Beer-loving Thai legislator brews up plan to tackle duopoly
Taopiphop Limjitrikorn hopes his party’s election win gives him a shot at breaking up control over a $14bn industry
23 May 2023 - 16:27
byDevjyot Ghoshal and Chayut Setboonsarng
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Taopiphop Limjitrikorn from the Move Forward Party poses at his bar in Bangkok, Thailand, on May 23 2023. Picture: REUTERS/ATHIT PERAWONGMETHA
Bangkok — A beer-loving legislator in Thailand once arrested for illegal brewing is hoping his party’s election win can give him a long-awaited shot at breaking up a $14bn alcohol duopoly of two of the country’s wealthiest families.
Brewer-turned-politician Taopiphop Limjitrikorn has been fighting to overhaul strict regulations for years, taking on Boon Rawd Brewery and ThaiBev, which have long had a stranglehold on the production of alcohol.
He is a member of the progressive Move Forward party, which is pushing to form the next government after winning the most seats in a May 14 general election. It reached an agreement on Monday with prospective coalition partners that include measures to “abolish monopolies and promote fair competition in all industries, such as alcoholic beverages”.
Though the single-largest party, the prospect of a Move Forward-led government is still uncertain due to a built-in constitutional provision that favours military-linked parties.
“The progressive alcohol bill is not only a bill, it is a political project,” said Taopiphop, 34, who was re-elected in a Bangkok district, in an interview at his bar.
“Now, I’m gathering all the stakeholders in this policy to make it happen as smoothly as I can because I realise that we are not the opposition any more. We are government.”
Boon Rawd, which makes Singha and Leo beers, and ThaiBev, the brewer of Chang beer, did not immediately respond to questions from Reuters.
Boon Rawd, Thailand’s first brewery founded in 1933, is privately owned and controlled by the Bhirombhakdi family, the country’s 15th richest, according to Forbes. ThaiBev was founded by Charoen Sirivadhanabhakdi, ranked by Forbes as Thailand’s third-richest person with a net worth of $14bn.
Maintain lead
If Move Forward is able to lead the government and open up the alcohol sector, the two companies may see short-term effects on their performance because of new competitors, said Damien Yeo, Consumer and Retail analyst at research firm BMI.
“Over the long run, both ThaiBev and Boon Rawd have plenty going for them that will help them maintain a healthy lead over any potential new competitors,” Yeo said, pointing to both companies’ better understanding of the market and regulatory issues.
More than half of Thailand’s alcoholic drinks market, valued at about 473-billion baht ($13.97bn) in 2020, is beer.
Boon Rawd controls a 57.9% share of the beer market followed by Singapore-listed ThaiBev at 34.3% and Thai Asia Pacific Brewery at 4.7%, according to a February 2022 report by Krungsri Research.
ThaiBev is also the runaway leader in the spirits market with a 59.5% share, with the second-place player holding only 8% of the segment, according to Krungsri Research.
Through an amendment to the excise laws, which failed to make it through parliament previously, Taopiphop said he is aiming to remove high-entry barriers for the alcohol industry that largely favour big companies such as Boon Rawd and ThaiBev.
The aim would be to help small domestic brewers gain at least 10% of the beer market within a decade, said Taopiphop.
In a social media post on May 19 after Move Forward’s election win, Piti Bhirombhakdi, who is on the board of Boon Rawd, said he backed the liberalisation of the industry.
“There will be some impact but in free trade we have competition. We will have to adjust our plan,” he said in reply to a comment on Facebook.
On a May 12 earnings call, ahead of the polls, a ThaiBev executive said the company was alert for new regulations. The company’s stock is trading at its lowest level since early November.
“We have been watching this closely for each party, and what their policy is,” senior executive vice-president Ueychai Tantha-Obhas said. “We just prepare for any outcome.”
A lawyer who became a tour guide before turning to brewing, Taopiphop said he plans to follow up on regulatory easing with further legislation on rationalising restrictive alcohol advertising and allowing 24-hour alcohol sales.
