3 Things Investors Should Know About Thai Beverage Public Company Limited’s Non-Alcoholic Beverages Business
Thai Beverage Public Company Limited (SGX: Y92) is a food & beverages company with four different business segments, namely, Spirits, Beer, Food, and Non-Alcoholic Beverages.
Despite the segments all being classified under F&B, they actually have different business and financial characteristics. In here, I want to have a quick overview of the Non-Alcoholic Beverages segment from three perspectives: Its financials, products, and future plans.
Financials of Non-Alcoholic Beverages segment
Here’s a table that shows the income statement of the Non-Alcoholic Beverages segment for Thai Beverage’s financial year ended 30 September 2016 (this fiscal year actually only consists of nine months) and for the same period a year ago:
Source: Thai Beverage FY2016 earnings presentation
We can see that the segment enjoyed a 6.8% increase in revenue in FY2016. The bottom-line also improved as the net loss narrowed.
Growth in the segment’s revenue happened due to an increase in sales volume and changes in the product mix.
The product portfolio
Here’re some of the products in the Non-Alcoholic Beverages business:
Source: FY2016 annual report
The Non-Alcoholic Beverages segment is a small revenue contributor for Thai Beverage. But in terms of sales volume (in litres), the segment is actually the largest. For perspective, FY2016 saw the company push through 1.27 billion litres in non-alcoholic beverage products. Meanwhile, the Spirits and Beer segments sold 417 million and 669 million litres, respectively, in the fiscal year.
In Thai Beverage’s FY2016 annual report, the company discussed the Non-Alcoholic Beverages segment and highlighted competition coming from existing major operators as well as the actions it implemented during the year to address the challenges.
These actions are likely to continue in the future, since Thai Beverage aims to grow the segement.
One of the actions was to invest in brand-building and marketing activities. Thai Beverage targeted specific customer groups, such as the younger generation.
The company also brought new products into the market. For example, Thai Beverage developed and launched a new soda water brand in September 2016 – “Rock Mountain” – to provide an alternative choice in the premium beverage category for consumers.
In addition, the company expanded overseas partly by cooperating with Fraser and Neave Limited (SGX: F99). Thai Beverage is a major shareholder of Fraser and Neave. The overseas move will help to diversify Thai Beverage’s income base. An example of the overseas expansion is the launch of Oishi- and est-branded beverages in Malaysia and Singapore.