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