“I’m not an extremist,” said Taopiphop. “I want to drink good beer.”
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Beer-loving Thai legislator brews up plan to tackle duopoly
Taopiphop Limjitrikorn hopes his party’s election win gives him a shot at breaking up control over a $14bn industry
Bangkok — A beer-loving legislator in Thailand once arrested for illegal brewing is hoping his party’s election win can give him a long-awaited shot at breaking up a $14bn alcohol duopoly of two of the country’s wealthiest families.
Brewer-turned-politician Taopiphop Limjitrikorn has been fighting to overhaul strict regulations for years, taking on Boon Rawd Brewery and ThaiBev, which have long had a stranglehold on the production of alcohol.
He is a member of the progressive Move Forward party, which is pushing to form the next government after winning the most seats in a May 14 general election. It reached an agreement on Monday with prospective coalition partners that include measures to “abolish monopolies and promote fair competition in all industries, such as alcoholic beverages”.
Though the single-largest party, the prospect of a Move Forward-led government is still uncertain due to a built-in constitutional provision that favours military-linked parties.
“The progressive alcohol bill is not only a bill, it is a political project,” said Taopiphop, 34, who was re-elected in a Bangkok district, in an interview at his bar.
“Now, I’m gathering all the stakeholders in this policy to make it happen as smoothly as I can because I realise that we are not the opposition any more. We are government.”
Boon Rawd, which makes Singha and Leo beers, and ThaiBev, the brewer of Chang beer, did not immediately respond to questions from Reuters.
Boon Rawd, Thailand’s first brewery founded in 1933, is privately owned and controlled by the Bhirombhakdi family, the country’s 15th richest, according to Forbes. ThaiBev was founded by Charoen Sirivadhanabhakdi, ranked by Forbes as Thailand’s third-richest person with a net worth of $14bn.
Maintain lead
If Move Forward is able to lead the government and open up the alcohol sector, the two companies may see short-term effects on their performance because of new competitors, said Damien Yeo, Consumer and Retail analyst at research firm BMI.
“Over the long run, both ThaiBev and Boon Rawd have plenty going for them that will help them maintain a healthy lead over any potential new competitors,” Yeo said, pointing to both companies’ better understanding of the market and regulatory issues.
More than half of Thailand’s alcoholic drinks market, valued at about 473-billion baht ($13.97bn) in 2020, is beer.
Boon Rawd controls a 57.9% share of the beer market followed by Singapore-listed ThaiBev at 34.3% and Thai Asia Pacific Brewery at 4.7%, according to a February 2022 report by Krungsri Research.
ThaiBev is also the runaway leader in the spirits market with a 59.5% share, with the second-place player holding only 8% of the segment, according to Krungsri Research.
Through an amendment to the excise laws, which failed to make it through parliament previously, Taopiphop said he is aiming to remove high-entry barriers for the alcohol industry that largely favour big companies such as Boon Rawd and ThaiBev.
The aim would be to help small domestic brewers gain at least 10% of the beer market within a decade, said Taopiphop.
In a social media post on May 19 after Move Forward’s election win, Piti Bhirombhakdi, who is on the board of Boon Rawd, said he backed the liberalisation of the industry.
“There will be some impact but in free trade we have competition. We will have to adjust our plan,” he said in reply to a comment on Facebook.
On a May 12 earnings call, ahead of the polls, a ThaiBev executive said the company was alert for new regulations. The company’s stock is trading at its lowest level since early November.
“We have been watching this closely for each party, and what their policy is,” senior executive vice-president Ueychai Tantha-Obhas said. “We just prepare for any outcome.”
A lawyer who became a tour guide before turning to brewing, Taopiphop said he plans to follow up on regulatory easing with further legislation on rationalising restrictive alcohol advertising and allowing 24-hour alcohol sales.
“I’m not an extremist,” said Taopiphop. “I want to drink good beer.”
Reuters
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