Azure coasts. Palm trees. Appealing islands. Hill tribes in the mountains. A spicy innovative cuisine. Everyone knows how well Thailand appeals to international tourists. In 2014 the Kingdom had 24.7m tourist arrivals.
Does anyone have an idea how Thailand’s beers stack up?
In the beer world, Thailand remains a somewhat unconventional case. By GDP per capita standards, Thailand is classified as a developing nation, and yet at least one of its native brews, Singha, is world renowned, by name if not for taste. Competitor Chang is trying to get there, too. Its name and logo have appeared on the Liverpool Everton football team’s uniform since 2004.
Usually, it is the brews manufactured by industrialized countries’ multinational parents which score highest in the worldwide brand name recognition contest. We’re talking about beers like Budweiser, Asahi, Amstel, Kronenbourg. Even countries richer than Thailand, like Korea, Malaysia, and Poland, can’t make the claim that they brew a beer that most people can name off the top of their head. Beer Lao from Laos may be considered an exception by many, a well regarded beer brewed by a very undeveloped nation. I’d argue otherwise. Beer Lao is mostly a Southeast Asian regional success story. Most people throughout the world haven’t heard of or tried a Beer Lao.
No doubt, Thailand’s exotic and popular tourist appeal has spread its oldest native beer brand further than had Thailand remained unknown. Yet that doesn’t fully explain Singha’s worldwide recognition. You could procure bottles of Singha quite easily in the USA twenty-five years ago, and back then, Thailand ‘only’ attracted 5.29m tourist arrivals, about a fifth of what it does today. Imported beers people drink for nostalgic reasons aren’t the ones you’d expect to be able to find so easily in foreign markets. Since 2013, Singha beer is also produced at Carlsberg’s Russian plant for distribution in Europe. Boon Rawd cut a deal with Carlsberg to use any of eight Asian Carslberg plants to produce the beer. People in Europe actually want to drink Singha to some degree.
Thailand’s beer market was and still remains a very insular one. Boon Rawd (commonly referred to as the Singha Corporation) and Thai Beverages dominate. Foreign breweries with a Thai presence, Asia Pacific Breweries and San Miguel, round out the lot. Since the late 2000’s, Thailand has seen a greater number of foreign beer imports, but with high duties, alcohol taxes, and limited distribution, none of these foreign beers yet pose any serious threat to the native market.
How can we know that? Although detailed Thai beer statistics aren’t easy to come by, what’s on the shelves tells a very detailed story. The imports stretch a gamut of styles, from pilsners to quadrupels. Thai beers, which include the foreign beers brewed under license like Kirin, Asahi, San Miguel, and Tiger, are all lagers clustering in the 5% ABV range. Boon Rawd, for instance, produces Singha (pale lager, 5%) but also the lower-end Leo (pale lager, 5%). They used to produce a very generic named brew, Thai Beer, also a pale lager at around 5%. The beers of ThaiBev, San Miguel, and Asia Pacific are mirror images of this “diversity.”
If the foreign IPA’s and saisons were posing some kind of serious competition to the Thai consumer taste, the four giants would probably produce their own local, though inferior, versions of these beer types at domestic prices. They’re not. The most daring move by any of these Thai behemoths was ThaiBev’s introduction of Federbräu in 2008, another pale lager at near 5% but this one adhering to the German purity law. In 2010, The Nation wrote up an article documenting how ThaiBev hoped to increase the market share of Federbräu to 10% of the Thai beer market by 2013. What actually happened is that Federbräu’s market share steadily fell from whatever its minimal peak ever was and, today, can be as hard to find as many of the imports.
As neither a major beer exporter or beer importer, Thailand’s beer production and consumption has always been about equal and currently stands at a bit less than 19 liters per person, slightly more than half of China’s production and consumption per capita. Thais, overall, seem to prefer their 35% ABV Mekhong Whisky. They must be drinking a lot of it because 2014 data collected by the World Health Organization showed Thailand ranking as #1 among ASEAN countries in total alcohol consumption.
The current beer regulations favor the giant domestic brewers. Beer pundits insist that if these regulations were loosened, Thailand would undergo a beer renaissance similar to what’s been seen in Western countries. The data suggests otherwise. 40% of Thai drinkers live in the poorer northeast and another 23% in the north. Price is a very relevant factor. The region least price sensitive, Bangkok, only comprises 8% of Thai drinkers. If domestic craft brews could be produced legally in any volume, even without the high import taxes they would suffer distribution and economies of scale issues which likely wouldn’t make the beers significantly cheaper than the imported beers are now. And then, of course, there’s the most important concern: would the average Thai drinker be interested in a Thai-made saison, Belgian wheat, or tripel at any price, much less being willing to pay a premium for it?
As anyone living in Thailand already knows, imported food products are costly, not just beer. Thailand has a sophisticated enough manufacturing sector at this stage in the economic game such that it could produce the equivalents of the imported Italian pasta, American cookies, Korean instant noodles, and German-style dunkels if there was enough demand. It would make little sense for Thais to keep paying premiums for things they could manufacture competently at lower cost. Thais value potato chips and peanut butter enough to produce their own cheaper versions alongside the expensive imports. The import-only products are ones that Thai consumers don’t purchase in high enough quantities to matter or luxury items in which Thais perceive that the price premium of the import justifies its price.
For the moment, Thailand’s pale lagers are tasty and cheap enough for the Thais and exotic and different enough for the foreign market. And if the model ain’t broken, no one is about to go out and fix it.