Singha Corp, maker of Singha and Leo beers,
plans to set up a brewery in Myanmar with initial capacity of 80 million to 100
million litres per annum as the opening gambit in its strategy to penetrate
markets in Asean.
Piti
Bhirombhakdi, regional marketing director, said the company had two options for
investing in Myanmar. The first is to set up its own manufacturing operations
in the country; the second is through a joint venture with a local partner.
"We
are interested in neighbouring countries with high beer consumption. These
would be Myanmar, Vietnam and Cambodia," he said.
Myanmar
is a labour-intensive country that, as it opens up and becomes more politically
stable, will become a tough competitor for Thailand in the near future, he
said.
"With
its location near southern China, we can set up a beer factory in Myanmar and
use it to support both the Myanmar and Chinese markets," Piti said.
There
are currently three major beer factories in Myanmar, one owned by the
government and two by private companies. The government is granting licences to
manufacturers interested in setting up breweries. Myanmar Beer produced by Asia
Brewery leads the market in that country, followed by the Mandalay brand.
"We
are looking at Myanmar as the first priority in setting up a brewery in Asean.
We consider Vietnam our second priority," Piti said.
The
company sells about 40 million litres of beer to Myanmar each year, mostly
through border trade, he said. It is waiting for the political situation there
to stabilise before setting up the kind of sales and marketing operations it
will need to do business seriously in the country.
Singha
Corp is also in the process of selecting a local distributor in Vietnam. Its
business there will begin with sales of beer exported from Thailand. The company
is also conducting a feasibility study on setting up a brewery in Vietnam,
examining both the market situation and return on investment. The company has
already set up a team of staff in Cambodia to take charge of both on- and
off-premises distribution, as well as the establishment of an office in the
market.
Piti
said the company was also negotiating the formation of a joint venture with one
of the top beer-makers in Europe that would cover the whole market there. The
talks will be finalised within the next one or two months. The joint venture
will allow Singha Corp to reduce its transport and logistics costs, and boost
its ability to compete with local rivals.
For the
US market, the company has appointed Moosehead Brewery, Canada's oldest
independent brewery, to produce Singha under an OEM (original equipment
manufacturing) contract starting in October. Marketing and distribution of
Singha beer in the United States has been conducted by its subsidiary Singha
North America for almost 30 years.
Piti
said the US and Europe accounted for about 30 per cent of the company's
international market of 110 million to 120 million litres per annum, while Asia
accounted for 65 per cent and the Middle East and Australia the rest.
"Export
and international businesses now represent about 10 per cent of our total
turnover, and we want to double that to 20 per cent by 2015," he said.
"We
produce about 1.5 billion litres of beer per annum in total at our three
breweries in Pathum Thani, Khon Kaen and Bang Len [in Nakhon Pathom] and will
increase this by 100 million litres by the end of this year. We want to
increase our production capacity to 2 billion litres within the next three years
to support increasing demand in both the domestic and export markets."
Singha
Corp expects to increase domestic sales of beer by 8 per cent this year,
exceeding the growth forecast for Thailand's overall beer market, which is 4
per cent.
KWANCHAI
RUNGFAPAISARN
THE
NATION
Business & Investment Opportunities
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