Thailand & Cambodia: ThaiBev to invest in domestic, overseas expansion

Thai Beverage (ThaiBev), the Singapore-listed Asean food and beverage company, looks set to spend 7 billion baht to expand its businesses both domestically and internationally in the current fiscal year, which began on Oct 1, the Bangkok Post reported on October 4.

Of the total, 4 billion baht has been allocated to construct a new beverage factory in Cambodia, with 3 billion earmarked for logistics facilities, a biogas factory, and other strategic initiatives, said Thapana Sirivadhanabhakdi, the company's president and chief executive.

"With the resurgence of tourism and the food and beverage industries, we have been taking steps to reinforce our brand and market positions across our business segments to enhance our competitiveness," Mr Thapana said.

"The company plans to pursue sustainable growth through three strategic pillars: growth, sustainability and enablement."

Under the growth pillar, ThaiBev wants to diversify its market presence, expand its product portfolio and meet evolving consumer demands.

Michael Chye Hin Fah, head of the company's beer product group, said ThaiBev is constructing its first beer production plant in Cambodia, which is scheduled to be completed within two years.

The facility has a total production capacity of 50 million hectolitres per year.

"This marks the first time ThaiBev will build its own brewery factory in Cambodia, which is the result of the country's rapid market growth and untapped potential," said Mr Fah.

"With the brewery, Chang beer will eventually capture a 10% market share in the premium beer segment in the long term."

Regarding ThaiBev's performance, he said the company's beer business in Thailand has recovered as economic activities rebound and tourists return.

However, the firm's business in Vietnam continues to face challenges stemming from weak consumption amid macroeconomic headwinds, said Mr Fah.

Improved logistics will facilitate the efficient delivery of beverages produced at the Cambodian factory to the Vietnamese market, he said.

On the subject of spirits, Prapakon Thongtheppairot, the company's executive vice-president, group chief financial officer, and head of the spirit product group, said ThaiBev will focus on expanding its presence in the international premium spirit market, noting the domestic market is quite mature, contributing up to 90% to the company's spirit portfolio.

ThaiBev significantly expanded its international portfolio of branded premium spirits and strengthened its distribution networks through the acquisition of Larsen Cognac and the Cardrona Distillery, said Mr Prapakon.

"These acquisitions enabled Thai Beverage to establish a foothold in the cognac and dynamic New World spirit categories, complementing its existing, successful spirit brands," he said.

"The company sees substantial potential in the Asian market for premium spirits and aims to increase revenue and profit in its international spirit business. ThaiBev expects revenue from spirits in China to rise from 2% of the group total to 10% in the future."

Nongnuch Buranasetkul, the company's senior vice-president and chief of food business in Thailand, said ThaiBev plans to allocate about 800 million to 1 billion baht to expand its food business in the current fiscal year, with a specific focus on KFC and Oishi.

"We see significant potential for opening more KFC and Oishi restaurants, tailoring the formats to suit the specific characteristics of each location," said Mrs Nongnuch.

The company aims to open 50-60 new restaurants this fiscal year.

In the first nine months of the company's fiscal 2023, ThaiBev launched 43 various restaurants, bringing the total number of outlets to 771 as of June 2023.

According to Mrs Nongnuch, with increased dine-in traffic at its restaurants thanks to the company's efforts to enhance brand visibility and accessibility, the company's food business posted year-on-year growth of 19.2% and 14.3 billion baht in revenue for the first nine months, ending on June 30 this year.

However, the company's earnings before interest, taxes, depreciation and amortisation decreased 8.4% to 1.44 billion baht because of rising costs related to raw materials, utilities, labour and pre-opening expenses for new stores. "There is positive momentum for dine-in traffic at restaurants in Thailand, which is approaching pre-pandemic levels," she said.

"Locals are returning to dine out with family and friends, and tourists are beginning to visit again. We intend to leverage this momentum to expand our business through store openings and enhance same-store sales growth."

One of the key growth strategies for the food business this year is to increase its presence across the country and expand the number of stores across its various food brands, said Mrs Nongnuch.

The goal is to ensure consumers have easy access to their favourite restaurants and products regardless of their location, she said.

In the first nine months of 2023 fiscal year, ending on June 30, ThaiBev reported revenues of 216 billion, up 3.8% year-on-year.

The higher revenues were attributed to improved sales revenue contributions from all its business segments, driven by increased economic activities and the recovery of Thailand's tourism industry.

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