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5 Things You Should Know About Thai Beverage

Ser Jing - Thai Beverage First Quarter Results, Weighed Down by Acquisitions (pic)Those who are keen on a Chang beer or two are likely to know the name Thai Beverage (ThaiBev) (SGX: Y92).

Charoen Sirivadhanabhakdi is the sixth of 11 children born to a poor street vendor who migrated to Bangkok from Southern China.

He left school at just nine years old to start working – eventually supplying to distilleries that were producing Thai whiskies (which were a State run monopoly at this time). However, through the contacts he made he managed to acquire a licence to produce his own – and did extremely well by selling inexpensive spirits.

Carlsberg Asia Limited

By the nineties, Thailand’s beer industry was growing, with Singha beer dominating the market. Charoen’s company Thai Beverage and Danish brewer Carlsberg (OMX: CARL) decided to go into production in Thailand together, and brew Carlsberg beer in Charoen’s brewery in a bid to introduce it to the Thai consumers.

Chang Beer

However, by 1994, Charoen decided to make his own beer based on what he had learnt from Carlsberg. He made it stronger than rival Singha, named it Chang (Thai for elephant) and marketed it very aggressively – and within four years Chang was the most popular beer in Thailand with over 50% market share.

Carlsberg couldn’t compete and pulled out of their joint deal, which resulted in Charoen suing Carlsberg for US$2bn. The dispute was settled in 2005, with ThaiBev winning US$120m.

F&N

More recently, and after a long drawn-out battle, Charoen, via his company TCC, succeeded with its US$11.2bn bid to takeover Singapore’s most famous soft drinks manufacturer Fraser & Neave (more commonly known as F&N) opening the doors to sell F&N drinks such as 100 Plus to the huge Thai market, as well as boost sales of Chang beer.

But did you know…

  1. Charoen Sirivadhanabhakdi’s real name is Khun Chaoren. The King of Thailand graciously granted the family the name “Sirivadhanabhakdi” in 1988. Charoen’s family is also ethnic Chinese and he speaks fluent Teochew, as well as Thai.

 

  1. The Chang beer sold in Thailand is different to that made for export – the exported beer is a malt beer, whilst the local version is brewed from rice.

 

 

  1. In 2004, Charoen tried to buy Liverpool FC from the English Premier League. He was unsuccessful, but Chang Beer currently sponsors Everton FC.

 

  1. Alcohol is frowned upon by many Thai people – when Charoen tried to float ThaiBev on the Bangkok Stock Exchange protests by a Buddhist sect forced him to move the listing to Singapore.

 

  1. Chang beer is made using deep well water, which is so pure it is bottled and sold in Thailand as mineral water.

 

Myanmar

With its home market saturated, ThaiBev is currently turning its sights to an emerging market – Myanmar. While beer is still a luxury item for many low-paid Burmese, many are predicting an economic boom in the region, which could turn it into an everyday commodity. With the acquisition of F&N, came 55% of Myanmar Brewery, giving Charoen a foothold in the country.

However, they’re not the only ones – Carlsberg and Singha are rumoured to be joining forces and also planning to brew and sell their brands to Myanmar, which could prove interesting.

Today, ThaiBev has four main businesses: Beer, Non-alcoholic Beverages, Spirits and Food, producing some of Thailand’s most popular spirits and rums including Mehkong and Sansong. Add on F&N and private property arm TCC Assets and you can include properties, shopping malls and hotels to the portfolio.

As for Chaoren Sirivadhanabhakdi, well he reportedly has a net worth of US$11.7bn, making him the third richest entrepreneur in Thailand and earning position 83 in the Forbes’ list of the world’s billionaires.

Not bad for the son of a street vendor who left school at nine!  Click here now for your FREE subscription to Take Stock Singapore, The Motley Fool’s free investing newsletter. Written by David KuoTake Stock Singapore tells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Alison Hunt doesn’t own shares in any companies mentioned.