J UST about any night at the Hang Neak restaurant, across the Japanese Bridge
outside Phnom Penh, pretty young women dressed in the multi-colored uniforms of
several major beer companies hurry through the crowds to greet each new table of
customers. At the tables, the "beer girls" from Carlsberg, Tiger Beer, Angkor
Beer or San Miguel hail customers with the same question: Would you like a beer?
With brand loyalties not yet firmly established in Cambodia,
international beer companies are waging million-dollar marketing battles not
only in popular restaurants like Hang Neak but on the airwaves, park benches, on
billboards and with the kind of pop top and bottle cap lotteries that were
popular 25 or 30 years ago in the US and other developed countries.
country where the per capita beer consumption is still very low - about two
liters per person, compared to about 20 in Thailand and about 100 in Japan -
some of the beer companies are spending big sums on advertising and marketing
with the intent of solidifying their positions while the industry is still new
Angkor Beer, whose red-labeled bottles show a picture of
Angkor Wat, is widely said to have taken over the position as the market leader
from rival Tiger since Angkor refurbished a pre-war brewery in southern Cambodia
in 1991. But Angkor has spent dearly to win that position. Marketing director
Jaime Fong said the company is spending about $2.5 million a year on advertising
and promotional activities, such as the bottle cap lucky draws and the beer
girls. Fong puts Angkor's share of the beer market at 65 percent, although
others say the figure may be more like 35 to 45 percent.
Now Tiger Beer,
a Singapore brew with a tiger on the can that has positioned itself as a premium
beer with a restaurant price of around $1.30 a can, has upped the stakes with
its groundbreaking two weeks ago of a new brewery 15km outside Phnom Penh. The
brewery is expected to open next year. It will cost $36 million - a sizable
investment that Rick Linck, the general manager of the new brewery says
indicates that his company is in Cambodia for the long term.
always a small risk in investing in these countries," says Linck. But with
Cambodia's beer market expected to grow at least 10 percent a year for the next
10 years, he says, the risk is minimal.
"When we started in 1988 we were
doing 30,000 to 40,000 cases," says Linck. "There's been a tremendous growth
rate - more than ten times in six years." He says Tiger is now selling half a
million cases. "We expect to reach a million in two to three years," he
Part of the reason that beer consumption in Cambodia is expected to
grow so much is that it is currently so low. The beer companies are betting that
as avenues of distribution improve with the repair of roads, and as Cambodia's
economy and standard of living improve, beer sales will skyrocket. Market
research by the beer companies is still being conducted, but what has been found
so far is conclusive about the potential.
Craig Martin, general manager
of International Management & Investment Consultants Ltd., says his
company's research has found that "Tiger Beer is very popular. And Angkor Beer
is exceedingly popular."
If the research is correct about a potentially
huge Cambodian beer market, there may be a number of reasons, including pent-up
demand, the hot weather, the relatively cheap price - about $15 or $16 for a
case at the supermarket - and, as in most developing countries, a relative lack
of health consciousness. "There are a lot of factors," says Fong, who concludes
simply that: "Cambodians like beer. That's for sure."
The new brewery -
Cambodia Brewery Ltd. - is a joint venture of Asia Pacific Breweries Ltd., which
is the Singapore arm of Heineken, NV of Holland; and Progress Import Export Co.
Ltd., which has been the main distributor of Tiger Beer in Cambodia since 1988.
The brewery will employ about 200 workers and will have a capacity of producing
17 million liters a year, or about 51 million glasses of beer. The production
capacity can be expanded sixfold. It will produce Tiger Beer and ABC Stout.
Eventually, other brands could be added. The company also produces the Singapore
brand Anchor Beer.
The Cambodia brewery will only produce beer for the
local market; Asia Pacific Breweries already has breweries in other countries in
the region, including Vietnam. They just finished building one in Thailand and
just started building one in Myanmar.
The brewery was awarded a healthy
package of incentives by the government under the new Foreign Investment Act.
