Cambodia: Craft beer gradually increasing its market presence

Craft beer can be a hard sell. How do you convince people used to paying US$1 or less for a pint of beer to fork out three or four times as much for something new and different?

In Cambodia, craft beer breweries are gradually winning people over. Craft beer first took hold as tourists and expats wanted similar beers to those available back home. Now, Cambodians are also ordering craft beers as new offerings come onto the market, ASEAN TODAY reported on May 13.

That market is growing rapidly. New companies are selling new beers to a thirsty new clientele. Between 2014 and 2018, the number of breweries rose from two to nine. There are now 12 brewpubs or microbreweries in Cambodia.

Craft beer companies in Cambodia aim to provide something different. They must stand out if they are to convince drinkers to break long-established habits. Commercial breweries in Cambodia have been operating since the 1960s. That gave them a significant head start.

Some craft beer companies draw inspiration from Germany. Riel was founded by Americans and Australians missing the taste of craft beer from home. Himawari, located in a 5-star hotel, was founded by a Singaporean. At Five Men Fresh Beer, you can watch the brewing process. Others offer free tours or discounts during happy hour.

Among the newest is Embargo, which launches in Phnom Penh on May 15. They aim to give Cambodians the chance to taste both local brews and craft beers from abroad. “Our vision is to make it easy for craft beer lovers to try all the different Cambodian beers and at the same time get a chance to try some foreign craft beers as well,” Kimmo Hakala, Embargo’s founder, told ASEAN Today.

Although the market in Cambodia is growing, it has not yet become saturated. It is established enough for entrepreneurs to find it an attractive option. “The craft beer scenes in neighbouring Thailand and Vietnam are doing great, but the reason we did not do it any of those countries was because we thought the market is too saturated,” Hakala confirmed.

He then reeled off a list of other commercial factors that inspired him to set up the company: “A growing, albeit immature market; huge increase in tourism and expats; a growing Cambodian middle class; and the relative ease one can set up a business…without spending a small fortune.”

His comments echo those of Himawari Hotel director Andrew Tay. “You don’t need to take such a long time for return on investment,” he said. “It is somewhere between one to four years. But, of course, it depends on the quality of the beer.”

Quality is the key to success when it comes to introducing a new beer. Achieving these standards is not easy. One of the biggest challenges is that brewers must import the ingredients required (such as grain, hops and yeast) from abroad.

Sourcing and importing from Australia, Germany and New Zealand presented breweries with problems. The customs system is slow and inconsistent. As companies are importing small quantities, this makes the whole process more expensive. In some cases, they have met this challenge by grouping with other companies and ordering in bulk, sharing the costs.

Some breweries also struggled with staffing. There are limited numbers of people with experience in the industry because of how new it still is. They also had to contend with a tax hike when the tax on locally brewed beer rose from 20% to 30% in 2016.

Nevertheless, those that have persevered are beginning to reap the rewards. They have done so by focusing on quality rather than quantity. They want customers to link paying more money for a craft beer with buying a better drink. Breweries use locally inspired flavours when creating new beers – making sure their offerings are different but not wholly unfamiliar. Cerevisia offers a beer brewed with Cambodian honey and Riel have a beer blended with toasted coconut.

People are becoming more open-minded. They are more willing to try something new. That helps craft brewers. “People here are willing to explore different flavours of food and culinary experiences from different countries,” added Tay. “It is similar with craft beer – people are starting to open up and try something different.”

Although craft beer is more established elsewhere in ASEAN (Singapore has had breweries since 1997, for example), it is cheaper to brew in Cambodia. Prohibitively high rental and labour costs in Singapore put people off.

In Thailand it is illegal to produce beer on a small scale, handing those in Cambodia an advantage as well as a lucrative export market. Some 90% of the beer brewed in Cambodia ends up in Singapore and Thailand.

With new craft beer companies popping up with increasing regularity, competition and variety are driving the market forward. The more craft breweries there are, the more awareness about the craft there is, which can boost trade. “More beers are entering the market which means more manpower for marketing the niche that is craft beer,” Hakala explained.

He also told us that he feels that now is an excellent time to get into the market. When the Kingdom launched its first craft brewery in 2009, it entered too soon. People did not know enough about craft beer and the higher prices were off-putting. In the space of a decade, attitudes have shifted, more companies have taken the plunge, and an appetite for craft beer is sweeping the nation.

Hakala is optimistic about the future. “At the moment it seems far-fetched but if we look at Thailand and Vietnam, it all happened very fast over there, and now the majority of the craft beer drinkers in those countries are the Thais and Vietnamese.”

Craft beer in Cambodia has come a long way in the last decade. The next ten years should see growth continue. However, to see growth on the scale of Thailand and Vietnam, breweries must convince even more locals to drink even more craft beer.

12 May, 2019