Thai Beverage Public Company Limited had enjoyed growth in both sales and profit in 2015.
Without a doubt, the company’s Beer segment was the standout performer for the year, with revenue and sales volume increasing by 22.5% and 17.5%, respectively. The segment had also gained market share at the expense of the Leo brand of beer, a leading competitor to Thai Beverage’s own Chang beer brand.
As a brief recap, Thai Beverage has four major business segments in total, namely, Spirits, Beer, Non-alcoholic Beverages, and Food. It operates mainly out of Thailand.
In a recent earnings briefing, analysts were curious to find out how Thai Beverage’s competitors – like Leo for instance – were reacting in terms of pricing. Prapakon Thongtheppairot, Senior Vice President Beer Product Group responded:
“I think it is hard to say what we would expect our competitor would react to when the competitor lose market share at this level. I have to say that we do respect their action, but we would welcome their price reductions greatly.”
Ueychai Tantha-Obhas, Executive Vice President Spirit Product Group, added his take as well on the potential price competition between Leo and Chang:
“Actually, there is some price reduction in the market already. Because of their kinda heavy trade deal. But I think Chang now is able to maintain, and sort of defend itself on the pricing pretty. Actually on our small bottles, we are at price parity or even higher than them. And we still see the volumes to grow.
We are not arrogant or anything but we are quite certain that the green bottle has lifted up a lot of our image and then the price gap is really, really narrow. We strongly believe that we can be at price parity very soon, without losing volume.”
Tantha-Ohbas also added his view about price differences:
“Actually, I don’t think so. If you look at 7-11, our big bottle is only THB 1 different. Our small bottle is now higher than Leo. The can is about the same. We are catching up very quickly. We haven’t seen any volume dented yet so far.”
The Beer segment made up over a quarter of Thai Beverage’s top-line in 2015. However, it only contributed 6.2% of the company’s net profit. This could be an interesting area of the company to observe for investors in the current year and beyond.