Jul 14, 2015

Heineken taps Myanmar beer market

In Myanmar, a country not known for its beer drinkers, international brewers are betting on higher incomes and economic reforms titillating people's thirst for some tipple.

The flow of foreign beer into the country, which once drew international ire over human rights abuses by its military government, is challenging the dominance of state-owned firms that have long controlled the market.

On Monday, the world's third-largest brewer, Heineken from the Netherlands, announced it had opened a 53 million-euro ($60 million) brewery in the Hmawbi township outside the capital Yangon.

Not big beer drinkers

Heineken has its work cut out for it. Perhaps most importantly, the Myanmarese aren't big beer drinkers. Beer consumption there averaged just over three liters per person in 2013 - a far cry from nearby Thailand's 31 liters, according to data from Euromonitor International.

And when they do drink beer, they stick to what they know, Alec Maurice, a business development specialist at consulting firm Thura Swiss, told the Reuters news agency.

"This will not be an easy game for foreign firms," Maurice said. "Myanmar consumers are often very loyal to their brands, especially in the beer sector."

Heineken will have to go head-to-head with the state-owned Myanmar Brewery and its 80 percent market share. But the Dutch brewers aren't the first international players to do so. In May, Carlsberg opened a beer production plant in Bago, 80 kilometres northeast of Yangon.

Twice the value

But international beer companies do have one thing going for them. The value of the beer market is expected to nearly double to around 611 million euros within three years from an estimated 340 million in 2015.

Heineken and Carlsberg have come into Myanmar as the Southeast Asian country is slowly opening up its markets after nearly fifty years of junta rule. In 2011, the government launched a series of economic reforms, hoping to stimulate the private sector and encourage foreign direct investment.

Especially the energy, telecommunications and manufacturing sectors have seen a lot of investment activity from aboard. Domestically, analysts say consumption is also likely to grow.

"Myanmar is on faster trajectory of growth and its disposable income will rise for common people in coming years," said Vijay Dhayal, a senior consultant at the financial consulting firm New Crossroads Asia.

Slight delay

Public trading is also supposed to be a new feature in Myanmar's further economic development, as plans to open the country's very first stock exchange are underway.

However, officials from the national finance ministry said on Monday the index's opening is to be pushed back for a few months as the country prepares for elections.

So far, three companies - Asian Green Development Bank, Myanmar Agribusiness Public Corporation and First Myanmar investment company - have said they will list on the exchange. The finance ministry has said only about five companies will be listed once trading begins.

Source: AFP/Reuters