Jenny Chan 陳詠欣
Sep 17, 2015

Beer firms vie for a piece of Myanmar

SECTOR STUDY: Despite strong incumbents, international beer-makers are keen to establish a foothold in the growing market, and are building local brands to do so.

Changing tastes: International brands hoping to win a near-virgin market
Changing tastes: International brands hoping to win a near-virgin market

Hot weather favours beer-drinking in Myanmar. Parents are fine with young adults having beer rather than hard liquor. There are more than 15,000 small streetside shops and convenience stores (potential distribution points) selling bottled beers at almost every corner of the country. Under-18s are not legally allowed to buy alcohol, but teens are rarely asked to show ID. 

All these factors ferment into a market opportunity that is “pretty obvious”, said Rose Swe, co-founder of Mango Group, whose agency is handling Carlsberg.

Last month, Japanese beer giant Kirin made headlines with a major US$560 million investment in Myanmar Brewery, maker of market leader, Myanmar Beer. The move eclipses earlier investments in the country by Carlsberg and Heineken.

Multinational brewers are betting big on growing the market in the Southeast Asian country. Annual per capita beer consumption in Myanmar is currently just 3.5 litres — presenting enormous growth potential compared with over 30 litres per capita in neighbouring Vietnam and Thailand.

At present, major incumbents Myanmar Beer, Dagon, Mandalay Lager, Andaman Gold, Spirulina and Tiger Beer dominate the market. 

Carlsberg was the first multinational to enter the market, opening a US$75 million facility in Bago, 80 km northeast of the commercial capital Yangon in May. The brewery is a joint-venture with holding company Myanmar Golden Star Group, signed in 2013.

Heineken was hot on the heels, building its own US$60 million brewery in the Hmawbi township near Yangon, in a joint-venture with Alliance Brewery Company.

According to local agency Blink’s estimates, Myanmar Beer dominates about 85 per cent of the market, with Tiger Beer on 10 per cent and others making up 5 per cent. The entry of international brands could push growth to up to 30 per cent by 2016. 

Carlsberg says consumers in Myanmar are “very open” to new choices, so the market will benefit from an increased range of brand offerings.

Given a growing population and increased urbanisation, consumption could double, predicted Jessica Spence, commercial vice-president at Carlsberg Asia.

Myanmar’s beer market

  • Population: 53 million
  • Estimated value: US$375 million
  • Estimated volume: 185 million litres
  • Per capita consumption: 3.5 litres

Sources: TNS, Euromonitor

Heineken is even more optimistic. Its new brewery has a capacity of 33 million litres per annum, with room to increase to 100 million.

Still, Heineken is prepping for its entrance into Myanmar to be a long-term investment. It will take “a few years” to become profitable, according to Zita Schellekens, government affairs and sustainable development manager for Asia-Pacific at Heineken. “We aim to compete by the strength of our comprehensive portfolio, our efficient supply chain and our focus on training and development of people,” she says. 

Kirin’s investment in Myanmar Beer appears to be a shrewd move that will allow it to leapfrog its international rivals in the market. The brand has created a good bond with its consumers; a strategy that Stephen Kyaw, co-founder and CEO of Blink, says is working well. These include ‘Myanmar Beer days’ complete with giveaways, lucky draws, free gifts, and ‘buy-two-get-one-free’ offers. 

Carlsberg, on the other hand, is intent on driving awareness and trial via products, such as Yoma, a new brand it created from scratch. As a lot of beer consumption is in the ‘on-trade’ (pubs and clubs), Spence’s focus is making sure that consumers get a “fantastic first experience of our beers every time”.

Kyaw says people in Myanmar tend to prefer draught beers to bottles or cans. “If Carlsberg and Heineken create a trendy beer-station atmosphere, they will see fast growth for their brands.”


EXPERT OPINION
Local partnerships critical to gaining foothold

Jason Copland, general manager, TNS Myanmar

I think it has been well documented about the low per-capita beer consumption in Myanmar. Compared to other markets in the Asia region, the Myanmarese drink somewhat less than 4 litres per person per annum.

This makes it a very attractive market for brewers and drove the recent investments from Heineken and Carlsberg in establishing local presence. Furthermore, incomes are rising and leading to more social gatherings which are fantastic occasions for people to drink beer.

Both Heineken and Carlsberg will benefit from their local partners’ experience with the local regulatory requirements and an understanding of distribution.

I imagine it to be very challenging for alcohol brands to establish good footholds to grow their businesses in this predominantly Buddhist market without it.

Apart from consumption of local brewer brands from Myanmar Brewery and Dagon, there is also considerable consumption of imported bottled and canned beers from neighbouring countries, in particular Thailand. This is a challenge for international beer producers who have invested in plants and paying taxes.

Heineken and Carlsberg have developed local champion brands Regal Seven and Yoma respectively, using local ingredients as much as possible to drive greater penetration. This is a good strategy as local beer drinkers are very proud of their country and appreciate that brands are considering their tastes.

 

 

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