Premium Beer Market in Thailand free essay sample

There were various kinds of determinants influencing the enlargement of the beer market; especially the cause from gas price has risen up high like never before. Deriving the consumer products price had to be adjusted to avoid suffering from higher cost of production and transportation. On the other end, consumer’s purchasing power had become lower due to the higher cost of living; driving them to adapt to the economic situation they were facing. From the observation in the beer market, we could notice there were obvious changes in consumer’s behavior; consumers or drinkers tended to shift from having large size of beer 640ml. to the smaller size 330ml. in the form of small bottle or can. Moreover, there was a slightly drop in the frequency of buying beer also. In addition, government sectors also had plan in process to leverage IRS tax on alcohol beverage as the European Union had implemented it before in order to improve the social overall status and also eliminate beer industry pitfalls. We will write a custom essay sample on Premium Beer Market in Thailand or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Year 2006 In this year, there were many interesting movements occurring in the premium beer market. Beer manufacturers in the premium segment had planned an expansion in their production base to penetrate in other potential segments which were most likely to be the offering in light beer; providing more choices for consumers, containing less amount of alcohol or to be exact, lower than 5%. From the total amount of alcohol contained, although light beers were obviously positioned separately from the premium segment, still, they had become the new face of drinking premium beer which targeting on consumer who loves to drink healthier responded to the healthy concerning issues and rend in nowadays. Most importantly was light beers were actually sold in the cheaper price than premium beers. Plus with the facts that light beer market was still in the introduction stage, holding only 35 million liters in total production quantity or only 2% of the market shares in beer industry; therefore, showed that the light beers market still had more potential growth along the way (Source: Thai Bever age Marketing CO. LTD/Prachachat Newspaper: March 13th 2006) For the entrepreneur in light beers segment, San Miguel, the first brand penetrated into this market, was using the ‘Push Strategy’ in the early stage, implementing the intensive distribution to cover all convenience stores and on-premise market like pubs, bars, and restaurant in order to take advantages of being the first offering in the market. On the other hand, Chang Beer, who had been testing the light beer market since year 2005, decided to officially commercialize Chang Light into the premium market in March 2006; at a price of 45 baht per bottle which contains 4. 2% of alcohol volume; also implementing ‘sport marketing’ or ‘event sponsorship’ through golf and related activities. By March 2006, Singha Light was introduced to the premium market in Thailand. Although Singha was planning to focus on exporting their light beers to penetrate in Europe and America continents, but because of the high volume of alcohol up to 6% containing Singha Beer, it caused them to face with higher tax than the competitors. Plus, most drinkers in those markets preferred drinking beers with low degree of alcohol. Apart from that, Singha Light also put more focuses on driving the local market. Singha spent its marketing budget up to 150 million baht to present â€Å"Singha Light: The North Pole Challenge† in order to seek for 4 Thai persons getting once in a life time chance to travel up to the North Pole. Moreover, in this year, the government sectors had pushed through the new legislative law to be the mandatory for all alcoholic beverages. The law basically consisted of the regulations on selling and having to specific age of buyers, time and place of distribution. In addition, The Food and Drug Administration (FDA or ORYOR) had come up with the restriction of having any kind of advertisements relating to alcoholic beverages except print advertorial section in non-Thai magazines and other media. These regulations were officially brought to used on December 3, 2006 and immediately caused all the billboards, logos, brand related signs to be taken down and prohibited. Pubs, bars, restaurants, and also convenience stores were forced not to put any signs or logos of alcoholic beverage which could be seen clearly from outside the facilities. However, there were some exceptions were allowed in the case of social responsibility or tourism related activities. For example, the regulation stated that the facilities providing alcoholic beverages must also provide other non-alcoholic beverages like drinking water or sparkling/soda water etc. The company name must not be the same or rhyme with the name of the alcoholic drinks brand; and marketing strategy like ‘corporate brand image’ was prohibited like naming the company ‘Beer Thai’. For other marketing promotional tools like using pretty girls, the regulation still allowed them to dress in color to indicate the brand but the logos of the brand on the clothes including umbrella were prohibited; and for the issue of specialties or free giveaways that contained any logos indicating brand was postponed to be reconsider for the appropriateness. Year 2007 With the continuation of rapidly gas price rising situation, it was bad influencing the consumers to construct the negative perspective towards the stability spending and earning in the upcoming future and also directly affected the consumer’s behavior. As observed from the quantity of total beers sold in the early April, which usually the most profitable season of the beer industry; 143. 