While tea shops remain Myanmar’s venue of choice for leisure, international brewers are hoping that the country’s consumers will soon be reaching for beer mugs instead as they expand their Southeast Asian presence.
In early February, Carlsberg announced a joint venture with Myanmar
Golden Star to construct a brewery in Bago: about 80 kilometres (50
miles) outside of Yangon. Carlsberg will be a 51 percent shareholder of
the newly formed Myanmar Carlsberg Co Ltd.
According to Myanmar
Carlsberg chairman U Thant Zin Tun, primary construction, levelling of
the foundation and laying a new road has begun at the site for a 1
million hectrolitre facility. He said full construction will begin
within three months, with a scheduled completion date of June or July
2014.
“We expect that the Myanmar beer market will grow strongly
in coming years as the economy expands,” said Roy Bagattini, head of
Carlsberg Asia.
The planned Myanmar brewery will be Carlsberg’s
ninth in the ASEAN region. The company operates two in Laos, one in
Cambodia, four in Vietnam and one in Malaysia. The existing facilities
have a production capacity of 1.25 billion litres.
The deal ended
a rough year for the world’s fourth largest brewery. On February 18,
the group posted 2012 figures that fell short for industry analysts’
expectations, signalling stalled growth that sent stock prices diving.
Performance
was hampered in Western Europe by an unseasonably cold and damp summer,
along with challenging consumer habits and economic performance, the
company’s financial report said.
In Russia, Carlsberg’s second
largest market where it took full control of leading brewery Baltika in
November 2012, increased government restrictions on where beer can be
bought and advertising limited growth of sales to 2pc in a flat market.
“The
Group delivered a good performance in 2012, despite a challenging
Western European beer market,” said Carslberg’s chief executive officer
Jorgen Buhl Rasmussen.
“In Asia, we continue to deliver
impressive growth and strengthen our market positions,” he said, citing
particularly strong volume growth in ASEAN member-states Cambodia,
Vietnam, Laos and Malaysia.
He added that in 2013, “We will look to capitalise on the attractive growth opportunities available.”
Carlsberg says the average beer consumption per capita in Myanmar is 4
litres, while the average consumption per capita in Southeast Asia is
30 litres. Mr Rasmussen said that he expects growth in Myanmar to be
around 6-7pc over the next few years.
Carlsberg is not the only
beer company eyeing Myanmar. ThaiBev became a new player in the opening
sector following the announcement on February 18 that TCC Assets,
controlled by Thai billionaire Charoen Sirivadhanabhakdi, had bought
over 90pc of Singaporean conglomerate Fraser and Neave (F&N).
Through
the acquisition of F&N, ThaiBev gained a 55pc stake in Myanmar
Brewery, producers of the popular Myanmar Beer and ABC Stout. The other
45pc is owned by Union of Myanmar Economic Holdings Limited (UMEHL), one
of two military economic holding companies still under sanctions by the
United States.
“F&N’s 55pc stake in Myanmar Brewery offers
entry into one of the region’s most intriguing emerging markets, with
the potential for massive expansion over the next decade,” said Michael
Schaefer, head of Beverages and Foodservice Research at Euromonitor
International.
The takeover came after a six month legal battle
that saw ThaiBev manoeuvre both Indonesia-led Overseas Union Enterprise
(OUE) and Japanese based Kirin.
Mr Charoen, 69, is worth an
estimated US$6.2 billion according to Forbes Magazine, making him the
third wealthiest citizen in Thailand.
ThaiBev did not respond to
inquiries from The Myanmar Times on its plans for Myanmar Breweries or
the Myanmar market, saying it had received an unusually high number of
media requests in the aftermath of the F&N deal.
But Kelvin
Chan, head of Country Research at Euromonitor International, said that
the deal brings production of ThaiBev beers to Myanmar: including the
flagship Chang range of beers as well as Archa and Federbrau.
“We
can expect ThaiBev to inject their own beer brands into Myanmar
Breweries. This will give ThaiBev a head start over competitors that
have yet to set a firm foot in Myanmar.”
Beer is still
prohibitively expensive for many in Myanmar, where per capita GDP is one
of the lowest in the region at just $860, says the Asian Development
Bank (ADB). But the bank also believes Myanmar could grow at up to 8pc a
year, tripling per capita income by 2030.
Beer companies are
hoping this predicted growth will lead to the increased spending power
of an expanding middle class of consumers.
“With foreign
investments flowing in, consumers will naturally have more disposable
income – which will contribute to beer sales in Myanmar,” said Mr Chan.
Additionally,
Myanmar has few of the same restrictions on the hours and locations of
beer sales that have hurt sales in main markets.
Though the
country does impose advertising restrictions across print and broadcast
media for alcoholic beverages, creative solutions – such as Myanmar
Beer’s creation of a casual clothing line – have provided producers with
a loophole.
Myanmar’s poor border regulation, however, is still
of concern to beer companies. Carlsberg’s U Thant Zin Tun said he was
worried over the fiscal impact of untaxed beer brought in from
neighbouring countries.
Illegal imports are not only bad for
brewers, but also for the country’s finances. In August 2012, a
government official told The Myanmar Times that Myanmar loses about $27
million a year in taxation to illegal beer imports.
Main entry
points include Myawaddy-Mae Sot, Kawthoung-Ranong and Tachileik-Mae Sai
along the Thai border and Muse-Shweli on the Chinese border in Kachin
State.
source: The Myanmar Times
www.mmtimes.com/index.php/business/4209-carlsberg-thaibev-eye-growing-beer-market.html
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