ThaiBev commits up to B8bn for expansion
Firm wants to stick with its strengths
published : 28 Sep 2022 at 05:26
newspaper section: Business
writer: Pitsinee Jitpleecheep
Despite the uncertain global economic outlook, Thai Beverage (ThaiBev), the Singapore-listed food and beverage company, says it remains committed to spending 5-8 billion baht to expand its businesses next year, mainly in Thailand.
Of the total investment budget, 1.1 billion baht is for food business expansion, 600-800 million baht for spirits business expansion, 300-400 million baht for non-alcoholic drinks, and the remainder for other segments such as digital platforms, logistics infrastructure, health and wellness, and product innovation.
For the food business, the company plans to open 70 new restaurant branches next year, 35 of which will be for KFC, with the remainder other brands.
"The investment budget may not be as big as before Covid-19," said Thapana Sirivadhanabhakdi, the group's president and chief executive.
"We would rather focus on existing businesses and those we recently acquired to post the best returns."
According to Mr Thapana, Asean remain the group's core market, citing the huge potential of the non-alcohol business, which is larger than the alcohol market. For instance, in the Philippines the market for non-alcoholic drinks makes up 50% of the total beverage market, compared with 87% in Indonesia and 49% in Thailand, he said.
In addition to the investment, the group said it is enjoying resilient business growth, especially for spirits, beer and non-alcoholic drinks.
Mr Thapana said ThaiBev's sales in the nine-month period up to June grew by 8.2% to 208 billion baht, with earnings before interest, taxes, depreciation and amortisation rising by 6.7% to 39.1 billion baht.
He said the group's nine-month sales revenue is even higher than in comparable periods over the past three years, demonstrating the strength of demand recovery and the success of brand management efforts.
Mr Thapana said the relaxation of border rules and social and dine-in restrictions in Thailand and Vietnam, two key markets for the group, have contributed to the recovery of domestic and international tourism.
The resulting rise in consumption has boosted the firm's sales revenue and earnings, he said.
"But even as we celebrate a return to normality, we face new challenges of higher inflation and input costs amid heightened geopolitical tensions, which could dampen domestic private consumption. We will continue to exercise prudent cost management to mitigate these pressures," said Mr Thapana.
"We are reinforcing our commitment to enabling sustainable growth by setting out quantifiable targets to help us achieve sustainability and net-zero emissions."
ThaiBev launched its sustainability strategy yesterday, with clear environmental, social and governance initiatives and goals, including a target to achieve net-zero carbon emissions by 2040.
He said the strategy will enable ThaiBev to drive sustainable development and resilience across its business, protect the environment, support local communities and enhance governance.
Prapakon Thongtheppairot, ThaiBev's executive vice-president in charge of spirits, said the group's spirits business had proven to be resilient, maintaining market share for both white and brown drinks.
In Thailand, Ruang Khao remains the No.1 white spirit, while Hong Thong is still the biggest-selling brown spirit.
Based on a recent market research report, SangSom rum grew by 9% due to its brand strength, the ongoing economic recovery, and the return of tourism to Thailand, which supported the recovery of spirits sales, especially brown spirits.
Despite facing difficulties over the past two years, the Myanmar-based subsidiary Grand Royal Group still delivered a solid performance, maintaining its position as the No.1 whisky in the country and generating strong positive cash flow, Mr Prapakon said.
Michael Chye Hin Fah, head of the beer product group, said the company is encouraged by the recovery in beer segment performance in both Thailand and Vietnam.
The group's beer sales increased 15.3% year-on-year to 92.6 billion baht in the first nine months of fiscal 2022, driven by a healthy recovery in economic activity in these key markets.