Drinks maker to side-step cola war with huge expansion
Myanmar's leading beverage manufacturer, Loi Hein Group, is planning a huge expansion into banking, insurance and property development.
Sai Sam Htun, chairman of Loi Hein, revealed the plan during an exclusive interview at the ASEAN Business Forum 2013.
The expansion is expected to happen within the next two months and is aimed at catapulting the company from a hundred-million-US-dollar to a billion-dollar concern in the next 10 years.
"We are planning to register on the Myanmar Stock Exchange in 2015, either publicly or as an IPO [initial public offering]. But before that, our company intends to move to Singapore and register itself there in order to gather more funds," said Sai Sam Htun.
Currently, Loi Hein produces Alpine bottled water, soft-drink brands Blue Mountain, Green Spot, Fantasy and Lemon Sparkling, as well as being a distributor for an energy drink and wine brands.
With Coca-Cola and Pepsi having returned to Myanmar, Loi Hein is preparing for fierce competition by partnering with multinational firms from Europe, Japan and Thailand to manufacture and distribute bottled water, carbonated soft drinks and energy drinks.
"We have invited one big company - not a player in the carbonated soft drinks market - to partner and back us up financially," Sai Sam Htun explained.
He said his company had no intention of competing with Coca-Cola and Pepsi, but as a local company, he described its position as "secure" amid the renewed competition in Myanmar's soft-drinks market.
"The beverage market will grow in the future as the income of its 60 million people rises and they consume more beverage," Sai Sam Htun said.
As a newly opened market, Myanmar is in transition, with international investors keen to exploit this "last frontier" for its rich natural resources and strategic location between China and India.
Sai Sam Htun reassured delegates at the forum that the reforms under way in Myanmar were irreversible.
Japanese and South Korean investors are making aggressive moves into Myanmar, while in contrast there has much less business activity from ASEAN countries.
Sai Sam Htun urged neighbouring Thailand to take the lead and be more active in doing business with Myanmar.
"This is a huge opportunity, especially for Thailand. Thailand should be both a competitor and a partner to Myanmar," he said.
However, Sai Sam Htun sees no advantage for his company from the coming ASEAN Economic Community (AEC), due for launch in 2015. He said other ASEAN countries, such as Thailand, Malaysia and Vietnam, would stand to benefit more, as their soft-drink markets were already over-capacity.
"I don't think it will be beneficial for us. I think it will be difficult, because we will have to compete with neighbouring countries in the beverage business," he said.
Yet with its fast development, he believes that Myanmar can be a pillar for the region's economic growth. But first it must solve the problem of opening up its market to overseas investors while at the same time protecting its national interest.
"I think Myanmar can grow very fast. It can be a central pillar for regional growth and - if we connect to China and India - growth of the next superpower. America is also entering the game. We are the centre of attention. We will be the pillar of the AEC," he said.
Follow the strategies of this beverage company in competing with multinational brands, as well as the opportunities for Thai small and medium-sized enterprises in this new soft-drinks market, in the next Myanmar Series article.