After a better-than-expected performance in Thailand, Ajethai Co, the producer of Big Cola, will move further into the highly lucrative beer market, challenging local two giants _ Singha and Chang.
The Thai unit of Peru-based Aje is conducting a feasibility study in the Thai beer market and expects to introduce four beer brands _ Franca, Club, Tres Cruces and Caral _ within the next three or four years.
"There is still room for us to enter the beer market. With the experience of our Big Cola here, we expect we can do the same for beer," said Hernan Cordova, Ajethai's managing director.
After the completion of the market study, the parent company will approve a business plan next year. The brewery is expected to be built with an initial investment of US$100 million.
Thailand's beer market is valued at almost 200 billion baht annually. Two domestic beer brands _ Singha and Chang _ control more than 90% of the market. All beer brands under Singha Corporation including Singha and Leo hold a 60% share in the market, while arch rival Thai Beverage's Chang holds 34%.
The Thai beer market is now very hot and attractive for new players. Singha Corporation will reintroduce Denmark's Carlsberg to Thailand after the brand withdrew from the country a while back.
The Aje Group started its beer business in Peru in 2007 before expanding into Colombia and Mexico. Sales from beer worldwide remain small but have huge potential.
"In Thailand, we expect to start our beer business in 2015. Even though the beer market here is very competitive, it has room to grow, as Thai consumers are ready to try new tastes," he said.
Big Cola became a top-three player only six years after its launch. Ajethai now contributes 14% sales to the Aje Group's global soft drinks sales, after Mexico (19%) and Colombia (18%).
Apart from beer, Ajethai will allocate about $30-50 million to build its new soft drinks factory in the North or Northeast next year. The additional factory will boost its annual production capacity by 20-25% to 448 million litres from the current 343 million litres. The business plan for the new factory will be finalised within two months.
Ajethai now produces four products in Thailand _ Big Cola, Cielo drinking water, cool tea and Sporade sports drink.
The Big Cola production capacity in Thailand also serves Laos, Cambodia, Myanmar and Malaysia.
Big Cola entered Thailand in 2006 and currently has a 16.6%% market share in Thailand's 43 billion baht soft drinks industry. This share is expected to rise to 18-19% next year. Soft drink demand here increases by 6-7% per year.
Currently, Big Cola is No.2 in the soft drinks market in Peru, Colombia, Ecuador and Indonesia. The company hopes Big Cola will rank No.2 in the Thai soft drinks market, controlling a 20-25% share within the next five years.
Overall sales of Ajethai is expected to exceed 4 billion baht by year-end, rising to 10 billion 2017. Ajethai will become the management centre for Big Cola businesses in Asean in the future.