5 million liters comparing to the average sales from other months 140. 6 million liters or 2. 1%. These numbers obviously reflected the stagnant sales reached as low as 2-3%; dropped from 4-5%; mostly because of the pressure on the purchasing power of consumer due to the government regulation trying to decrease the alcoholic drinks consumption. On the tax regulation issue on beers, The Excise Department had organized into 3 groups and assigned different tax fees depending on each segment. The premium beer will be paying tax at 37 baht/liter; 36 baht/liter for standard market and 28 baht/liter for the economy segment respectively. For the controversial advertising issue since last year was finally settled down in this year with the revised regulations allowing the product image to be on print media but without persuasive messages or any presenter. Also print media was required to put 25% caution message of the total area of the advertisement. And for the mass media especially on television, they had divided into 2 phrases. First phrase, the TV commercials during the 10pm were allowed to put up any logo of the brand to be shown for approximately 5 seconds, and for the second phrase, 30 seconds mark shots were allowed. These changes made had tremendous positive effects to the beer market. However, those regulations were not major obstruction for the beer market. Marketers tried to adjust and improve their strategies and tactics to come up with new way of advertising. Event Marketing was one of their strategies which effectively doubled up the frequency of use. In this year, the expansion of the total beer industry had constructed the 6% growth of both quantity and value. But if we carefully looked through the segments, we would found that the premium beer market had surprisingly decreased by 8%. These were caused by the psychological factors driven consumers’ behavior to decline; plus with the government regulation had made impacts on many brands to seeking for new ways to market their products since back in August 2006 which eventually projected the decline in many firms’ total sales volume. Year 2008 Nowadays, the beer market in Thailand is still holding the attractive market for the imported brands. From the current market condition, we can notice there are many international brands which are trying to penetrate into Thailand’s beer industry to capture their potential market shares; starts off with re-entering of Carlsberg S/A Company, Denmark with the brand ‘Carlsberg’ into Thai beer market; after they had left the Thai market for the last 4-5 years. This comeback of Carlsberg is driven by the their main company in the foreign country; by starting from having the San Miguel’s breweries factory in Pathumthani as their production site. In the meantime, their marketing team has already been put in place and been planning to start their first comeback marketing event in March; and follow with the officially introduction in June. Carlsberg is mainly focusing all their efforts in distribution channel and strategies more than any other aspects. Carlsberg will initiate into the hypermarket and position itself in the same level as Heineken. Apart from that, in March, Thai Beverage Marketing CO. ,LTD. lso has plan preparing the expansion the beer portfolio to cover all the potential markets. Asahi was and still is the leader brand in Japan by having the most market shares in the beer market in Japan; by implementing the intensive distribution as their strategy, available to be purchased everywhere setting the price in the average range. Moreover, there has been improvement in the production procedure and logistics process in order to maintain the freshness and quality of the products and has tried to adjust the taste to be more preferable by Thai drinkers. They started out by focusing mainly on Japanese restaurants in order to construct the new customer base. By the year 2003, they have expanded more of their products into the common market including modern types of distribution channels like supermarkets, hypermarkets, and convenience stores etc. After some recession from the marketing strategies they had been implementing since the end of the year 2003; focusing on the taste of drought beer and plus with the innovative and futuristic of the products under the concept ‘Platinum Beer’ which derived from the sparkle silver-colored wrapped around the bottles and cans. But the selling point is somehow overestimated the perception of Thai drinkers. Therefore, in the year 2004, Asahi had decided to turn the other way around, back to its own origin which was Japan as the selling point along with the message of the bestselling beer in Japan by hoping the J Trend would eventually improve the Asahi Super Dry’s image. The result was quite successful; Asahi had captured the wider market share. By using J Trend, Asahi had effectively reached into the office workers which were employed in the Japanese firm or the group of people who have passionate in Japanese style including college students. Although there was not that large group of buyers, but most of them were likely to be identify as the middle class people, educated and have enough purchasing power. Year 2005 