Heineken’s Foot in the Door

Last Friday’s launch of Heineken Beer in Myanmar marked the official entrance of the Amsterdam-based giant’s flagship brand, but the company’s place in the market will require years of strategy and legwork.

With a newly-built factory in Hmawbi township, the conglomerate has already begun selling their brews for weeks, time enough to test the market and turn heads. Myanmar is not a country of prolific drinkers, with some of the lowest alcohol consumption rates outside of the Muslim world, according to the WHO. Still, Myanmar is a ripe market, Lester Tan, managing director of APBABC, Heineken’s local producer, told Myanmar Business Today.

The 151-year-old beer company is no stranger to developing a brand in new markets, but the unique situation in Myanmar has had them rethink their beer portfolios to woo drinkers and gain new followers.

Brand expansion

Heineken entered Myanmar through their local producer APBABC, which allows them to produce and distribute within the country.

With Heineken’s foreign muscle came the eponymous Heineken Beer, as well as a beer produced specifically for local markets, Regal 7.

After F&N left Myanmar at the end of their ill-fated joint venture with Myanmar Brewery Limited (MBL), Heineken also gained the Myanmar trademark to Tiger Beer and ABC stout.

With this acquisition, Heineken expanded from owning one to four brands almost overnight, bringing a portfolio of three different lagers and a stout to the small but emerging market.

Regal 7, according to the company, is positioned as a competitor to Myanmar Beer, a conservative, inexpensive beer, light enough to be consumed in the tropical heat, and cheap enough to compete in local pubs, known in Myanmar as “beer stations”.

APBABC’s head of marketing, Valentina De Luca told Myanmar Business Today that Tiger beer is aimed at a slightly more upscale market, with a price not much higher than Regal 7, but more of an international image bestowed by the brand’s Singaporean roots.

The dark sheep is ABC stout, which enjoys a cult following, but is now challenged by MBL’s remarkably similar Black Shield beer.

Finally, the company has begun to produce their flagship Heineken beer in their new factory north of Yangon, aimed at a more upscale, image-conscious beer drinker. For the company, the introduction of the Dutch beer is a boost to their other brands, bringing the sheen of foreign quality to their in-country offerings.

Lester Tan said, “It’s not just taste that a brand has, but also a consistent quality. When you drink a beer, you also drink the brand and what you associate the brand with.”

Rival fermentation

Still, the beer market continues to be filled with an increasingly comprehensive list of industrially-produced lagers, including Myanmar Beer, Dagon, Andaman Gold, Mandalay Beer, Carlsberg’s Yoma and Tuborg, pervasive illegal imports of Singha and Chang from Thailand, Tiger Beer, along with the newly-arrived Regal 7 and Heineken.

As for the competition with Carlsberg, the Danish rival beer producer that began selling in Myanmar just months ago, Tan said, “We are both brand new, both just started. We are aware of each other’s presence in the market, but neither of us are established enough to see any sort of rivalry. The obvious target is MBL, the rest of us are just getting into the market.”

MBL, the producer of Myanmar Beer, is the brand to beat for new entrants to the beer market. With 80 percent of the market share by some estimates, it boasts a vast distribution network in both bottles and kegs and a following across the country, especially in smaller towns and beer stations.

Beer stations are essential to cornering the market, especially outside of larger cities. Sixty percent of the beer market is in the form of draft beer, and the growing popularity of these ramshackle pubs has turned them into “the local Starbucks,” says Tan.

Getting beer stations to change brands is a hard sell.

“It took Myanmar Beer 20 years to get where they are in beer stations, and these things don’t come quickly. We have an attack plan, but it will be a slow burn. We need to [distribute] more draft machines and get into more stations around the country,” said Tan.

De Luca said that their push to get Regal 7 into beer stations was by promoting the novelty of the new beer, going as far as to provide beer stations with foosball tables, redecorating and giving sales training to local waitstaff.

Still, rural distribution remains a crux.

When asked where Heineken distributes, Tan replied, “At the moment I would like to say nationwide, but we have just started, and we distribute by a wholesaler system. We have 400 wholesalers around the country, and you will find the beers regularly available in Yangon, Mandalay and in some of the larger towns. But it is definitely not in every town and city.”

Beyond bubbly lagers

Demand is growing for more varieties of beer to enter the market, but this will come later down the road, said Tan.

“There is a cider revolution going on around the world, and Heineken is very much at the forefront of this, especially in Asia,” said Tan, adding, “In Myanmar, [beer flavours are constrained by] a combination of factors, one is obviously relative wealth in a market.

“You start to go into various differences – that happen with greater disposable income. We will get there, but it is slow in coming. We are starting to see it already. There is some call for wheat beer, some call for different sorts of beers. We will get there slow and steady.”

Tan said, “Country faces a lot of challenges, but it is at least forward thinking enough to make changes. Building the brewery was difficult, but it’s getting better.”

But as for now, the international beer giant must still play the role as a small player in the Myanmar market, building a solid place for itself on a shifting sea of brews.

Source: Myanmar Business Today

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