Beer Industry

Strategic Management
Agenda
Economic Overview
Consumer behavior
Competitive Analysis
Law and Regulation
 Economic Overview

10.0 9.3 Inflation

Thailand GDP
8.0
6.0 5.1 5.0
4.6
4.0
2.5
2.0
0.0
2005 2006 2007 2008 2009 2010(EST)
-2.0
-2.3
-4.0
Introduction of beer market in Thailand
Beer is one of the world's oldest prepared beverages
9500 BC Ancient Egypt, Mesopotamia
 It is the third most popular drink overall, after water
and tea
Alcohol volume around 4-6%
How this industry operate their
Brewing business?
Briefly information of Thai beer
market
In past few years average production volume of beer is
2,000 Million liters
Reflect 70% overall plant capacity in 2010
Oligopoly market structure
Tax and Government policy create big impact on
industry
FTA with ASEAN in 2010 about Beer category
Q1. Beer Production and consumption
Production and Consumption of Beer in Thailand
Millions of
Liters
2,500
2,1612,128 2,160
2,209
1,984
2,011
2,000
1,6951,709
1,604
1,602 1,6321,604

1,500
1,2381,213 1,2751,284
1,1651,165

1,000

500

0
2000 2001 2002 2003 2004 2005 2006 2007 2008
Production of Beer Beer Consumption
Source: Bank of Thailand
Q1. Beer Market Value
THB 106,000
THB 104,384
THB 104,000
THB 102,364 THB 102,188
THB 102,000

THB 100,000
THB 98,928

THB 98,000
THB 96,970

THB 96,000

THB 94,000

THB 92,000
Q1. Market share by segment Y2010
Total Market Value is 96,970 Million THB
• Premium value is 6,930 Million THB
• Standard value is 7,895 Million THB
• Economy value is 82,145 Million THB
Premium Standard Economy
Q2. Key players in Beer Industry
Singha Corporation Co., Ltd.

Premium Standard Economy

Q2. Key players in Beer Industry
Thai Beverage Public Company Limited
Premium Standard Economy
Q2. Key players in Beer Industry
Thai Asia Pacific Brewery

Premium Standard Economy

Q2. Price Comparison
Brand

Segment
Premium
38 35 40
Baht Baht Baht
Standard
35 25 35
Baht Baht Baht
Economy
30 24 25
Baht Baht Baht
Q3. Law and Regulation
3 key factors which effect the industry’s growth

1) Tax
2) Advertisement and Selling
3) AFTA
Q3. Law and Regulation
Type of Tax Tax’s Rate
Excise Department and Custom Department

 Produce and sell in Thailand 60% of product price or 100 Baht per liter of
pure Alcohol

 Import Product
 C.I.F. Price Cost of product + Insurance + Freight

 Stamp Tax 2-8 Baht per piece depend on product’ size

 Import Tax 60% of (C.I.F. price + Stamp Tax+ other fees)

 Others taxes
 License fee 10,000 per year

 Additional Tax for Ministry of Interior 10% of alcohol tax

 Additional Tax for Thai Health 2% of alcohol tax

Promotion Foundation
Q3. Law and Regulation
2) Advertisement and Selling
Advertisement Rules
Limited Broadcasting time 10 PM to 5 AM
Limited Detail of Advertisement Font, Size
Warning massages Be required

Selling Rules
Limited Selling time 11 AM. to 2 PM and 5 PM. to 12
AM.
Limited Selling place e.g. University, Religion place, etc.
Q3. Law and Regulation
3) AFTA
 The agreement between the Asian countries;
Thailand, Malaysia, Indonesia, Philippine,
Singapore and Brunei
 1 January 2010
 0% tariff of products
Q3. Government Campaign
Buying for gift (%)
35

30
30.2
25

20 21.1 20.5 Buying for gift (%)

Comic book
15
Brochure
Advertisement
10
Source: ABAC
Polls
5

0
2008 2009 2010

banner Post Cards

Q3. Societal Attitude + Lifestyle
Societal Attitude Lifestyle
Thai Healthiness
• Government Campaign Attractive • More Health concern
100
 71.6% say “Should not buy Alcohol  3.4% Illness decrease 2005-2006
for gifts” (2010
90 ABAC polls) (Thai Health Promotion Foundation)
80
• Law and Regulation • More Saving Concern
 Reducing Accident
70 from drinking In Quarter 2, 2009; 85% trying
Percentage (%)

Alcohol 60 spend less, 54% for outside

50 entertainment (Nielson Company,
BangkokBiznews.com)
40

30
•Pricing Concern
 look on price which suitable with
20
quality
10

0
2001 2002 2003 2004 2005 2006
 Q4. Competitor Positioning Map
Company Market Distribution Operation Marketing Expertise in Reasons
Share channels Excellence campaigns launching new
products
Thai Beverage • Powerful distribution
channels
• Penetrate the right
target groups

Singha • One of the most

Corporation admired brand in Thailand
• Global brand image

Thai Asia • Highest market share in

Pacific premium segment
Brewery • Heineken is well-known
internationally

San Miguel • Awkwardly in positioning

and marketing the
products.
Q5. Strategic Move
Marketing strategy
Chang Music Marketing

Singha Sport Marketing

Heineken Events, Beer Garden

San Miguel Nothing

 Strategic Move
Thai Beverage Public Company Limited

Music Marketing
• 200 Million Baht for GMM Grammy
• Create negotiation power with outlets
and transform them to exclusive partners
 Strategic Move
Singha Corporation Co., Ltd.

Sport Marketing
• Prefer 20 million spectators from
supporting Manchester United and
Chelsea rather than 40,000-50,000
audience in each concert

Beer Garden
• Imitate “Oktober Fest” in Germany
 Strategic Move
Thai Asia Pacific Brewery

• Suffer from government

restriction of advertising
• Creative commercial from
Heineken cannot on air
Lessen scale of events to 7
commercial areas such as Arena
10, K-Village, United Center
Building
Return to focus on Premium
Brand Portfolio
Q6. Key Success Factor
Key Success Factor Description
Brewing Capacity • To make low cost of productivity
• Economy of scale
Strong distribution •To occupy the intensive point of sales
• Limited competitor channel
Power of Brand • To make brand become part of lifestyle
• To brand engagement for repeated purchase
Marketing Campaign • To penetrate the right segment with the right strategic
Pricing • Suitable for each segmentation
Q7. Attractive or not?
NO… because
 Beer consumption is decreasing
 Law and regulation is more strict
 Tax rate is increasing
 High awareness of health concern