Asahi had decided to renovate the whole marketing strategy by turning to focus mainly on the concept â€Å"Think Difference† with â€Å"Color Marketing Strategy : Universally Communication†. They tried to emphasize on the silver strip on their products to create brand awareness, recognition and recall; distinguished from other brands in premium market. Source : BA Distribution CO. ,LTD. /Prachachat : July 17, 2005) Later on, Asahi had captured more market shares especially the increasing in rural markets; 40% from the eastern and northern part and the rest 60% from Bangkok and Metropolitan. During the second semiannual, Asahi had set the marketing budget up to 120 million baht from the total 180 million baht in order to emphasize on below-the-line 70% and above-the-line 30%. Year 2006 Organizational management structure was rearranged; the management team from Boon Rawd Brewery had come in and totally taken places in all positions in Asahi by deviding the works into two major departments under 4 CEOs; 2 from Japan and 2 from Boon Rawd. Sales department was under the Boon Rawd management team and BA would be taking care all of the marketing activities. Although there was major change in the management team, still they had not changed the positioning of Asahi and maintained its brand as international brand. San Miguel San Miguel first initiated into the beer industry by sponsoring in many golf competition; holding beer booths in many golf courses started from the middle of November and so on. Moreover, San Miguel had distributed their beers through many channels possible. However, San Miguel had the advantages over other competitors in terms of strong financial capability; therefore, San Miguel could use the turnkey operation; letting the 3rd party management team, which specialized in the particular kind of managing, to come in and run the business for them. Year 2005 San Miguel had decided to spend large amount of budget up to 375 million baht to settle down the contract with Pat-Kol Co. ,Ltd. in order to construct 95 rai of ‘Multi-Beverage Production Site’, which could be utilized to manufacture many kinds of beverage like fruit juice, drinking water, ready-to-drink tea/bottled tea, and also soft drinks in Amata City Industrial Park, Rayong. And debut its first brand of beer â€Å"Kirin† 2nd market leader from Japan. Year 2007 San Miguel had specified the marketing policies into major brands like San Miguel’s Low Calories Beer, San Mig Light as followed mandatory from the main headquarter. On the local market, San Miguel offered Blue Ice Beer as a standard brand and Red Horse Beer as an economy brand. These brands were already introduced to the Thai beer market for 2 years but they were intended just to test the market, and will be taken out of the market eventually. In this year, San Miguel had planned to emphasize more in below-the-line marketing; increasing from 60% to 70-80% mainly through pubs, bars, and restaurants in order to directly reach the right group of target; and decreased the above-the-line from 40% down to 20-30%. Moreover, they had planned to join with ‘Sugar Beet Restaurant’ in order to boost sales and build more brand awareness. Federbrau Thai Beverage Public Company Limited has just decided to introduce Federbrau into the premium beer market in order to fill up their beer portfolio. They have started off by distributing through on-premise channel like night clubs, pubs, bars since March by offering three sizes of products which are 630ml large bottle, 330ml small bottle, and 330ml can. These products will be further on distributing into another channel like supermarkets and hypermarkets. Feberbrau Beer is the imported brand from Germany; containing 4. 7% of alcohol volume which is the lightest taste provided nowadays like the word ‘Federbrau’ itself means ‘feather’. It is the first brand in Thailand which keeps practicing ‘Reinheitsgebot’, the law legislated in Germany allowing only 4 ingredients in brewing beer; water, malts, barley hops, and yeasts. Although the law has not passed the qualification of the EU, many breweries has still produced beer following this law in order to project higher standard than other manufacturer. Feberbrau Beer is being brewed by COSMOS Brewery (Thailand) Co. Ltd. , Wangnoi, Phra Nakhon Sri Ayutthaya. Federbrau has planned to position its product as the genuine German beer; offering new choices for consumers though Thai drinkers might not know the story behind their recipe; therefore, it is focusing on sending messages indicating the German-style and creating the adventurous sensation by using blu e color. They are mainly targeting the ages between the ranges of 22-35 who have self confidence, freedom lovers, and have their own lifestyles. For the regulation issues, there are many strict regulations on alcoholic beverages to be complied. But since Federbrau has clearly stated its position, it would not create any conflicts between the brands like Chang Light under Thai Beverage itself unlike the previous conflict between Chang and Archa. The marketing plan of Federbrau for the first 9 months will be mostly focusing on emphasizing on above-the-line rather than below-the-line; all kinds of media including billboard will be used to promote the brand awareness and brand recall by started off in the Bangkok area and then move on to nationwide through TV, radio, newspaper, shop decoration and also holding event to cover all potential market opportunities.

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