ThaiBev to ramp up Vietnam operations

ThaiBev, known for its Chang beer (right), attributes the lacklustre demand in Thailand for its beverages to poor macroeconomic fundamentals.
ThaiBev, known for its Chang beer (right), attributes the lacklustre demand in Thailand for its beverages to poor macroeconomic fundamentals.PHOTO: BLOOMBERG

It is working with Sabeco on areas such as marketing and R&D

After posting disappointing third-quarter results on Tuesday, Thai Beverage (ThaiBev) said yesterday evening that it continued to remain optimistic about its growth in subsequent quarters.

It cited plans to double down on the Vietnam beer market as well as pinning its hopes on the upcoming Thai elections, which are expected to take place early next year, giving the anaemic demand for beer and spirits in the country a much-needed boost.

One of the concrete steps it outlined in a post-earnings conference call was that it was looking to focus on its 54 per cent stake in Saigon Beer Alcohol Beverage Corp (Sabeco).

Despite acquiring the Sabeco stake in December last year, ThaiBev said it could begin conducting due diligence of the production facilities only recently because its current chief executive officer, Mr Bennett Neo Gim Siong, was appointed only on Aug 1.

ThaiBev believed the Vietnam beer market would be a profitable venture for the company and was optimistic about the prospects of Sabeco.

Asked by analysts about developing synergies between ThaiBev and Sabeco, the firm said it was working on a number of areas, including procurement, marketing and R&D.

It was also exploring how best to integrate market knowledge as well as best practices in manufacturing.

Speaking on its Thailand and Myanmar markets, ThaiBev attributed the low demand for beverages - including both non-alcoholic drinks such as water and green tea, and alcoholic ones like beer and spirits - to poor macroeconomic fundamentals.

It cited the poor performance of the regional agriculture industry, including the rice and fishing sectors, as the main reason for the falling disposable income among consumers.

It added that the reduction in demand for alcoholic beverages was likely not due to changing consumer preferences, such as towards healthier drinks with less sugar content.

One-off events such as the recently concluded World Cup also did not significantly raise overall consumption of beer in ThaiBev's markets. The company said it expects its domestic beer markets to continue to remain challenging in the face of weak demand.

ThaiBev closed two cents or 2.9 per cent lower at 68 cents yesterday.

A version of this article appeared in the print edition of The Straits Times on August 16, 2018, with the headline 'ThaiBev to ramp up Vietnam operations'. Print Edition | Subscribe