Brett Sciaroni, attorney with Tilleke and Gibbins and Assoc., who worked on the
incentive package, said the joint venture is guaranteed a 100 percent duty
exemption on building equipment and on raw materials such as hops, cans and
yeast, that have to be imported for its first year of production, and a
five-year tax loss carry-forward that enables it to average out losses for five
years after the brewery starts making a profit.
Still up in the air is
the number of years during which the company will qualify for a total corporate
tax exemption. The Investment Act provides for such exemptions for up to eight
years, but a sub decree to the act is still being written. In any event, the
company's tax rate has been capped at a maximum nine percent. The usual rate is
20 percent, said Sciaroni, who also said the nine percent rate is the lowest in
Asia. "This is a very very low corporate tax rate. I don't think anyone is
The government sees the brewery as a beneficial investment for
Cambodia. Second Prime Minister Hun Sen praised the joint venture at the ground
breaking ceremony, as the first foreign investment to actually be implemented
under the new Investment Act, and for creating 200 jobs in the countryside. And
beer, he noted, is less unhealthy than tobacco.
Linck declined to say how
many years it will take the joint venture to recoup its investment in the
brewery, but it is clear it will take several years. Fong said that Angkor Beer,
which spent $10 million to refurbish an old government owned brewery in Kampong
Som in 1991, does not expect to be profitable for about five more
"It's difficult to predict. We are still spending money," said
Fong. "We have been forced into expansion by the competition." Last year, during
the peak season of April, Angkor did the unthinkable: it ran out of
Since then it has expanded its production capacity, but Fong said
it still had a slight shortage this April. Now, the company is planning to
launch Angkor for export to several countries including the US, the UK, France
and Australia, and is planning to begin selling beer in cans. Currently, Angkor
is only available in bottles or kegs; cans must be imported.
But he says
his investors are patient. "They understand what they are investing in. In the
beer industry you don't get a return on investment so fast." He says only in
Cambodia could a new brand become a market leader in just a short
Even with the expansion plans, Fong denies his company is taking
aim at Tiger Beer. He says there is enough room in the market for two major
brands, but that there will be some losers, the imported brands which have to
mark up their prices to cover the 50 percent import tax on alcohol and whose
companies don't understand how to market in Cambodia.
Already, the number
of brands available in Cambodia has shrunk. During the UNTAC days, when
foreigners first started to flock to Cambodia, there were about 40 brands from
many countries worldwide. Now there are only about ten brands.
of market shares vary, but N.K. Lim, the Cambodian representative of advertising
giant McCann Erickson who has done advertising and market research for San
Miguel, the Philippine brand making a push into Cambodia, estimates Angkor Beer
at 35 to 45 percent of the market, followed by Tiger Beer and then a number of
others including San Miguel, Carlsberg , Heineken, BGI, VB, Fosters and ABC
Stout (a sister brand to Tiger), Guinness Stout and Budweiser.
the beer companies are using marketing techniques that were used 20 years ago in
other developing nations, but as the market grows it will become more
sophisticated and such tactics as lucky draws will probably fade away.
In the long run, he says the beer market will thrive "as long as the
government's laissez fair attitude continues. I see the market being shared
between Angkor and Tiger," says Lim.
Already, many restaurants or taverns
see the writing on the wall. At the Ettamagoh Pub Way North, the Australian
tavern on Sihanouk Blvd, owner Manny Kargas says he only needs to stock four
brands and Angkor is far and away the most popular beer, which he attributes
partly to price. It's a little cheaper than the imports, at about $1 for a
draft. He says Angkor treats his bar as a valued customer, even providing a
cleaning service for the pub area as well as maintaining all the equipment and
providing the glasses.
But meanwhile, until the shakeout comes, he and
others expect the level of promotions to continue. For the foreseeable future
customers can expect to find the beer girls in many restaurants, competing with
each other to greet the customers first.
"Most people don't know what
they want ," explains one of ten Angkor beer girls pitching at Hang Neak one
night recently. "So they'll order from whatever girl arrives."
Carlsberg and Tiger girls agree. "On a good day, says one Carlsberg girl, "I can
sell four to six cases."