Efficient growth is key for business expansion and for yielding sustainable returns to stakeholders. We have secured ThaiBev’s leadership position as the largest beverage company in Southeast Asia 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; Myanmar Supply Chain and Marketing Services Co., Ltd. and Myanmar Distillery Co., Ltd. (“Grand Royal Group”), the biggest player in Myanmar’s whisky market; and Saigon Beer - Alcohol - Beverage Corporation (“Sabeco”), Vietnam’s biggest beer producer and distributor, 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 with the acquisition of Oishi Group Public Company Limited (“Oishi”) – the No. 1 green tea beverage producer in Thailand – in 2008. Thereafter, we acquired Sermsuk Public Company Limited (“Sermsuk”) – the beverage producer with the most extensive distribution network in Thailand – in 2011, and F&N in 2012. We have also continued to further expand our food business beyond Oishi’s Japanese restaurants by establishing Food of Asia Co., Ltd. (“Food of Asia”) in 2015 and acquiring assets from Yum Restaurants International (Thailand) Co., Ltd., the operator of KFC business in Thailand, in 2017.
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 number of tourists visiting ASEAN countries. Beverages from Thailand have high growth potential in these markets. Consumer behavior, especially in Cambodia, Lao PDR, Myanmar, and Vietnam, has been strongly influenced by the popularity of Thai media broadcasts, as well as their substantial native labor force working in Thailand. The first step to our success in ASEAN was the acquisition of F&N in 2012. In 2017, we acquired a 75% stake in the biggest player in Myanmar’s whisky market, Grand Royal Group, which has production facilities in Yangon and Mandalay. That same year, we also won the bid for 53.59% of the shares in Vietnam’s biggest beer producer and distributor, Sabeco, which is best known for its Saigon Beer. These acquisitions have driven ThaiBev to the leading position in Southeast Asia and bolster our expansion in the international market, especially in ASEAN.
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 “Ruang Khao”, “Hong Thong”, “Blend 285”, “Chang” beer, “Oishi” green tea, “est” soft drinks, and “100PLUS”.
We focus on improving our brands through product innovation and the introduction of more modern packaging in line with our premiumization strategy. Our efforts in the spirits product group have been focused on the development of “Ruang Khao”, the No. 1 brand in the white spirits category, through the launch of “Ruang Khao Silver” with a modern image and new packaging. This helped to upgrade the brand image of Ruang Khao, Thailand’s first spirits brand, in order to build a premium white spirits market and penetrate the Southeast Asian market. We also revamped the packaging of “Blend 285” and “Blend 285 Signature”, products in the brown spirits segment, enhancing them with a glamorous image mirroring that of premium international spirits. In addition, we have further extended ThaiBev’s portfolio in the premium market by positioning our Scotch whiskies such as “Old Pulteney”, “anCnoc” and “Caorunn” gin in luxury hotels and restaurants in Thailand since 2015.
In 2018, we expanded into the ready-to-drink spirits segment. We launched “Star Cooler”, a ready-to-drink wine cooler, and “Kulov Max 7”, a ready-to-drink vodka in a can, as drinks for all places and occasions. We also offered consumers in the brown spirits segment more choices by launching a 345 ml-bottle variant of our “Blend 285” blended spirit, which uses IWSC (International Wine and Spirit Competition) award-winning malt whisky matured in oak barrels from Scotland as a key ingredient.
In addition to “Chang” beer – a flagship product of our beer business which has been imprinted in the minds of consumers for over two decades – ThaiBev now also has a wide range of other beer products for different occasions. These include “Federbräu”, a premium beer made of German single malt; “Archa”, a value-for-money beer; “Tapper Original X-Tra”, a lager beer with a 6.5% alcohol content in modern packaging targeting younger generations that prefer strong beer; as well as “Huntsman” and “Black Dragon”, craft beers for younger generations that seek unique products. “Bia Saigon”, the No. 1 beer in Vietnam, is now a part of ThaiBev’s beer portfolio as well, following our investment in Sabeco.
To further realize our potential and secure our market leadership position in the non-alcoholic beverage segment, we constantly introduce innovative and healthy products that are suitable for all moments in daily life to cater to the tastes and preferences of consumers of all ages. New products launched in 2018 include the revamped Oishi “Honey Lemon” green tea, which now boasts a flavor innovation using genuine ingredients made from Japan Hyakkamitsu honey, and Oishi “Honey Lemon Jeed” (Sour Honey Lemon), a new, sour variant with twice as much lemon and less sugar.
