ThaiBev looks to food and abroad for growth after sales dip

[BANGKOK] Thai Beverage's (ThaiBev) sales in the first nine months of its fiscal year, from October 2016 to June 2017, dropped 6 per cent year on year to 142 billion baht (S$5.8 billion) because of slow economic growth, CEO Thapana Sirivadhanabhakdi told reporters on Thursday.

Sales have also been pressured by Thailand's observance of a year-long mourning period after the death of King Bhumibol in October last year. The beer market has declined by 8 per cent, one executive said at Thursday's news conference, as festivities have been curbed.

ThaiBev, controlled by Mr Thapana's billionaire father Charoen Sirivadhanabhakdi, expects an upturn after the mourning ends this month and plans to launch two new spirit products in November.

The company was optimistic about the Thai economy next year, thanks to strong fundamentals and growth from neighbouring Vietnam, Cambodia, Laos and Myanmar, Mr Thapana said.

The Singapore-listed company was also hit by a new alcohol excise tax and a sugar tax on its sweetened drinks, which Mr Thapana said has had a "short-term impact" on business.

It has increased prices of spirits, which account for more than half its revenue, by about 2 per cent across the category, said CEO of Spirits Prapakon Thongtheppairot.

For the current financial year starting in October, the company plans capital expenditure of 7.4 billion baht for routine repairs, maintenance and potential mergers and acquisitions (M&A), Thapana said.

ThaiBev, which is known for Chang beer, also wants to grow its beer market share in Southeast Asia, but this cannot be achieved organically, said Edmond Neo Kim Soon, head of the company's beer division.

Overseas operations account for 10 per cent of revenue and M&A activity is needed for expansion, he said, adding that key markets are Vietnam, Cambodia and Myanmar.

The company is also expanding its food business, executives said.

Having announced in August that ThaiBev would buy the KFC franchise from Yums! International (Thailand) for 11.3 billion baht, giving it 240 stores in Thailand, further expansion into casual and fine dining is planned through subsidiary Oishi Group , said ThaiBev foods division CEO Nongnuch Buranasetkul.

REUTERS