Beer Wars in Burma as Rival Brewers Battle for New Market

By William Boot 7 March 2013

Burma is about to become a business battleground for two old brewing adversaries intent on capturing the region’s last great untapped beer market.

One-time partners Carlsberg of Denmark and Thai Beverage of Bangkok, who fell out in a business dispute seven years ago forcing Carlsberg to quit the lucrative Thailand market, are both planning to brew and sell their brands in Burma.

The fallout between the two big brewers was acrimonious, leading to a court action in Singapore in which Carlsberg ended up paying US $120 million damages to Thai Beverage, which had unsuccessfully sued for $2.5 billion.

Carlsberg has only just re-entered Thailand after an eight-year absence, teaming up with Thai Beverage rival Singha Corporation. Now the two firms will be competitors in Burma, where Bangkok-based Singha also plans to sell its beers.

“Burma is a brand new market for beer where per capita consumption is very low, not much more than 10 percent of the volume drunk in Thailand and Vietnam. Burmese don’t have a lot of disposable income so I think we are going to see some fierce competition with stuff like a price war as the competitors try to garner market share and knock rivals out,” said an industry insider in Singapore, who spoke to The Irrawaddy this week on condition of anonymity.

Carlsberg has formed a partnership with Myanmar Golden Star Breweries, which has links with the Burmese military. The Danish giant sought a joint venture with Golden Star 15 years ago, but human rights groups in Europe brought the firm’s links to the military to light, effectively blocking the deal.

Carlsberg says its new partnership will initially involve distributing its brands in Burma, but there are also plans to build a new brewery.

Thai Beverage—also called ThaiBev—is owned by one of Asia’s wealthiest men, Charoen Sirivadhanabhakdi, ranked in the world top 100 richest people by Forbes Magazine with over $11 billion. His company has gained a foothold in Burma by acquiring Singapore-based Fraser and Neave, primarily a non-alcoholic sporting drinks producer, but which includes Myanmar Brewery among its assets.

Charoen now owns 55 percent of Myanmar Brewery, whose other major shareholder is the army-controlled Union of Myanmar Economic Holdings.

Burmese at present drink on average less than four liters per year—that’s only about 10 small bottles—of local brand beers which for many people on low pay are still a luxury drink. In neighboring Thailand annual per capita beer consumption is 25 liters and in Vietnam it’s 30 liters.

“The two brewing companies will be banking on an economic boom in Myanmar [Burma] turning beer into an everyday commodity accessible to most adults,” the Singapore industry insider said. “The potential is big but it’s a business gamble, especially because there will be two large investors fighting for dominant market share which in the medium term will keep retail prices down and profits slim.”

“Thai Beverage needs to expand abroad because its home market is saturated and maturing. There isn’t the volume potential in Laos and Cambodia with much smaller populations, while religious objections to alcohol stymie markets in Malaysia and Indonesia.”

The arrival of the two major brewers in Burma might also lead to an injection of money into Burmese sport. Both Carlsberg and Thai Beverage are major sponsors of football teams in the English Premier League.

For years the Carlsberg logo was emblazoned on Liverpool players’ shirts, while across town the name Chang adorns the strips of rival club Everton. Carlsberg has now moved in to provide sponsorship at Arsenal.

“The combination of F&N [Fraser & Neave] and Charoen’s Thai Beverage creates a powerful, multifaceted player in the region,” said Michael Schaefer, the chief of drinks research at Euromonitor International, a London-based consumer markets analyst.

“What’s more, one of F&N’s most successful brands, sports drink 100 Plus, gives Thai Beverage a foothold in one of Southeast Asia’s fastest-growing categories, one where it has long struggled to gain traction. F&N’s 55 percent stake in Myanmar Brewery offers entry into one of the region’s most intriguing emerging markets, with the potential for massive expansion over the next decade.”

Carlsberg is primarily a beer producer but Thai Beverage built its base in Thailand making dirt cheap whisky and white liquor, popular among poor, rural Thais. Charoen then created the Chang beer brand and succeeded in wresting Thailand market dominance from the older and better established Singha Corporation.

Singha beer is also scheduled to go on sale in Burma, but proposals outlined by the Bangkok company in May last year to also open a new brewery in Burma may be undermined by the Carlsberg and Thai Beverage developments. Another idea by the Singha Corporation is to build a brewery in Mandalay, primarily to export into southern China.

Whether Burma eventually has two new breweries or three, it looks like there is going to be a lot more of the frothy amber liquid on sale.