We also brought “Sarsi” – F&N’s original root beer, which has a distinct aroma, froth and fizz – back to Thailand’s carbonated soft drink market in a retro-style glass bottle.
“Sarsi” is targeted at a broad base of consumers ranging from teenagers to working adults who enjoy trying new and different products, as well as long-time fans of Sarsi who miss its unique flavor.
Our robust and extensive distribution network is one of our major strengths and is also a key factor that has elevated ThaiBev to 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 1,100 direct sales teams to provide sales services and manage the visibility, of our products on store shelves. 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. We also founded HORECA Management Co., Ltd. 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. Moreover, we established Cash Van Management Co., Ltd. to manage our direct sales teams, which support around 270,000 retailers across Thailand. As for our non-alcoholic beverage business group, we have expanded route-to-market channels and further developed the non-alcoholic beverage business of Sermsuk. As a result, we now have business units which manage five distribution channels in total – namely, traditional trade, modern trade, cash vans, HORECA, and Sermsuk.
Besides enhancing ThaiBev’s own distribution network, we also always seek opportunities to collaborate with business alliances in each Asian market. In 2018, we established Asiaeuro International Beverage (Hong Kong) Limited and Asiaeuro International Beverage (Guangdong) Co., Ltd. to distribute alcoholic beverages and coffee and operate related businesses in China, Hong Kong, and Macau, with an emphasis on premium imported wines and spirits, as well as ThaiBev’s spirits.
To manage our entire distribution and logistics system, the backbone of our company, we set up Thai Beverage Logistics Co., Ltd. (“TBL”). Since its establishment, TBL has created strategic hub–and-spoke networks in each region, set up distribution centers in the Nakhon Ratchasima and Surat Thani provinces, and in 2017, opened a new distribution center in Ko Kha District, Lampang Province, which serves as the distribution base in Thailand’s Northern region. As a result, ThaiBev currently has three regional distribution centers, two provincial distribution centers (in Phra Nakhon Si Ayutthaya and Kamphaeng Phet), 15 sub-distribution centers, and 1,380 trucks. We are in the midst of planning to transform all our regional distribution centers into smart centers by using technology to automate all operations and applying Big Data technology to connect all centers, and also intend to set up 18 highly efficient distribution centers to replace all of our 55 existing warehouses.
To facilitate the expansion of our food business, we acquired a stake in cold chain logistics and distribution expert, Havi Logistics (Thailand) Co., Ltd., in 2018. With its expertise, we can now ensure that products are maintained at the proper temperature when they are being transported from factories to consumers, and can also provide such services for clients in the restaurant business in Thailand.
Our people are key to our drive towards realizing Vision 2020. We are determined to continue building up all our product group teams, equipping them with a variety of skill sets and facilitating efficient collaboration so as to bring the most benefits to our operations and enhance the potential of the Group in the long run.
We have made every effort to place an extensive focus on developing our workforce. We provide opportunities for all staff to sharpen their work-related skills and capabilities through various learning and development processes designed for each product group. A key objective of these processes is the development of our employees’ managerial competencies, functional competencies, and leadership qualities. We have also set up a Transformation Program to prepare them to have the right mindset and attitude to embrace future change. Initiatives we have introduced to help our employees realize their potential include scholarships for Master and Ph.D. programs in English at leading universities in Thailand and abroad; leadership development programs such as our Senior Executive Development Program, ASEAN Management Development Program, Management Development Program, and 5 Levels of Leadership Program for staff at every level; as well as learning and development programs for executives and employees, to instill in them leadership qualities that we expect them to possess and prepare them for higher levels of leadership in the future.
To ensure that ThaiBev continues to be relevant and stay ahead in the digital age, our Office of Human Capital and Office of Information Technology have co-developed the “Beverest” project. The project encourages greater collaboration between us and our employees, as well as among employees from both our domestic and international businesses. These initiatives for our employees’ development are in line with the “Limitless Opportunities” concept that ties in with our Vision 2020 strategic roadmap, which calls for a workforce management strategy that aims to improve our employees’ capacities for career growth and create working networks.
We determinedly and continuously manage and develop the potential of our staff to build strong and highly efficient teams. Our pride have been formally recognize at an international level. At the Asia’s Best Employer Brand Awards 2018 in Singapore organized by the Employer Branding Institute and the World HRD Congress, which comprises a network of human resource executives from 36 countries across Asia, we won three awards – the ‘Best Employer Brand’ award, ‘Dream Employer of the Year’ award, and the ‘Award for Talent Management’.