per cent "

surge

sərj/

noun

noun: surge; plural noun: surges

1.

a sudden powerful forward or upward movement, especially by a crowd or by a natural force such as the waves or tide.

"flooding caused by tidal surges"

synonyms: gush, rush, outpouring, stream, flow More

Don't they mean dribble?

[NeverSure]

Edited May 25, 2015 by NeverSure

[Davyro]

Simple case of a monopolized market. Products expensive and its poor quality. The only thing that will make them improve the product and price is competition from others. Will it be allowed to happen??