Latest move sees the huge Thai drinks conglomerate move to power faster and deeper expansion in ASEAN and Southeast Asia to tap into a growing beer market. The driving force and founder of Thai Beverage, Charoen Sirivadhanabhakdi, has become one of the wealthiest men in the world with interests in property, brewing, food, insurance and media.
Thai Beverage filed papers with the Singapore Stock Exchange this week to pursue an IPO offering for 20% of a newly spun-off regional beer and drinks juggernaut focused on the Southeast Asian and ASEAN market where the firm sees potential for spectacular growth. It is understood that the Thai group’s 2018 purchase of Sabeco, the leading Vietnamese brewing firm, will be central to the new entity which is expected to be valued at $10 billion or ฿300 billion.
Thai Beverage, the largest and most profitable drinks firm in Southeast Asia, established by the tycoon in 2003, is to launch an IPO on the Singapore Stock Exchange to float off 20% of its fast-growing regional beer-producing concern subject to market conditions.
The move will allow the new entity easier access to capital markets to expand in a rapidly growing market for beer expected to resume once the Covid-19 emergency recedes.
Thai firm listed in Singapore, not Thailand
The Thai firm which is listed in Singapore because the Stock Exchange of Thailand in Bangkok doesn’t accept firms linked with the production and marketing of alcoholic drinks, filed preliminary documents this week with the market in the city-state.
It is understood that the floatation aims to raise $2 billion or ฿60 billion. The move had been planned for the middle of last year but was postponed because of the Covid-19 crisis.
Potential growth in the ASEAN beer market
The firm sees terrific potential for the growth of beer sales in the ASEAN area and the development of its operations in Vietnam where it owns Sabeco, the brewer of Bia Saigon.
Between the group’s flagship product Chang Beer and Bai Saigon, it controls over 23% of the beer market in the ASEAN community of 10 nations in Southeast Asia.
The estimated potential of the beer market in ASEAN is vast and it is expected to grow to $50 billion or ฿1.5 trillion by 2025 with a flourishing population expected to rise to 700 million people from 660 million now.
‘We aim to be the market leader for all beverages by 2025,’ Chief Executive and President of Thai Bev, Thapana Sirivadhanabhakdi, explained before the onset of the virus crisis. ‘Key markets are Thailand, Myanmar, Cambodia, Vietnam and Laos.’
Firm still very much rooted in Thailand
In 2019, Thai Bev’s sales were 65% from Thailand and 35% from overseas markets.
The firm had a net profit of ฿21.89 billion in the first nine months of that year on a turnover of ฿205 billion.
There is no information available yet for the impact of the virus crisis on the sale of beer in Thailand and across Asia but in the United States, it is reported that, up to the end of 2020, sales fell by $22 billion with the loss of over 650,000 jobs.
The industry is expected to fully recover.
One beneficial side effect for bigger brewers may be the more damaging impact on the emerging craft beer industry, once a growth area which has been decimated by the virus and its continuing aftermath.
Beer Chang was first brewed in 1995 and has grown exponentially into a worldwide super brand
Beer Chang was first brewed in 1995 in Ayutthaya province although Thai Beverage was not formed until 2003 when a firm engaged in the sale of beers and spirit products emerged to take on the market leader in the kingdom, up to then, Singha Beer, brewed since 1933 in Thailand by Singha Corporation at the Boon Rawd Brewery.
Chang went on to become the market leader in Thailand. It has since become an international brand and is well known in the United Kingdom through its sponsorship of English premiership side Everton FC.
Today, Chang Beer is a recognisable brand in many key markets backed up by an award-winning beer.
International Hong Kong-based arm with diverse operations worldwide created through acquisition
The firm has established International Beverage Holdings Ltd in Hong Kong to market its products worldwide. It has operations in Thailand, Asia, Scotland and the United States.
Its products range from Thai and Asian beers to single and blended Scotch whiskeys and Thai spirits as well as non-alcoholic drinks.
In 2013, it purchased Fraser and Neave, a Singapore based conglomerate involved in property, brewing and media in a deal valued at $11.3 billion.
This was followed, in 2018, by another mega-deal in which it purchased the majority shareholding in Vietnamese brewing giant Sabeco for $4.8 billion.
One of the world’s wealthiest men
On a personal basis, there is no doubt that Charoen Sirivadhanabhakdi is one of the wealthiest men not only in Thailand but in the world with interests in property, brewing, food, insurance and media that had a combined capitalisation of ฿356 billion as detailed in an August 2020 report.
However, due to the Covid-19 crisis, profits in these concerns for the first six months of 2020, fell by 47.8% to ฿2.9 billion from ฿5.6 billion the year before.