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.

For a

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

and fragmented.

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.

"There's

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

says.

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

lower."

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

years.

"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

beer.

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

time.

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.

Estimates

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.

Lim says

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."

Two

Carlsberg and Tiger girls agree. "On a good day, says one Carlsberg girl, "I can

sell four to six cases."