Thailand: Thai Beverage set to roll out new products and resume large-scale marketing after mourning period of king ends

Following a year of sluggish alcohol consumption, Thai Beverage, the maker of Chang beers, is set to roll out new spirits products and resume large-scale beer marketing campaigns beginning in November, as the one-year mourning period for Thailand's late king officially ends, the Nikkei Asian Review reported on October 6.

"For the past year, alcohol consumption dropped by volume because of the event that you all know about," CEO Thapana Sirivadhanabhakdi told reporters in Bangkok on October 5. He was referring to the Oct. 13 passing of the much-revered late King Bhumibol Adulyadej last year, which prompted the cancellation of New Year parties and the postponement of celebrations such as weddings.

Thai Beverage's financial year runs from October through September. In the first three quarters through June, beverage sales were down by 6% on the year to 142.4 billion baht ($4.3 billion), largely due to lower sales of spirits and beer, which account for nearly 90% of its total turnover.

But consumption is picking up, observed Thapana. "I think it will be much better in the next three months," he said. The late king's cremation ceremony is to be held on Oct. 26.

For the current fiscal year that started on Oct. 1, the company has earmarked capital expenditures of 7.4 billion baht, up 42% from the previous year. The money will be spent on upgrading production facilities, Thapana said.

Following the end of the mourning period, the brewer plans to release new spirits products including Ruang Khao Silver, an addition to its 200-year-old Ruang Khao white spirits brand targeting the premium market.

Using special sugar cane honey as its ingredient, the 700ml bottle will be priced at 168 baht, compared with 120 baht for its conventional products. The company also hopes to market the rum beyond its borders, in countries such as Vietnam.

Production has already started, but sales will be withheld until November, "a more appropriate timing" because of the mourning period, according to Prapakon Thontheppairot, head of the spirits division.

Also in November, Blend 285, Thai Beverage's blend of malt whisky and other spirits, will get new packaging - a more sophisticated design and easy-to-open seal.

For its flagship Chang beer, large-scale marketing campaigns are expected to pick up again. "We hope to use the marketing resources that we scaled down on last year for campaigns this year," said Edmond Neo Kim Soon, head of the beer business. The company intends to heavily promote a "special edition" beer packed in a champagne bottle, as well as regular bottled products wrapped in special "festive" packaging.

September's hike on excise taxes for alcohol and sugary drinks could prove a blow to the company, especially because it came while the country is still in mourning. But CEO Thapana brushed off such concerns.

"The impact is just short-term," he said. "Once the new price increase kicks in, consumers are going to react to the new price; but after a while, they will become accustomed to it."

Under the new tax rate, the company will increase retail prices of spirits products by around 2%. For beer and sugary drinks, which face intensifying competition, it has yet to decide whether to pass the tax increase on to customers.

Thai Beverage is in its fourth year of a six-year business plan through 2020 aimed at boosting sales of non-alcohol businesses to more than half of total sales. But sales of alcohol products are still hovering at around 90% of overall turnover.

Nevertheless, Thapana is confident the goal can be achieved. "It won't be reached just through organic growth," he said, hinting that more mergers and acquisitions may be in the offing.

Recent moves suggest the company hopes to move further into the restaurant business, which currently accounts for 3.5% of its sales. In September, the brewer announced it would acquire 240 outlets of fast-food chain KFC in Thailand, to become the country's largest KFC franchise. Earlier this week, the company said it purchased a 76% stake in Thai restaurant chain operator Spice of Asia for 114.5 billion baht.

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