Beer IndustryStrategic Management
AgendaEconomic OverviewConsumer behaviorCompetitive AnalysisLaw and Regulation
Economic Overview
2005
2006
2007
2008
2009
2010
(EST)
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
4.6 5.1 5.0
2.5
-2.3
9.3Thailand GDP
Inflation
Introduction of beer market in ThailandBeer is one of the world's oldest prepared
beverages9500 BC Ancient Egypt, Mesopotamia It is the third most popular drink overall,
after water and teaAlcohol volume around 4-6%
How this industry operate their Brewing business?
Briefly information of Thai beer market In past few years average production volume
of beer is 2,000 Million litersReflect 70% overall plant capacity in 2010Oligopoly market structureTax and Government policy create big impact
on industryFTA with ASEAN in 2010 about Beer
category
2000 2001 2002 2003 2004 2005 2006 2007 20080
500
1,000
1,500
2,000
2,500
1,165 1,238 1,275
1,602 1,632 1,695
2,0112,161 2,160
1,165 1,213 1,284
1,604 1,604 1,7091,984
2,128 2,209
Production of Beer Beer Consumption
Production and Consumption of Beer in ThailandMillions of Liters
Source: Bank of Thailand
Q1. Beer Production and consumption
Q1. Beer Market Value
2006 2007 2008 2009 2010Year Year Year Year Year
THB 92,000
THB 94,000
THB 96,000
THB 98,000
THB 100,000
THB 102,000
THB 104,000
THB 106,000
THB 98,928
THB 104,384
THB 102,364 THB 102,188
THB 96,970
Q1. Market share by segment Y2010Total Market Value is 96,970 Million THB• Premium value is 6,930 Million THB• Standard value is 7,895 Million THB• Economy value is 82,145 Million THB
Premium
Standard
Economy
Singha Corporation Co., Ltd.
Q2. Key players in Beer Industry
Premium Standard Economy
Thai Beverage Public Company Limited
Q2. Key players in Beer Industry
Premium Standard Economy
Thai Asia Pacific Brewery
Q2. Key players in Beer Industry
Premium Standard Economy
Q2. Price Comparison Brand
Segment
Premium
Standard
Economy
38Baht
30Baht
35Baht
24Baht
25Baht
25Baht
35Baht
40Baht
35Baht
Q3. Law and Regulation3 key factors which effect the industry’s growth
1) Tax2) Advertisement and Selling3) AFTA
Q3. Law and RegulationType of Tax Tax’s Rate
Excise Department and Custom Department
Produce and sell in Thailand 60% of product price or 100 Baht per liter of pure Alcohol
Import Product C.I.F. Price
Stamp Tax
Import Tax
Cost of product + Insurance + Freight
2-8 Baht per piece depend on product’ size
60% of (C.I.F. price + Stamp Tax+ other fees)
Others taxes License fee
Additional Tax for Ministry of Interior
Additional Tax for Thai Health Promotion Foundation
10,000 per year
10% of alcohol tax
2% of alcohol tax
Q3. Law and Regulation2) Advertisement and SellingAdvertisement Rules
Limited Broadcasting time 10 PM to 5 AM
Limited Detail of Advertisement Font, Size
Warning massages Be required
Selling Rules
Limited Selling time 11 AM. to 2 PM and 5 PM. to 12 AM.
Limited Selling place e.g. University, Religion place, etc.
3) AFTA The agreement between the Asian countries;
Thailand, Malaysia, Indonesia, Philippine, Singapore and Brunei
1 January 2010 0% tariff of products
Q3. Law and Regulation
Q3. Government Campaign
Comic book
Post Cards
banner
Brochure Advertiseme
nt
2008 2009 20100
5
10
15
20
25
30
35
30.2
21.1 20.5
Buying for gift (%)
Buying for gift (%)
Source: ABAC Polls
Q3. Societal Attitude + LifestyleSocietal Attitude Lifestyle
• Government Campaign Attractive 71.6% say “Should not buy Alcohol
for gifts” (2010 ABAC polls)
• More Health concern 3.4% Illness decrease 2005-2006
(Thai Health Promotion Foundation)
• Law and Regulation Reducing Accident from drinking
Alcohol
• More Saving ConcernIn Quarter 2, 2009; 85% trying spend less, 54% for outside entertainment (Nielson Company, BangkokBiznews.com)
•Pricing Concern look on price which suitable with
quality2001 2002 2003 2004 2005 2006
Good Health (%) 81.71 81.71 81.71 83.4 84.5 84.4
Illness (%) 15.1 16.9 18.7 20.6 19.7 16.3
Life cycle (%) 86.27 86.27 86.27 86.27 87.64 87.64
5
15
25
35
45
55
65
75
85
95
Thai Healthiness
Per
cen
tage
(%
)
Q4. Competitor Positioning Map Company Market
ShareDistribution channels
Operation Excellence
Marketing campaigns
Expertise in launching new products
Reasons
Thai Beverage
• Powerful distribution channels• Penetrate the right target groups
Singha Corporation
• One of the most admired brand in Thailand• Global brand image
Thai Asia Pacific Brewery
• Highest market share in premium segment• Heineken is well-known internationally
San Miguel • Awkwardly in positioning and marketing the products.
Q5. Strategic MoveMarketing strategy
Chang Music Marketing
Singha Sport Marketing
Heineken Events, Beer Garden
San Miguel Nothing
Strategic Move
Thai Beverage Public Company Limited
Music Marketing• 200 Million Baht for GMM Grammy • Create negotiation power with outlets
and transform them to exclusive partners
Strategic MoveSingha Corporation Co., Ltd.
Sport Marketing• Prefer 20 million spectators from
supporting Manchester United and Chelsea rather than 40,000-50,000 audience in each concert
Beer Garden• Imitate “Oktober Fest” in Germany
Strategic Move
Thai Asia Pacific Brewery
• Suffer from government restriction of advertising
• Creative commercial from Heineken cannot on air
Lessen scale of events to 7 commercial areas such as Arena 10, K-Village, United Center Building
Return to focus on Premium Brand Portfolio
Q6. Key Success FactorKey Success Factor
Description
Brewing Capacity • To make low cost of productivity• Economy of scale
Strong distribution
•To occupy the intensive point of sales • Limited competitor channel
Power of Brand • To make brand become part of lifestyle• To brand engagement for repeated purchase
Marketing Campaign
• To penetrate the right segment with the right strategic
Pricing • Suitable for each segmentation
Q7. Attractive or not?NO… because
Beer consumption is decreasing Law and regulation is more strict Tax rate is increasing High awareness of health concern