What Does the Future Hold for Thai Beverage Public Company Limited

Thai Beverage Public Company Limited  (SGX: Y92) had enjoyed growth in both sales and profit in 2015.

But what would 2016 look like for the company? As a brief recap for context, Thai Beverage’s business can be divided into four major segments, namely Spirits, Beer, Non-alcoholic Beverages, and Food. Geographically, it operates mainly out of Thailand.

Bubbly performance

Thai Beverage’s Beer segment was the standout performer in 2015, with revenue and volume increasing by 22.5% and 17.5%, respectively. The company had also made some solid gains in terms of market share. Here’s what Prapakon Thongtheppairot, Senior Vice President Beer Product Group, had to say about market share in a recent earnings briefing:

“Based on the latest data that we receive on a monthly basis, from third party information – by the end of the year, we would have moved from 30% to about 38% and market share has been improving on a monthly basis.

The data in January, again this is third party market research company providing such data, in January, we still continue gaining market share. So, comfortably saying that if we were to measure where we are about now, we should have gained about 10% market share within five months timeframe.”

Later on in the briefing, he also expressed confidence on the gains that have been made:

“We are are confident with the level of market share that we have gained. We are confident that this market share that we have gained so far would be maintained and we are working on a program that would allow us to continue to gradually increase our market share towards our Vision 2020 which, you know, as we have been talking about since last year.”

The Spirits segment was the major revenue contributor for Thai Beverage in 2015, making up close to 62% of revenue. But, growth has been slow in this segment. The management team gave their take on the situation:

“There is a trade down happening, people trade down to white spirits. The portion between white spirits and brown spirits in terms of volume; White is 70%, and brown is 30%. In terms of revenue, it’s about 50-50.

And then, going forward, it will be like that. The economy is not very good. The white spirits will probably continue to grow, and the brown spirit, I will look at it as flat. Going forward.”

Finally, attention in the briefing shifted to one of the company’s smaller segments, the Non-Alcoholic Beverages (NAB) segment, which made up only 9.6% of total revenue in 2015. Sales of the carbonated drinks sub-segment fell 9.2% year-on-year.

Vivek Chhabra, President of Sermsuk (a subsidiary of Thai Beverage) gave his take on future sales in this area:

“On the [carbonated drinks], we have seen some decline last year of sales. However, going forward, we have been able to, over the past couple of months, to arrest this decline. We are on a path to stabilizing our volume.

Overall, on the NAB side, we are seeing good growth continue in the industry, the total volumes are growing well. And also, especially on the water category, we have a strong position and witnessing significant growth in volume for the water side.

So, carbonated has been solved, basically we have stabilized the decline and are sort of confident that we will see the bottom of it.”

In 2015, Thai Beverage had sold 919 million liters of water, 305 million liters of tea and Jubjai (a herbal tea product), and 225 million liters of carbonated drinks.

Thai Beverage has made non-alcoholic beverages one of the key focus of its “Vision 2020” strategic roadmap. The beer brewer is targeting non-alcoholic beverages to make up 50% of its sales by the year 2020.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.