Myanmar makes way for foreign beverages

YANGON — The globe’s big beer and beverage makers are rushing into Southeast Asia’s last frontier.

Consumers do some comparison shopping in the beer aisle of a Yangon supermarket.
That would be Myanmar, where here in the largest city, Netherlands-based Heineken and Myanmar’s Alliance Brewery on July 12 jointly opened a beer factory. The Dutch company sunk about $60 million into the venture, which produces Regal Seven, a Myanmar beer. Plans call for Heineken beer to be made there in the future.

The Dutch company has a 57% stake in the venture.

The move comes a couple months after Denmark-based Carlsberg and Myanmar Golden Star Brewery began making beer together in Bago, north of Yangon.

Regal Seven will be in stores by the end of this month. It is expected to go for about the same price as Myanmar Brewery’s Myanmar Beer, which costs around 1,200 kyat (96 cents) for a 640-milliliter bottle.

Myanmar Brewery’s license also allows it to make Tiger Beer, Heineken’s Asia-Pacific brand.

But the Dutch company is not seeking to compete against itself with the new brewery. Its goals are to broaden its product lineup and make further inroads into Myanmar, whose then reclusive military regime in 2011 began steering the country toward democracy.

The Coca-Cola Company, meanwhile, is looking to build its second Myanmar plant, in Mandalay, the country’s second-largest city, a senior official of the Mandalay municipal government told a local newspaper.

The U.S. company is sounding out the municipality about setting up in the Myotha Industrial Park, located in the western part of Mandalay, according to the newspaper.

Coca-Cola has disclosed neither when the soda pop factory might open nor what its capacity would be. But it has said it intends to use the plant as a logistics hub for the country, the report said.

In 2012, Coca-Cola went on sale in Myanmar for the first time in nearly 60 years. In June 2013, the company started making the soft drink through a joint venture with beverage maker Pinya Manufacturing in suburban Yangon. The Mandalay Plant would help the company more efficiently distribute its drinks throughout the country.

PepsiCo, Coca-Cola’s main U.S. rival, showed up in spring 2014, producing its signature pepsi in Yangon through a joint venture with South Korea’s Lotte Group.

In fiscal 2014, through this past March, Myanmar produced about 40 million gallons of beer, up 20% from the previous 12 months, according to industry estimates.

The country’s soft drinks market was worth around $480 million in fiscal 2014, a double-digit increase from the prior 12 months.

Before the country began edging toward democracy, economic sanctions effectively barred Western brands from entering Myanmar. As a result, home-grown beverage makers have long dominated Myanmar’s drinks market, particularly the beer segment. Accordingly, Myanmar Brewery’s Myanmar Beer and Heineken’s Tiger Beer dominate retailer shelves. As such, analysts estimate that Myanmar Brewery controls more than 80% of the country’s beer market.

Myanmar Brewery is a key unit of Union of Myanmar Economic Holdings, a company associated with Myanmar’s military. With the Myanmar Beer brand already established among the country’s drinkers, it won’t be easy for global brands like Heineken and Carlsberg to take over, a representative of a big retailer here said.

This is also true of Myanmar’s soft drink market, where Myanmar Golden Star Breweries has formed joint ventures with PepsiCo and Carlsberg, and Loi Hein has done the same with Japanese beverage maker Asahi Group Holdings.

From the opposite vantage point, Coca-Cola and PepsiCo are slowly but steadily taking more of the market. With the playing field changing, Myanmar beverage makers see partnerships with multinationals as a survival strategy.

Source: NIKKEI Asian Review

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