THAI BEVERAGE (ThaiBev) has earmarked Bt4 billion for investment to improve existing facilities and expand its distribution-centre network during the company’s current fiscal year, in order to maintain business momentum at an annual growth rate of 14.8 per cent until 2020.
The beverage giant announced revenue of Bt139.15 billion for the first nine months, some 14.8 per cent higher than in the same period last year.
The revenue figure has been posted as fiscal year 2016 income, as the company decided to change to a new fiscal-year period, starting from October.
“Embarking on our ‘Vision 2020’, we are now on track both in the top line [sales revenue] and bottom line [profits],” group chief executive officer Thapana Sirivadhanaphakdi said yesterday.
In line with Thai economic growth, Thapana said he currently had an optimistic domestic outlook and also saw more room to grow, particularly in Cambodia, Laos, Myanmar and Vietnam (CLMV), as Thailand had become highly involved with these neighbouring countries.
Moreover, the CLMV countries have experienced by far the highest growth rates among new emerging markets, he added.
To capitalise on this trend, the company has to maintain its production capacity and improve its factories and facilities in order to enhance the efficiency of business operations, he stressed.
“The investment for this current financial year is slightly bigger than what we used in the same period last year, which was Bt3.8 billion,” the CEO said.
Besides improving production efficiency, the company is revamping its logistics strategy through the expansion of its distribution-centre network in the Kingdom with a view to reducing the transportation burden and costs.
Within the next three years, ThaiBev wants to have a total of 19 distribution centres, from just two at present, with the cost of setting up each centre ranging from Bt250 million to Bt400 million.
After its “Vision 2020” was announced late last year, followed by major restructuring, the company shifted its focus more onto three key areas – spirits, beers and non-alcohol beverages – as core platforms for growth, Thapana said.
With its strategic location, Thailand will remain the major operational hub for ThaiBev.
In Myanmar, meanwhile, the company has started selling Scotch whisky brands such as Hankey Bannister and Meridien, in addition to the existing Crown 99 and Blend Signature.
In Malaysia, Mekong-brand Thai whisky has just been introduced, and will be sold alongside the company’s premium portfolio of Scotch whiskies, while in the Philippines the company has made the sale of premium products the first priority, he explained.
The group CEO acknowledged that Vietnam, with its 90 million-strong population, was now the top-priority foreign market for the beverage empire, followed by Myanmar and the Philippines.
The company plans to construct packing factories in these three countries in the near future to support future growth.
“Currently, the Vietnamese government is keen on the privatisation of state-owned enterprises. We are studying a business possibility in regard to the privatisation of Saigon Beer Alcohol Beverage Corp, or Sabaco,” he added.
In September, the Vietnamese government said it wanted to sell its entire 89.59-per-cent stake|in Sabaco for US$1.8 million (Bt63.8 billion).
Under the privatisation plan, Vinamilk is one of the most attractive state-owned corporations as it is one of the biggest dairy firms in the country, he said, adding that ThaiBev is also interested in this business.
However, the bidding for Vinamilk is expected to be undertaken by ThaiBev’s Fraser and Neave unit.
Bigger market share
For the domestic market, ThaiBev aims to increase its market share in all product categories.
Neo Kim Soon Edmond, chief executive officer for the company’s beer-product group, said that by 2020, the aim is for Chang to be No 1 by sales with a market share of 46 per cent.
Chang is currently second with 38 per cent, followed by Singha with 6 per cent and Heineken with 4 per cent.
Leo beer is the market leader, with a share of around 53 per cent.
The company also targets an increase in market share for its healthier products: Crystal drinking water, Oishi green tea and Est carbonated beverages.
Vivek Chhabra, ThaiBev chief executive officer for non-alcohol beverages, Thailand, and president of Sermsuk, said these products were another top priority for the group.
The goal is that their share of the overall market for healthier drinks will increase from 50 per cent presently to 70 per cent within five years.
Prapakorn Thongtheppairot, CEO for the spirit-product group, said his sights had been set on the company’s tapping into the Bt15-billion soda-water market by introducing the Rock Mountain brand.
With its strong distribution network and well-prepared marketing strategy, the new product will help stimulate not only the soda-water market, but also the market for spirits, he explained.
ThaiBev has allocated Bt250 million to build public awareness of the new brand.