Carlsberg partners with Singha
It’s like with second marriages. Hopefully they work out better than the first ones. After an acrimonious split from its first Thai partner, Charoen Sirivadhanabhakdi, and his Chang brewery (later to become ThaiBev) in 2005, Danish brewer Carlsberg at the end of September 2012 tied the knot with ThaiBev’s rival Singha, the company behind Thailand’s first brewer Boon Rawd and maker of Singha and Leo beer brands.
The move is to expand Carlsberg’s presence in Southeast Asia. In its past financial year, the region, including China, contributed only 16 percent to Carlsberg’s volumes and 9 percent to Carlsberg’s profits (EBIT). In Thailand, with a population of about 67 million and a per capita consumption of 29 litres of beer, Carlsberg has had a negligible footprint.
Although the Thai beer market has grown to about 20.6 million hl in 2011, according to the Barth Report, this has not necessarily boosted brewers’ profits. According to BRAUWELT International’s estimates, the beer profit pool (EBIT) was about USD 200 million in 2011, which is low compared with other emerging beer markets.
The 50:50 joint venture with Singha will oversee the marketing, sales and distribution of Carlsberg’s international beer brands in Thailand, while Singha’s brands will be launched in selected markets outside of Thailand through Carlsberg’s international network, the company statement said. At this stage Carlsberg’s brands will not be brewed in Thailand but will be imported from one of the Carlsberg breweries in the region.
The privately-owned Singha, formerly known as Boon Rawd Brewery, produces beer, soft drinks, water, ready to drink green tea, and various energy drinks, as well as fish snacks, it was reported.
Asian media say that Singha had a market share of 59 percent of the Thai beer market in 2011, compared with the 31 percent share of Mr Charoen’s ThaiBev and the 5 percent share of Asia Pacific Breweries.
With some ill-concealed glee the same media also reminded their readers that this is the second time Carlsberg has partnered with a Thai brewer. The first time Carlsberg formed a joint venture was in 2001 with Mr Charoen’s Chang Beverages, which was an unmitigated disaster for Carlsberg.
The Danish had to end the alliance after just two years, accusing Chang of failing to contribute the assets agreed upon. The partnership with Mr Charoen had been an ambitious one as the Danish brewer folded in all its Asian assets. Sources at the time said Mr Charoen was happy to use Carlsberg to distribute its beer internationally, but did little to push Carlsberg in Thailand. The relationship ultimately fell apart amid frosty accusations and a USD 2.5 billion claim for damages by Chang, once Thailand’s "whisky king", Mr Charoen, had received what he wanted from his perhaps slightly naive Danish partner. To add insult to injury, Mr Charoen forced Carlsberg to pay USD 120 million to settle their legal dispute in 2005.
From the above, Asian commentators concluded that during the long relationship, ThaiBev had gained both brewing and management know-how from Carlsberg, knowledge that helped the company establish its Chang beer in the Thai market.
In other words, Carlsberg got pulled over the barrel by Mr Charoen. No doubt in Copenhagen fingers are crossed that this time the saying “second time lucky” will come true.
