Myanmar Beer War getting stronger than ever

In Myanmar, where there is an internal conflict popularly described as “the longest civil war”, a new war has been risen within its newly opened market while the current war is breaking out in the northern part of the country until this month, in November 2015.

This is a war among international and local beer giants and it becomes more and more interesting as Myanmar is passing through an election this year.

That is recently Myanmar became a new exciting market for beer brands. Both Carlsberg and Heineken opened beer brewing factories in Myanmar, one after another to win the country’s beer market share that turns out to have great business potentials. On top of that, Japan based-beer giant Kirin Holding Company partnered with Myanmar Brewery Limited and plans to distribute its products in Myanmar. Therefore, Myanmar beer market is becoming a high competition playground among international beer moguls. At the same time, Myanmar beer market is also competing with European beer giants.

UNDERSTANDING MYANMAR BEER MARKET

There are challenges for both Carlsberg and Heineken that expanded their market in Myanmar, in order to secure their business. In Myanmar market big companies have to fight to get market shares, taking into account the individual daily average income in Myanmar which is only a few dollars, and the very low prices of local beers (around 0,50 USD). Myanmar consumers tend to buy cheaper beers due to the low individual daily income.

Carlsberg and Heineken have to compete with the biggest local competitor Myanmar Beer. After Heineken has turned its back on Myanmar market after the sanction started, Myanmar Beer has been growing rapidly and has now a dominant success in the market. Nevertheless, the Thai beer brands Chang and Singha succeeded in taking market shares from Myanmar Beer, namely because they sold their beer at half the price of the Myanmar giant.

Importing liquor and spirits to Myanmar has been gradually prohibited, and this since 2014. The government announced liquor and beer distributed to the market need to pay tax stamps. Myanmar Brewery took advantage of this and made lots of well-timed promotions to win more market shares. They strategically lowered their prices to compete with imported beers and it was quite a success.

In 2015, liquor and spirits imports were restricted more tightly, which helped Carlsberg and Heineken to get back their previous investment in a Myanmar market (they can expect to get their capital back within 3 to 6 years). Heineken said to the media that it would be worthwhile to wait for long-term profits.

With over 10 beer brands such as Myanmar Beer, Tiger, Singha, Chang, Heineken and Carlsberg, Myanmar Beer and Tiger Beer remain leaders in this market. According to statistics, Myanmar Beer already won about 80% of the current market.

NEW BEERS BEING INTRODUCED

To compete with Myanmar Beer attractive prices, APB-Alliance Brewing Company, part of Heineken Company introduced a new local beer brand crafted for local taste, Regal Seven on August 27th.

This new brand was expecting to penetrate the market in order to win affection for Heineken, that revealed Regal Seven will compete directly with Myanmar Beer to win the majority of consumers in the market. Regal Seven will be available on draught in selected pubs in Yangon and Mandalay restaurants, in bottles and cans in restaurants, as well bars and supermarkets throughout the country. Heineken brand was launched and distributed in sale already. The price of Heineken brand is not too high in comparison to other beer brands in the market.

Carlsberg also distributed two beer brands in Myanmar since May 2015, Yoma and Tuborg. Myanmar Carlsberg company partnered with two local companies in mid-August 2015 to distribute its beer in Mandalay and Mon Ywa cities. According to the spokesperson from Myanmar Carlsberg, they have currently contracted with Mandalay Kudos Co. for the distribution in the Mandalay region and with Lucky Two Elephant Company in Mon Ywa region.

Myanmar Brewery announced its partnership with Kirin Holdings Company and that they will replace Tiger and ABC beers with new brands. When Myanmar Brewer split with Asia Pacific Breweries (APB), they could not keep on distributing these brands and stated they will produce new brands, partnering with Kirin Company. Myanmar Beer will be distributed with the same taste and with a focus to provide a better quality. The market shares of Tiger and ABC in Myanmar is about 15% of the market.

Currently, Myanmar Brewery is distributing Myanmar Beer, Double Strong Beer, Andaman Gold (Red), Andaman Gold (Blue) in the country. In July 2015, Myanmar Brewery introduced its draught beer brand named Black Shield, and announced its 2014 income that was 200 million USD.

JOINT VENTURES TAKE PLACE

This year in August, long dispute between Union of Myanmar Economic Holding and Singapore based F&N Company came to an end after F&N agreed to sell its 55% shares of Myanmar Brewery to UMEHL, at $560 million, bought by Japan based Kirin Holding Company. It adds up the joint venture for Myanmar Brewery, 55% of shares owned by Kirin Holdings Company, and 45% owned by UMEHL. Kirin, the new partner of UMEHL is Japan’s second largest brewery company.

