E-Malt.com News article: Malaysia: Guinness confident of retaining market share and warding off newcomer

Guinness Anchor Bhd (GAB), the maker of Tiger and Anchor beer, is confident of retaining its market share in the country despite the entry of a new brewer into the industry, said its managing director Charles Ireland, The Edge reported November 30.

“We sell premium brands, they sell brands which are of lower prices; we have different business models and our consumer markets are different,” he told reporters after GAB’s AGM here yesterday.

The brewery currently held a 55% share of the malt liquor market (MLM) in the country, comprising both the beer and stout segments, said Ireland.

It has been reported that the new local beer maker, which is owned by Teluk Intan businessmen Kiew Yong Seang and Ng Siew Cheng, started operation in Port Klang in May under the name of Napex Corporation. It produces and markets the brand Jaz Beer.

It is believed that the company obtained the licence before the government’s declaration some time last year that licences for breweries were closed.

Ireland said although both GAB and the new brewery were targeting different consumer markets, the latter was expected to grow.

“We will embark on several initiatives, like launching new products and improving operational efficiency to maintain our competitive edge,” he said.

Among the new initiatives, GAB implemented Go-To-Market that would enhance its operational efficiency and eliminate 20,000 man-hours a month of administration, said Ireland.

“By switching from a free stock to a nett pricing system of trade incentive, we have liberated our sales team and trade partners from being bogged down with administrative paper work,” he said.

Ireland added that the trade’s response to the new initiative had been positive and even more trade outlets were now turning to GAB for its beer and stout.

“Our move to a nett pricing system enables our trade partners to buy in any quantity they like, as and when they need the stock, and still be entitled to a trade discount,” he said, adding traditionally, trade partners were required to purchase in set quantities to enjoy a trade discount.

Meanwhile, GAB’s net profit for its first quarter ended Sept 30, 2007 (1QFY08) rose 16.27% to RM43.1 million from RM37.07 million a year earlier on the back of improved sales.

The brewery said revenue rose 4.9% to RM325.2 million from RM310 million while earnings per share rose to 14.27 sen from 12.27 sen.

Compared with the preceding quarter, GAB said revenue was 39.5% higher at RM325.2 million driven largely by significant pre-budget speculation purchases in the months of August and September.

“This seasonal fluctuation helped profit before tax for the group improve by RM36.8 million compared to the previous quarter,” it said.

It said the government’s decision not to increase excise duty on local beer and stout was welcome. However, it said excise duty in the country remained the second highest in the world after Norway, resulting in high consumer prices and significant smuggling.

“Overall, market competition is expected to remain intense, especially given the emergence of a third brewery in Malaysia,” said GAB.


30 November, 2007