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Thai Beverage Public Company Limited’s Year in Review: A Big Vision for Non-Alcoholic Beverages and Food

Thai Beverage Public Company Limited (SGX: Y92) released its annual report for its fiscal year 2016 (FY2016) last month.

For Thai Beverage, FY2016 contained just nine months – it stretched from 1 January 2016 to 30 September 2016. The usage of a nine-month fiscal ‘year’ was to facilitate a change in the company’s fiscal year-end from 31 December to 30 September.

In FY2016, Thai Beverage reported THB 139.1 billion in sales, a figure that was about 15% higher than the comparable period a year ago. Thai Beverage derives its revenue from four business segments: Spirits, Beer, Non-alcoholic beverages, and Food.

Let’s take a look back at the Non-alcoholic beverages and Food business segments.

A bird’s eye view

Thai Beverage’s Non-alcoholic beverages revenue grew 6.8% in FY2016. The segment recorded THB 13.3 billion in sales and accounted for 9% of Thai Beverage’s FY2016 revenue. The segment, though, recorded a loss of THB 1.1 billion on the bottom-line.

The Food segment showed tepid growth, with its revenue increasing by just 1.4% to THB 5 billion, making up 4% of Thai Beverage’s FY2016 revenue. The segment’s profit was a little better, increasing 7.3% to THB 2.1 billion due to cost efficiency.

Both segments are still small in the grand scheme of things, but Thai Beverage has some big ambitions for them.

Fields of gold

Thai Beverage unveiled its Vision 2020 in 2014. In its original announcement, Thai Beverage made a bold target:

“… revenue contribution from non-alcoholic beverages is targeted to increase to over 50% by 2020.”

At the current rate, the goal seems like a bridge too far. The Non-alcoholic beverages segment, though, is huge on one statistic – sales volume. Thai Beverage delivered 1.3 billion liters of non-alcoholic beverages in FY2016.

Thai Beverage’s annual report highlighted its efforts in the segment:

“On the non-alcoholic beverage front, ThaiBev further invested in brand-building and portfolio diversification through innovation in 2016 to meet the full spectrum of consumer demands.”

Some of the company’s efforts started awhile back. These include the acquisition of a controlling stake in Singapore’s Fraser and Neave Limited (SGX: F99). The report noted:

“ThaiBev fully expanded into the non-alcoholic beverage segment by acquiring Thailand’s No. 1 green tea company Oishi in 2008, acquiring Thailand’s widest reaching distributor Sermsuk in 2011, as well as Singapore’s long-established leading beverage producer and distributor and printing company F&N in 2012.”

Foodie paradise?

Thai Beverage is also venturing into new areas with its Food segment. The FY2016 annual report highlighted:

“In addition to our leadership position in the beverage industry, ThaiBev also operates in Japanese restaurant and ready-to-cook and ready-to-eat food business through Oishi Group Public Company Limited.

We have started branching out from our well-established Japanese restaurants and food products by leveraging on our subsidiary Food of Asia Co., Ltd. (“Food of Asia”), which we established in 2015, to accelerate the expansion of our food business.”

Thai Beverage is likely to be in the early innings for both its Non-alcoholic beverages and Food segments. It remains to be seen whether Thai Beverage is able to gain traction on its big vision for the year 2020. At the moment, it would appear that acquisitions would be the fastest way forward. Investors will have to see what the new fiscal year brings for Thai Beverage’s Non-alcoholic beverages and Food segment.

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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.