Brewers get ready for launch of AEC

Corporate May 28, 2012 00:00

By KWANCHAI RUNGFAPAISARN
THE NA

9,072 Viewed

Two local beer giants are spreading their wings to cash in on the Asean Economic Community, but some concerns have been raised, as Thailand will lose competitive advantage to other Asean members when the AEC is fully effected in 2015.



Thai Beverage expects its exports to surge from Bt6 billion last year to more than Bt15 billion by 2015 as it accelerates its shipments of both alcoholic and non-alcoholic products, extends its portfolio to more premium goods and expands its manufacturing for both types of beverages to Vietnam and Myanmar.

Myanmar is a newly opened market with strong potential for growth. Beer consumption there is 200 million-300 million litres per year, far behind Thailand’s 2 billion litres per year.

Charoen Sirivadhanabhakdi, chairman of TCC Holding, which is in many diversified businesses, is looking at setting up plants in Vietnam for its major beverages, notably beer and non-alcoholic drinks.

Among TCC’s major units are ThaiBev, the brewer of Chang beer, Oishi Group, the leading producer of ready-to-drink green tea, and Berli Jucker (BJC), which already has extensive business interests in Vietnam.

Charoen said last week that investment in beverage facilities in Vietnam would, however, not occur before 2015, when the AEC is fully implemented and the company has established a firm distribution network and support facilities, such as plants for glass bottles and aluminium cans, in the country.

“We need to develop strong business fundamentals in Vietnam in the areas of human resources, logistics and distribution, and support facilities such as product containers and packaging, before setting up our beverage plants there,” he said.

MALAYSIA, VN PLANTS

BJC already operates glass-container plants in Malaysia and Vietnam in partnership with Owens-Illinois, the world’s leading producer of such products. BJC has also acquired a 75-per-cent stake in Thai Corp International, a Thai-owned trading and distribution business in Vietnam.

Thai Beverage Can, a subsidiary of BJC, has formed a joint venture with US-based Ball Corp, the world’s largest producer of aluminium cans, to build a can factory in Vietnam for US$60 million (Bt1.85 billion).

BJC is also looking for investment possibilities in other promising markets, including Myanmar and Indonesia.

Charoen said he is confident in the country’s ability to adjust to the coming AEC. The country, however, should rely on its strengths in agriculture as it moves forward and become even more competitive beyond border trade.

To cash in on the AEC, Thai companies have to branch out in the region, as there will no longer be any boundaries for trade and business, he added.

Piti Bhirombhakdi, regional marketing director for Singha Corp, said the company needed to study many factors in expanding its beer business abroad, including branding. It has to consider whether it is ready to expand at the regional and global level and whether its current manufacturing capacity can supply export markets effectively. The company also needs to study details and regulations regarding the market situation and investment regulations of those countries it is interested in.

“To expand our investment abroad, we will look for local entrepreneurs with business skills and potential in the business for a win-win partnership. Takeovers, however, are not our strategy,” he said.

The AEC would not come out easily, while Thailand will benefit less from the AEC than other |Asean members, he said.

“Looking at the country’s capability and its potential to meet any investor’s requirement, Thailand can stand alone without the need to join with other countries. Thailand has been opened enough to allow foreigners to take benefit from the country,” he said.

Singha Corp is looking for joint venture possibilities with local investors in Myanmar and Vietnam. The company expects the contribution from the international market to double from 10 per cent currently by 2015.