Asia: ThaiBev to invest in renovating 25-year-old breweries and increasing sales

Singapore-listed Thai Beverage (ThaiBev), Thailand's biggest drinks company, will spend 7 billion baht next year to renovate 25-year-old breweries and increase sales from all beverages in populous Asean countries in the next six years, the Bangkok Post reported on October 4.

President and chief executive Thapana Sirivadhanabhakdi said the company's three breweries - located in Kamphaeng Phet and in Ayutthaya's Bang Ban and Wang Noi districts - are due for a major renovation after brewing for 25 years.

"Some of the investment budget in 2020 will be for Sabeco, the brewer of Saigon beer in Vietnam that we acquired in 2017, to reduce debt and financial costs," he said.

Sabeco is Vietnam's leading beer by volume with a market share of 40%. In the first nine months, 4.4 billion litres of Sabeco was sold in Vietnam, one of the largest beer-consuming countries in the region.

Mr Thapana said Cambodia is another country that drinks mainly beer. The company is exploring acquiring breweries there to boost alcohol sales in Asean, one of the fastest-growing regions in the world.

ThaiBev's Beer Chang and Sabeco's Bia Saigon together have 23% of the Asean market.

In 2018, ThaiBev was the largest beverage firm in Asean and ranked fifth in Asia by market cap with US$18 billion and the sixth by net sales with $5.85 billion.

"As the global economy is sensitive, we will focus on healthier drink choices and tap into Asean countries, as the market is huge with robust economic growth and large populations," Mr Thapana said.

The beverage market value in Asean totals $50 billion, while economic growth is strong with a projection of a 54% rise from $3.09 trillion in 2019 to $4.76 trillion in 2025.

The Asean population is expected to increase from 660 million to 700 million by 2025.

"We aim to be the market leader for all beverages by 2025," Mr Thapana said. "Key markets are Thailand, Myanmar, Cambodia, Vietnam and Laos."

Myanmar, Thailand and Vietnam, with a combined population of 220 million, will be major markets for expansion.

On October 3, ThaiBev reported total sales of 205.27 billion baht for the first nine months, up 18.2% from the same period last year.

Earnings before interest, tax, depreciation and amortisation rose 31.3% to 36.26 billion baht, while net profit climbed 34% to 21.89 billion baht.

Of total sales, 65% were from Thailand and 35% from overseas. Some 80% came from alcohol and the rest from the non-alcohol and food segment.

To boost sales in the non-alcohol segment, ThaiBev will cultivate new markets, including Laos and Cambodia, and focus on profitable stock-keeping units, channels and operations.

In the first nine months, sales from the non-alcohol segment rose 3.4% to 12.85 billion baht, but earnings before interest and tax remained negative with a loss of 649 million baht, narrowing from a loss of 1.13 billion baht in the same period last year.

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