Thailand: Singha Corp plans to build a new THB4 million brewery boosting total brewing capacity to 15,500 hl

Singha Corporation, formerly Boon Rawd Brewery, the country's second-largest beer producer, is to boost its capital expenditure over the next two years by 25% to THB5 billion, up from THB4 billion under an earlier plan, Bangkok Post posted August 17.

President Santi Bhirombhakdi said an increase in investment was aimed at supporting its plan to build a third brewery in a province in the central plains, requiring an investment of THB4 billion.

Construction of its new factory, located on a 150-rai plot, will begin next year and drive the total annual capacity of Singha beer to 1,550 million litres, up from the combined capacity at its existing breweries in Pathum Thani and Khon Kaen of 1,150 million litres. The additional output will serve both local and international markets.

THB1 billion of the funds will be used for future joint ventures with overseas partners and the capacity expansion of its packaging facility at Bangkok Glass Industry Co Ltd, in which it holds a 50% stake.

He said the firm was in talks with possible partners in three countries to establish joint-venture firms, in which Singha and its partners would hold equal stakes.

"Staying independent makes it hard to expand. Forming joint ventures will be the key strategy to help us grow faster because of synergy between partners. Such a strategy will also help us to prepare to cope with trade liberalisation in the future," said Mr Santi.

The co-operation strategy would not only improve marketing, manufacturing and distribution for existing products, but would also create opportunities to expand into new business lines for international markets, he said.

As a result, its export proportion would rise to more than 10% within the next 18 months from 4% currently.

Mr Santi did not disclose export sales figures or specific details regarding joint ventures.

At least one deal will be finalised by the end of this year, with about 100 million baht allocated for marketing support.

Vietnam is one of the countries that Singha is considering for potential expansion.

"Vietnam has great market potential because of its large population. But at the same time, up to seven competitors already have footholds there," said Mr Santi.

He added that the image of Singha had been changed from an alcoholic-drink firm four years ago to a total beverage company. The company now sells several beer brands, drinking water, soda and green-tea drinks.

The company has recently shifted to growing tea on a 500-rai plot in Chiang Rai, where it previously produced barley for beer.

"We will not compete with Sri Lanka in producing tea to drink. We will go a further step by supplying tea leaves for the industrial production of cosmetics and health supplements. ... Tea will be our third business pillar," said Mr Santi.

Currently, the company has about 20 products ready to be launched into the market. One of them is Amino, a fibre-providing drink.

Mr Santi said overall sales in the first six months of this year increased by 20-25%, a slight increase from earlier projections. Market demand in the second half of this year is expected to be slow as people tighten their belts under a slowing economy and face the burden of credit-card and loan repayments.

However, the general election, scheduled for October 15, could be one positive factor in the second half. But Mr Santi was not sure it would be enough to make up for other negative factors.

Mr Santi urged the Excise Department to increase the excise tax on white spirits to THB2.40 per 1% alcohol content, the same level charged on special blended spirits for the past two years. The excise tax on white spirits is currently THB0.7 per 1% alcohol content.

''We want the government to tax white spirits more because they hold up to 70% of the total spirits market. We want fair treatment. Collecting low excise tax on white spirits has benefited only one player, which dominates around 96% of the market,'' Mr Santi said. He refrained from naming the player for legal reasons.

By doing so, the government would earn about THB20 billion to offset falling tax revenue, which was below target in the first 10 months of the 2006 fiscal year.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .