Quick. What do the music group Dexy’s Midnight Runners and the beers of Laos have in common?
Dexy’s Midnight Runners is only known for its sole international hit “Come On Eileen”. And Laos for cervisaphiles is only known for Beer Lao.
Being known for one product is all they have in common. Dexy’s Midnight Runners as a group peaked at the time “Eileen” hit #1 in the UK and USA in 1983. Beer Lao has continued to expand in popularity ever since its introduction in 1976.
Laos doesn’t fit the profile of a beer success story. With a population of 6.8m, it is Southeast Asia’s least densely populated nation and neck-and-neck with Myanmar for being its poorest. Few people have any clue where it is. Despite ASEAN agreements meant to bolster trade in products and people between the ten regional Southeast Asian countries which comprise it, you’d be at pains to find one country’s beers easily sold in another. You cannot compare the ASEAN region to North America or Europe in this regard. Indonesian beers don’t show up in Malaysian coolers. Vietnamese beers aren’t part of the course menu at Vietnamese restaurants in Thailand.
There are, of course, a few exceptions. Cambodia’s middling Kingdom brews can sometimes be found at specialty marts around Thailand, not really such a notable exception when you consider that Kingdom was developed by the same venture capital firm as Thai Phuket beer. Tiger Beer from Singapore’s Asia-Pacific Breweries, another Heineken operation, is found all across Southeast Asia because Asia-Pacific sets up breweries locally. The Philippines’ San Miguel shows up in more countries than its quality would have you believe because it engages in brew-under-license agreements.
The one standout, the brew found increasingly throughout the region and only brewed in its homeland, is Beer Lao.
The Lao Brewery Company is behind the beer. It was initially founded in 1971, as Brasseries et Glacières du Laos, as a joint business venture between French and Lao businessmen. The beers then brewed were old French mainstay brands hardly popular in France, Biere Larue and 33 Export, average tasting stuff which continue to this day to be brewed in other countries but not in Laos.
After Laos became a communistic people’s democratic republic in 1975, the brewery was nationalized and Beer Lao introduced. There were further economic reforms in the country throughout the 1980’s and several changes in brewery ownership, the only constant being that the Lao government always owned at least 49% of the shares. By 2005, the Lao government had one half of the brewery’s shares, the beer behemoth Carlsberg the other.
It’s difficult to say exactly when Beer Lao became a beer the outside world noticed. Laos really only opened up its doors to international tourists in 1989, and it still took 6 more years before the Lao National Assembly formally identified the tourism industry as one of the nation’s eight priority development areas. In the five year period from 1992 to 1997, the number of accommodation outlets and available rooms just about doubled, and tourism arrivals from Europe and the Americas went from almost nonexistent to a total of 70,000. Certainly by 2005, Laos was entrenched on the Southeast Asian backpacker circuit.
The beer had gathered enough popularity for Time magazine to rate it as Asia’s best beer in its Best Of Asia 2004 list, a not altogether credible listing which included other meaningless headings like “BEST URBAN SURPRISE” and “BEST TONIC FOR A TIRED BRAIN.” Still, the tiny endorsement by an international magazine did wonders for the beer’s reputation and has been trumpeted out ever since. In 2005, the Lao Brewery Corporation expanded the range by introducing a Beer Lao Dark and Beer Lao Light (since discontinued), followed by Beer Lane Xang in 2008 and Beer Lao Gold in 2010.
The remarkable thing about Beer Lao’s success is that all its beer varieties are adjunct pilsner beers. There is not a diversity of styles. The various brews contain German hops and yeast and French malted barley, but they are bulked up with Laotian rice and proudly proclaim it. Other breweries using rice and other cheaper adjuncts, much larger concerns like Asahi, Anheuser-Busch, and Cass, don’t shout too loudly that they’re adding fillers. Laos is also not a territory from which you’d expect good beer to be brewed. According to a WHO report from 2010, only 36% of the nation’s alcohol consumption comes from beer. The country only produces/consumes around 32-33 liters of beer per capita annually, less than South Korea. These low figures hardly put it in the rank of a serious brewing powerhouse.
The brewery’s brewmaster is a local Laotian named Sivilay Lasachack. She picked up the brewing trade over six years in the Czech Republic, Germany, and Denmark on a government scholarship. It was Lasachak who dumped Beer Lao’s old French recipe and substituted more rice to replace the imported grains, both to lower cost and make the beer less bitter. The formula alteration worked out brilliantly. Beer Lao stood apart from the pack as a truly Asian creation, not another Asian copycat of a European style. Only a tiny percentage of the brewery’s output is exported (to other Southeast Asian nations, the UK, USA, Canada, Australia, and ten other countries), but that’s still giving Laos a lot more credit than other countries with a standard of living similar or superior to Laos’ whose beers will never make it past their own frontiers.
For most of the Lao Brewery Company’s history, it had no competition. Usually, in markets governed by a monopoly, a customer can expect high prices and mediocrity, not a bargain product an international magazine lauds. In 2008, the Lao government granted a second beer investment license to Lao Asia Pacific Brewery , the producer of Heineken, Tiger, Namkhong, and Namkhong Salongxay in the country.
Why would the Government of Laos allow in competition to threaten the revenues of the Lao Brewery Corporation of which it owns 50%? When the government owns a 25% share of the new entrant, too. The Lao government recognizes that the beer market will, in the not-too-distant future, be pried open by trade pacts for greater competition and wants to own as many pieces of the pie before that happens. Beer Lao has done enough things right that, whatever happens, it should still be one of the major brands left standing.