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ThaiBev to ramp up Vietnam operations
AFTER posting disappointing Q3 results on Tuesday, Thai Beverage (ThaiBev) said on Wednesday evening it continued to remain optimistic about its growth in the upcoming quarters.
It cited plans to double down on the Vietnam beer market as well as pinning its hopes on the upcoming Thai elections, expected to happen early next year, giving the anaemic demand for beer and spirits in the country a much-needed boost.
One of the concrete steps ThaiBev outlined in a post-earnings conference call was that it was looking to focus on its 54 per cent stake in Saigon Beer Alcohol Beverage Corp (Sabeco).
Despite acquiring the Sabeco stake in December last year, it could only begin conducting due diligence of its production facilities recently because its current CEO, Bennett Neo Gim Siong, was appointed only on Aug 1 this year.
However, it believed the Vietnam beer market would be a profitable venture for the company and was optimistic about the prospects of Sabeco.
Asked by analysts about developing synergies between ThaiBev and Sabeco, the firm said it was working on a number of areas including procurement, marketing, and R&D.
It was also exploring how best to integrate market knowledge as well as best practices in manufacturing.
Speaking on its Thailand and Myanmar markets, ThaiBev attributed the low demand for beverages – including both non-alcoholic drinks like water and green tea, and alcoholic ones like beer and spirits – to poor macroeconomic fundamentals.
It cited the poor performance of the regional agriculture sector, including the rice and fishing sectors, as being the main reason behind falling consumer disposable income.
It also added that the reduction in demand for alcoholic beverages was likely not due to changing consumer preferences, such as towards healthier drinks with less sugar content.
One-off events such as the recently concluded World Cup also did not significantly raise overall consumption of beer in ThaiBev’s markets.
The firm said it expects the domestic beer markets it is in to continue to remain challenging in the face of weak demand, as it does not see any significant shift in the disposable incomes for mass market consumers in the near future.
However, it noted that this was affecting its competitors as well as itself.
Discussing its growth strategy for the long term, ThaiBev said it was also seeking to grow its water and carbonated soft drink sales. It cited green tea as a product it was keen to grow as it had a high profit margin.
ThaiBev closed S$0.02 or 2.9 per cent lower at S$0.68 on Wednesday.
Source: https://www.businesstimes.com.sg/companies-markets/thaibev-to-ramp-up-vietnam-operations