4th Asian Excellence Recognition Awards 2014
Efficient growth is key for business expansion and yielding sustainable returns to stakeholders. We aim to secure ThaiBev’s leadership position as the largest beverage company in Southeast Asia and generate sustainable return for shareholders by developing innovative products, diversifying our portfolio, leveraging our efficient distribution network in core markets, and expanding our business in Southeast Asia. Through our collaboration with Fraser and Neave, Limited (“F&N”), Singapore’s leading beverage producer and distributor, as well as publisher, we are strengthening our foundation for sustainable growth in the future.
Attaining business sustainability from diversified revenue streams is core to our plan. This involves increasing income contribution from our non-alcoholic beverage segment and overseas sales.
Our expansion into the non-alcoholic beverage market is an important part of our strategy to become the leading total beverage producer and distributor in the region. We focus on offering a more diversified product portfolio and optimizing our distribution network. ThaiBev’s expansion into the non-alcoholic beverage segment commenced in 2008 with the acquisition of Oishi Group Public Company Limited (“Oishi”) – the No. 1 green tea beverage producer in Thailand. Thereafter, we acquired Sermsuk Public Company Limited (“Sermsuk”) – the beverage producer with the most extensive distribution network in Thailand – in 2011; and F&N, a leading Singapore company in the beverage, publishing, and printing industries, in 2012.
In our pursuit of overseas expansion, we view ASEAN countries as high-growth markets. Purchasing power in these markets, which have a total population of over 600 million people, is increasing amid the growth of their economies, and the rise in the numbers of investors and tourists to the country. Beverages from Thailand have high growth potential in these markets. Consumer behavior in ASEAN countries, especially Cambodia, Lao PDR, Myanmar, and Vietnam, has been strongly influenced by the popularity of Thai media broadcasts, singers, and superstars in these countries, as well as their substantial native labour force working in Thailand.
Furthermore, ThaiBev’s alliance with F&N has opened up many opportunities for joint investment in ASEAN. We have adapted successful business models from Thailand, Malaysia, and Singapore for other countries while fostering further cooperation to optimize brand and distribution synergies. For instance, Oishi successfully penetrated the Myanmar market by collaborating with F&N’s branch offices in the country. Moreover, we leveraged Fraser and Neave Holding Berhad’s robust production facilities in Malaysia for our expansion into other halal markets in Southeast Asia.
In 2014, we re-organized ThaiBev’s management structure and streamlined our core businesses into three product groups – spirits, beer, and non-alcoholic beverage. We also identified the core products of each business, namely, “Ruangkhao”, “Hongthong”, “Blend 285”, “Chang” beer, “est” soft drinks, “Oishi” green tea, and “100PLUS”. In the year 2016, we furthered our success through continued product innovation and the introduction of more modern packaging in line with our premiumization strategy.
Our efforts in the spirits product group were focused on the development of ThaiBev’s flagship “Hongthong” brand, which has been the No. 1 brand in the brown spirits category, and “Blend 285” brand through music campaigns as well as product premiumization. These help us to ensure that ThaiBev serves consumers in all segments. Moreover, we revamped the labels of “Blend 285 Signature” and “Meridian” brandy to give them a more glamorous and international image. Customer feedback following the revamp has been positive and the sales volume of both brands have increased. In late 2015, we began launching our Scotch whiskies such as “Old Pulteney” and “anCnoc”, as well as our “Caorunn” gin, in luxury hotels and restaurants in Thailand.
For the beer product group, “Chang Classic” in the new emerald green bottle and a champagne gold label has received greater feedback than expected, representing a major step on our path towards realizing Vision 2020, and becoming the top leader in Thailand’s beer market and achieve significant growth in Southeast Asia. In addition, the label of “Archa” beer has been revamped to be more beautiful and modern.
To realize our potential and secure our market leadership in the non-alcoholic beverage segment, we constantly introduce innovative healthy products that best meet the taste and preferences of consumers of all ages, from all walks of life, and in all moments of daily life. New products launched in 2016 include Oishi “Kyoho Grape”, as well as Oishi “Sakura Strawberry”, which featured innovative packaging that changes color when chilled. Meanwhile, Sermsuk launched est PLAY “Grape Berry” and “Korean Orange Cola” to create a sensation in the carbonated soft drink market. Sermsuk also expanded the production base of “Crystal” drinking water, which has been certified by NSF International, USA, as a quality product with high standards. In addition, the design of bottles used for “Crystal” drinking water was refreshed to give the product a more modern look and use thinner plastic.
Our robust and extensive distribution network is one of our major strengths and also a key factor that elevated ThaiBev to attain its leadership position in Thailand’s beverage market. We currently have more than 7,000 delivery trucks which reach over 400,000 outlets across the country, as well as long-standing relationships with agents, distributors, and restaurants. We have also established over 1,000 direct sales teams to provide sales services and manage the visibility of our products on store shelves. In 2013, we reinforced our domestic distribution network by establishing Modern Trade Management Co., Ltd. to distribute ThaiBev’s alcoholic and non-alcoholic beverages to modern trade operators. In 2014, we founded HORECA Management Co., Ltd. (“HORECA”) to close gaps in our distribution channels to luxury hotels and restaurants and provide us with the benefits of complete coverage of the segment; and to introduce our overseas premium products to the upmarket on-premise segment in Thailand. In 2015, we established Cash Van Management Co., Ltd. to manage our direct sales teams, which support around 270,000 retailers across Thailand.
With our route-to-market and distribution strength through HORECA, we were able to make our “Mekhong” brown spirits available in more than 1,000 luxury hotels and restaurants in 2016. Our premium spirits from Scotland were also made available in more than 200 outlets nationwide.
Besides enhancing ThaiBev’s own distribution network, we also always seek opportunities to collaborate with local business alliances in ASEAN markets in order to solidify our position as the leading full-scale beverage company in the region and become a truly stable and sustainable business.
One of the key aspects that drives the business towards Vison 2020 is people. ThaiBev is determined to continue building the team of each product group to have a variety of skill sets and collaborate efficiently. This will be most beneficial to the operation and enhance the potential of the group in the long run.
In 2016, ThaiBev invested in workforce with knowledge and competencies that enable them to be more capable professionals and further develop their potential. For example, we launched “Project Rocket” to groom talented employees that are under 30 years of age and ready to be devoloped towards future executives. Other projects were scholarships to be enhance employees’ knowledge, experiences, and competencies, and “Thailand-Scotland Staff Exchange Programme” to give employees an opportunity to gain overseas experience and exchange knowledge on spirits production techniques so that they could further develop the business for corporate success.