The news said Kirin want to launch its Japan beer in ASEAN market as the growth rate in Japan local market is becoming slower. Kirin plans to do a joint venture with a local company in the Philippines to enter the market. It also launched businesses in Vietnam and Singapore. Moreover, the media said Kirin was planning to take over the beer market in Asia which has high business potentials.

Carlsberg signed an agreement contract with Myanmar Golden Star – MGS in 2013 and founded Myanmar Carlsberg Company Ltd., and possesses 51 % of its shares. Myanmar Carlsberg Company opened a $75 million brewery in May 2015 at Bago, in Nyaung Inn Village industrial zone. Both Carlsberg and Tuborg are brewed locally alongside with Yoma, a new beer brand distributed into market since May 7th.

Heineken made a joint venture with Alliance Brewery Company (ABC) and founded APB Asia Pacific Breweries (APB). Heineken owns 57% shares whilst Alliance Brewery Company (ABC) owns the rest of the shares. A subsidiary company of APB, International Beverages Trading Company, produces Grand Royal Whisky, widely popular among the local beverage market. APB Alliance Brewery Company opened a $60 million brewery in Hmaw Bi, Yangon District in 12 July 2015. Regal Seven and Heineken beers also operate in this brewery and are now in the Myanmar market.

BEER PRODUCTION IN MYANMAR

Eleven Media stated, referring to the announcement of the Ministry of National Planning and Economic Development (MNPED), that alcohol and beer production in Myanmar are 41.8 million gallons in the fiscal year of 2014 – 2015 and represent a double increase of local beer production. In 2012 – 2013, Myanmar beer production was 26 million gallons and 34 million gallons in 2013-2014.

According to the statistics, beer production in Myanmar increases each year and has doubled within 3 years. With the new local and international breweries allowed in the market, beer production in Myanmar is expected to significantly increase.

BEER CONSUMPTION IN MYANMAR

Local media affirmed Myanmar beer consumption is over 46 million liters. The Myanmar Investment Commission (MIC) also said half of that amount is imported through illegal black market routes into Myanmar. Beer production from the three main breweries in Myanmar is only 20 million liters. Besides as it’s not officially allowed to import beer, the 26 million liters left come from black market routes.

The surveys from Euromonitor International highlights that the official beer market excludes black market goods imported from Thailand. Beer sales in Myanmar were 172 million liters in 2013 and since 2009 has been increasing by 5.5% yearly.

In US dollars, beer sales in Myanmar were $265 million in 2013 and it has been increasing up to 14% between 2009 and 2013. The local media underlines speculation from Euromonitor in stating that within 2014 and 2018 beer sales will yearly increase 21% and reach up $675 million of dollars.

An Ipsos survey estimated beer consumption in Myanmar in 2013 per person with about 10 liters. This figure doubled comparing to the consumption 3 years ago. Beer consumption per person in 2013 was 25 liters in Thailand and 25 liters in Vietnam.

According to the survey led Carlsberg, average beer consumption per person in Myanmar is only 6 liters per year and thus it’s not going to be a problem for getting a market share, according to U Thein Htun, Chairman of Myanmar Carlsberg. Myanmar media stated beer consumption per person in Thailand has now reached 38 liters.

AVERAGE PRICES FOR BEER IN MYANMAR

*There is a difference between retail and wholesale prices*

NEW INVESTMENTS ON MYANMAR BEER MARKET

As alcoholic beverage sales are developing in Myanmar, international liquor companies came into the country and intensified market competition with existing local beer companies. The Myanmar Investment Commission granted 4 international alcoholic beverage company licenses in January and also plans to give more licenses.

Besides, Thailand based popular beer companies (Thai Beverage and Singha Corporation) plan to enter Myanmar beer market.

Thai Beverage desires to expend its market in the ASEAN region as it has secured a stable market share in Thailand. They are planning to enter Myanmar beer market as there are lesser potentials in expending to lesser populated nations like Laos, Cambodia, Malaysia and Indonesia. This is because Malaysia and Indonesia have restrictions against alcohol. Thai Beverage will also make a joint venture with Fraser and Neave Ltd. to make its businesses bigger in Myanmar. It plans to produce Chang Beer in 3 different locations in Myanmar. Singha Beer Corporation also plans to sell beer in Myanmar and proposed to open a beer selling place in Myanmar last May. Singha aims to plant a brewery in Mandalay that will focus on importing beer to Southern China.

Beer consumers in Myanmar are increasing every year. According to the Ministry of National Planning and Economic Development statistics, Myanmar beer production doubled within 3 years and is forecast to exponentially increase as popular beer breweries are opening.

Sources: Irrawaddy Media, Eleven Media, Myanmar Times Daily and Journal, 7 Day Daily, Pyi Myanmar Daily, Trade Times Journal, AFP