Stiff competition is brewing in Myanmar’s beer market
By Franziska Meissner
Beer behemoths have already tapped into most parts of the world in their thirst for growth. As the global beer market remains highly localised, brewers have their eyes constantly peeled, ready to strike when local venture opportunities present themselves. A break like Myanmar comes along very rarely.
Dusting itself down after years of isolation Myanmar, home to some 60 million people, offers huge prospects for growth and investors are licking their lips in anticipation.
Myanmar’s per capita consumption of beer is among the lowest in Southeast Asia, with the average citizen imbibing three litres each year, a paltry figure when compared to 15 litres annually in Cambodia, 26 in Thailand and 30 in Vietnam.
“The Myanmar beer market is still in its infancy,” said John-Paul Schuirink, financial communications manager at Heineken International BV. “So there is significant room for growth.”
Eager to secure an early move advantage in Myanmar as part of its deeper push into fast-growing Asian markets, Dutch brewer Heineken signed a joint venture with privately owned Alliance Brewery Company (ABC) in May.
The venture APB Alliance Brewery will invest $60m into the construction of a brewery near Yangon. It is scheduled to start production by the end of next year and is expected to create 400 jobs.
“ABC knows the Myanmar alcoholic beverage market and has the consumer insights, distribution network and the land,” said Schuirink.
Carlsberg, which sees Asia as its biggest growth market, is also taking advantage of the long-isolated nation’s opening. In January it signed a joint venture with privately owned Myanmar Golden Star Breweries. The Danish brewer will initially distribute its brands in the country, with plans to produce 100m hectolitres a year for sale in the domestic market, as it banks on an economic boom in the country.
“[Myanmar] is one of the last remaining virgin markets for growth,” said Jeremy Cunnington, senior alcoholic drinks analyst at Euromonitor, a market intelligence firm.
With sales declining in principal markets such as Europe and the United States, getting a foot in the door in new territory is essential to the future growth of both Heineken and Carlsberg. Both companies are relatively weak in Asia, the world’s largest beer market with 35% of global consumption.
“Beer is a highly consolidated category globally and there are very few opportunities to expand and grow,” said Cunnington.
“Myanmar is one of these opportunities, both in terms of volume and growth, but also eventually in value growth as consumers will hopefully be able to afford to trade up to more premium products.”
The average consumer in Myanmar currently has little disposable income, but foreign investors are playing a long-term game. “With foreign investments flowing in, consumers will naturally have more disposable income, which will contribute to beer sales in Myanmar,” said Kelvin Chan, head of country research at Euromonitor.
With its home market saturated and maturing, Thai Beverage (ThaiBev), one of Southeast Asia’s largest beverage companies, is also thinking big in Myanmar, a country with large volume potential. Its $4.5 billion acquisition of Singapore’s Fraser and Neave, which owns a stake in Myanmar Brewery, gives the Thai drinks giant an advantage on the ground.
“We can expect ThaiBev to inject their own beer brands into Myanmar Breweries quite early on,” said Chan. “This will give [them] a headstart over competitors that have yet to set a firm foot in Myanmar.”
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