Carlsberg charges in to brewing beer battle

Even as it exited the Thai market due to a dispute with its local partner, Carlsberg has been clear about its intention to return. The task, however, is likely to prove challenging. Thailand's premium beer sector has for years effectively been a two-brand sector -- the bulk dominated by Heineken, and about 12 per cent by Carlsberg. When the Danish brewer exited, it essentially handed over its hard-won market share to a single, already strong competitor. "Asahi is very niche, and a very small number would have moved into Kloster simply because of the distribution muscle of Boon Rawd Brewery, but the bulk would have gone to Heineken," noted an industry source. "If you go down to the supermarkets, even (Calrsberg's) shelf space has been swallowed up by Heineken." The longer Carlsberg stays out of the market, the more opportunity its consumers will have to develop a taste for the competing brand -- as Kloster beer has discovered in the year since it returned to the Thai market, after more than a year's absence. Carlsberg's reentry will also be hindered by new regulations banning alcohol-related ads from being broadcast between 5am and 10pm. While arbitration between Carlsberg and its Thai partner is already underway, it's anybody's guess as to how long this will take to settle. The dispute which drove Carlsberg out of the Thai market began last year, when Carlsberg terminated its licence agreement with Carlsberg Brewery (Thailand) due to its "failure... to perform its contractual obligations, not least the payment of royalties which were due". CBTL, owned by Carlsberg's former partner in Asia, Charoen Sirivadhanabhakdi, commenced action against Carlsberg, saying that the notice of termination was invalid, and claiming damages for a wide range of losses. Production and distribution of the beer in Thailand was discontinued in mid-February. By the time it reappears on the shelves, Carlsberg will also have to contend with new competitors. San Miguel, which controls 95 per cent of the beer market in the Philippines, recently announced its intent to enter the premium segment within two years.