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The Case of Thai Beverages Public Company Limited

Introduction

The nature of competition in the alcoholic beverage industry in Thailand, in earlier years, was limited to an extent; however, the changes in the market dynamics and the advent of globalisation resulted in a significant increase in the competition in the marketplace (Sankrusme, 2008). It significantly affected the competition in the industry, thus leading to changes in the competitive strategies.

In this regard, the most prominent brand that successfully introduced its competitive strategies was Thai Beverage, which led to the overall success and growth of the brand and the products like Chang Beer (Aimkij and Mujtaba, 2010). Considering this, this study aims to evaluate and analyse the effectiveness of Chang Beer’s competitive strategy and its impact on the overall success of the brand.

Discussion

In the early years, Chang Beer considered a competitive pricing strategy to successfully compete against Carlsberg Beer. The company invested approximately 500 million baht in promoting the brand based on its price compared to Singha beer (Thourrungroje and Racela, 2013). However, the liberalization in the alcoholic and non-alcoholic beverage industry resulted in increased competition, thus presenting a challenge for the companies to re-evaluate their competitive strategy.

In particular, the company remained focused on the low pricing strategy as a competitive strategy, which allowed the business to change the customers’ attitude and behavior towards the beer (Suwannasri, 2003). In particular, the brand was introduced as a local beer that had a concentrated taste by the Thai consumers’ demand.

As a result, the company became quite prominent and successful in its early stages; this was indicating that the low pricing strategy allowed the brand to effectively compete against its most prominent competitor, Singha Beer. It ultimately presented the brand with an opportunity to enhance its market share compared to other competitors, which could be attributed to the diminishing purchasing power, thus encouraging the customers to purchase Chang Beer over Singha Beer in Thailand (Sankrusme, 2008).

Concerning the case of competitiveness of Chang Beer, it has been indicated that both foreign and local players have failed to compete against the brand, which implies that Chang Beer has dominated the alcoholic beverage industry in Thailand, even in the year 1999 with 57.66 percent of the market share (Lin and Lin, 2011). Likewise, the extensive distribution network and strong local branding have helped the company dominate the market, even in its intensely competitive business environment.

Considering the competitive strategy adopted by Chang Beer in the beverage industry, it has helped the brand limit new local and foreign brands to enter the alcoholic beverage industry (Thamarangsi, 2006). It can also be attributed to the company’s extensive distribution network that the brand has created over the past decade, thus making it extremely difficult and challenging for the newcomers to effectively compete against Chang Beer (Goldstein and Pananond, 2007).

Also, the Chang Beer competitiveness can be evaluated through the suppliers’ bargaining power in the industry. In the case of the brand, the suppliers have limited to no bargaining power since the company has an extensive distribution network (Nikomborirak, 2005), thus making the suppliers dependent upon Thai’s distribution, which implies that the brand has significant bargaining power over its suppliers.

It implies that the brand has only focused upon beer, making wines and other cocktails amongst the most important substitutes for Chang Beer. Likewise, the other substitute for the Chang Beer can be argued to be the non-alcoholic beverages, therefore making the threat of substitutes to be significantly greater for Chang Beer, especially in Thailand (Thoumrungroje and Racela, 2013).

The success of the brand’s competitive strategy can also be evaluated through its brand awareness. In this regard, the study conducted by Aimkij and Mujtaba (2010) suggested that Chang Beer has a higher brand awareness level amongst the customers. The study also indicated that customers in Thailand are highly aware of the brand logo and symbol, which can be argued to be amongst the success factors for the brand in Thailand’s beverage industry (Aimkij and Mujtaba, 2010).

However, in comparison to its counterpart, Leo, the brand was found to have relatively lower brand awareness and likeliness, which implies that Chang Beer must prioritize its marketing and advertisement aspect to ensure that the brand remains ahead of its competition in the alcoholic beverage industry (French, 2016).

Considering the overall success in Thailand, the brand has focused on going international; thus, Chang Beer has been rebranded as Chang Classis, which can be considered an effective strategy (Swartzentruber, 2016). In particular, it has been expected that the rebranding of the Chang Beer could allow the brand to increase its market share from 30% to 45% by expanding into regional markets including; Vietnam, Philippines, Myanmar, and Cambodia (Marketing Interactive, 2015).

Conclusion

Conclusively, Chang Beer has become one of the most successful Thai Beverage PLC brands in Thailand’s alcoholic beverage industry. In particular, the company’s adoption of the low pricing strategy has presented the brand with an opportunity to become the market leader while increasing its overall market share in Thailand.

As a result of the adopted strategy, the brand has successfully competed against the local and international beer companies, thus reducing the overall competitiveness of others compared to the brand. Moreover, the brand’s success over the decade has presented it to expand in the regional and global beverage industry, where it was expected that global expansion could lead to significant improvement in the brand’s market share and competitiveness against others in the beer industry.

References

Aimkij, N. and Mujtaba, B.G., 2010. Branding and brand equity measurement in the beer industry of Thailand. Chinese Business Review, 9(4), p.1.

French, J., 2016. Economic determinants of wine consumption in Thailand. International Journal of Economics and Business Research, 12(4), pp.334-347.

Goldstein, A. and Pananond, P., 2007, April. Singapore and Thailand. In International Workshop on Intra-Asian FDI Flows: Magnitude, Trends, Prospects and Policy Implications, India Habitat Centre, New Delhi (pp. 25-26).

Lin, J.M.H. and Lin, C.M., 2011. Elephant vs. Tiger: A Comparative Analysis of Entrepreneurship of Two Prominent Southeast Asian Beer Corporations. In Migration, Indigenization And Interaction: Chinese Overseas and Globalization (pp. 253-273).

Marketing Interactive. 2015. Chang Beer undergoes rebrand to boost regional presence. Data retrieved from http://www.marketing-interactive.com/chang-beer-undergoes-rebrand-boost-regional-presence/

Nikomborirak, D., 2005. The political economy of competition law: The case of Thailand. Nw. J. Int’l L. & Bus., 26, p.597.

Pornpanomchai, C. and Suthamsmai, N., 2008, August. Beer classification by electronic nose. In Wavelet Analysis and Pattern Recognition, 2008. ICWAPR’08. International Conference on (Vol. 1, pp. 333-338). IEEE.

Sankrusme, S., 2008. A Study of the Beer Market Leader, Challengers and Niche Strategies. World Academy of Science, Engineering, and Technology.

Sankrusme, S., 2008. A Study of the Beer Market Leader, Challengers and Niche Strategies. World Academy of Science, Engineering, and Technology.

Suwannasri, N., 2003. A study of the relationship between memory, attitude, perception and consumption situations toward Thai consumer’s behavioral intention of local and global brands of beer in the Bangkok area.

Swartzentruber, D. 2016. ThaiBev’s Chang Beer Seeks Cambodia Market Share. Data retrieved from https://aecnewstoday.com/2016/thai-bevs-chang-beer-seeks-cambodia-market-share/#axzz5AThvl24p

Thamarangsi, T., 2006. Thailand: alcohol today. Addiction, 101(6), pp.783-787.

Thoumrungroje, A. and Racela, O.C., 2013. Thai Beverage Public Company Limited: Thailand leader, global challenger. Emerald Emerging Markets Case Studies, 3(2), pp.1-20.