Laos: Lao Brewery remains bullish despite currency tumble and slowing growth

In one of Asia’s poorest and smallest economies, beer is big business.

Lao Brewery, the producer of the ubiquitous Beerlao, remains bullish even as the Laotian currency tumbles and growth slows in a nation of just 7.8 million, where nearly everyone owns a home, disposable income is rising, and young people abound.

Backed primarily by Denmark’s Carlsberg Group, the company’s annual production capacity for beer, soft drinks and bottled water has expanded to 800 million litres today, from 20 million litres two decades ago.

Henrik Andersen, managing director of Lao Brewery Company, told The Business Times in an interview: “Laos is in our top five (globally) – top line and bottom line. It is our second-biggest business in Asia, only after China.”

He added: “We are selling more than 100 litres of beverages to each Laotian a year. There is no other country, to my knowledge, that meets that.”

The company’s growth has been steady since Carlsberg took a 50 per cent stake in it in 2005, with the remaining half then held by Laos’ finance ministry.

The Danish group first invested in a 25 per cent share of the brewery in 2002, with Thai Beverage as its partner. Three years later, it raised its stake to 50 per cent when the partnership broke down.

In 2007, Carlsberg acquired a 70 per cent stake in state-owned Lao Soft Drink Company, the local bottler of Pepsi Cola and other soft drinks. The government holds 30 per cent.

In 2012, the two Lao companies were merged in a transaction that raised Carlsberg’s ownership to 61 per cent, with the rest held by the country’s finance ministry and smaller Lao shareholders.

Except for a dip in 2020 during the Covid-19 pandemic, the brewery has enjoyed an uptick in annual sales over the last two decades.

Beerlao, the company’s flagship lager, commands the lion’s share or 90 per cent of the local beer market, but the company is also upbeat about its soft drinks, its Tigerhead bottled water, and PepsiCo-owned snack brands such as Lays potato chips and Cheetos.

This is despite slower expansion, projected at 3.5 per cent in 2025, down from 4 per cent in 2024. The dip is expected to be “across all categories we have seen growth (in) over the years”, Andersen said.

He noted that the South-east Asian country has three factors working in its favour: a growing population (increasing 1.5 per cent a year), rising per-capita consumption, and a relatively young population (more than 53 per cent of Lao people are under 30, based on Unicef data).

“It is a very young population; kids are becoming teenagers and starting to drink soft drinks, and teenagers are becoming adults and starting to drink beer,” he said.

Laos punches above its weight in drinking. The country is ranked 18th globally, and the highest in Asia for alcohol consumption, based on World Health Organization (WHO) data. When it comes to beer, Laos trails only Cambodia in per-capita consumption, going by 2022 data from WHO.

The data also highlights another standout statistic: Lao women drink more than their sisters in the region.

While the Lao government in 2023 raised excise taxes on spirits and wines with alcohol content above 10 per cent, locally brewed spirits were exempt.

Lao Brewery has long been the country’s largest taxpayer, contributing about US$250 million to state coffers in 2024, Andersen said. He estimates that the company generated about US$600 million in revenue last year.

In recent years, the company’s biggest challenge has been the depreciation of the local currency, the kip. It was down more than 50 per cent against the greenback between 2022 and 2024, which has forced price hikes.

This is because most of its ingredients and machinery are paid for in US dollars or Thai baht, except for rice, which makes up about 30 per cent of its raw materials.

“We had to almost double our prices over a 24-month period, not because we wanted to, but because of the devaluation of the Lao kip. Yet, we ended up selling bigger volumes,” Andersen said. “That shows that there is more money in Laos than some observers might think.”

A Vientiane-based economist who declined to be named noted: “Housing is usually a household’s biggest expense. But in Laos, about 95 per cent of people own their homes – the highest rate in Asia, according to the World Population Review.”

In neighbouring Thailand, that proportion is around 80 per cent. “So that means people have more money to spend on consumption (on everything else),” the economist added.

Lao Brewery is not the only brewer in town. In 2008, Carlsberg’s global rival Heineken set up a joint venture – with the government holding 25 per cent and SBK Consulting, 7 per cent – to produce its iconic brand domestically.

The venture also launched a mass-market brand, Namkhong Beer, to contest the low-price segment.

As one long-time Vientiane resident put it: “Heineken is seen as the premium beer, the beer you drink to show off, whereas Namkhong is a working man’s beer.”

To maintain its dominant market share, Lao Brewery has expanded its beer line-up over the years. Besides the classic lager, its Beerlao range now includes variants such as Dark, Gold, White Lager, IPA and Green; the last of those is brewed with 100 per cent organically grown rice from the company’s sustainable farm project.

It also produces LaneXang beer to cater to the budget segment. The variety of Beerlao brands in the market may explain the lack of a vibrant craft beer scene in Laos.

Lao Brewery has also diversified into the export market. Andersen said: “This year, we will export about US$15 million worth of Beerlao to about 22 countries, but mostly to South-east Asian countries and China.”

While the Lao beer market is protected by hefty duties on imported beers, this has not stopped an inflow of smuggled brews, chiefly from China and Vietnam.

Although Lao Brewery no longer enjoys monopoly status with the arrival of Heineken, Andersen acknowledges that the partial government ownership comes with benefits.

“There is this interdependence between the government and us that has worked out well over the years,” he said.

For instance, the government keeps tariffs on beer imports high and excise duties low, while Lao Brewery pays its taxes and can be relied on to sponsor most sports and cultural events.