The Thai House of Representatives has recently passed a bill aiming to promote the brewing production of small-scale distilleries and breweries, thereby weakening the control of the country's major brewing enterprises.

However, market observers believe that the domestic market share of Thai Beverage is unlikely to be significantly affected. The maker of Chang Beer has established a solid distribution network in Thailand over the years, and it is difficult for new entrants to replicate this advantage.

New players must also comply with the country's strict regulations on alcohol advertising.

Market Dominators

The Community Alcohol Bill has been approved by members of the Thai House of Representatives, opening the way for individual entrepreneurs, cooperatives, and farmer groups to obtain licenses for the production and trade of alcoholic beverages.

Some media reports suggest that new players may have an impact on existing enterprises, particularly ThaiBev, which is listed in Singapore, and Boon Rawd Brewery, as these two companies dominate the country's beer and spirits markets.

However, analysts interviewed by The Business Times pointed out that new players must overcome many obstacles.

Alfie Yeo, a senior research analyst at RHB Singapore, said that as the market leader, Thai Beverage enjoys a scale that other major beer companies can't match. "We don't think it will be easy for small companies to take market share from existing players, as it involves brand building and distribution networks, which take time."

Meghana Kande, a research analyst at Galaxy International Securities Singapore, echoed this view, saying, "Given the time and capital required to build production capacity, distribution networks, and maintain quality standards, the short-term entry barriers for alcohol producers remain high."

She estimated that Thai Beverage holds about 90% of the Thai spirits market; in the beer segment, the company has a 42% market share.

In the fiscal year 2024, the revenues of both divisions increased. The revenue from spirits rose by 0.8% to 120.7 billion Thai baht (S$4.8 billion), while the revenue from beer increased by 2.4% to 126.3 billion Thai baht.

Spirits and beer accounted for 35.5% and 37.1% of Thai Beverage's overall revenue in the fiscal year 2024 respectively.

Other Factors

Analysts also believe that other factors, including Thai Beverage's own efforts, may make it difficult for new entrants to scale up in the industry.

Andy Sim and Chee Zheng Feng, research analysts at DBS Group, pointed out that Thai Beverage regularly updates its spirits and beer product lines and attaches importance to its non-alcoholic beverage business and operations outside Thailand.

In addition, Thailand has strict alcohol advertising laws. For example, it is prohibited to display the actual beverage, packaging, and containers. Advertising also cannot promote such alcoholic beverages in a positive way, such as claiming that they are beneficial to health.

Nevertheless, Sim and Chee believe that new players can stimulate the overall market from the consumption side and promote industry growth in terms of value, if not quantity.

Paul Chew, head of research at Phillip Securities, said that apart from these smaller companies, a greater threat to Thai Beverage comes from the beverage manufacturer Carabao Group, which aims to capture one-fifth of the market share within three to five years.

In November 2023, the group entered the beer market through its Carabao and Tawandang beer brands. The group said at that time that it aimed to become one of the top three players in the Thai beer market.