THERE are nearly 40 different beer brands available in Cambodia and more are arriving
on the docks every month. While the demanding beer drinker may grow lightheaded pondering
this multitude of brands, sellers may not be so intoxicated with this intense competition.
The Cambodian beer market is small.
National per-liter beer consumption is 3.5 liters, according to a study recently
completed by IMIC, a leading consulting firm in Cambodia.
This figure compares with per-liter consumption of 10-12 in Thailand, 80 in the US,
and 140 in Germany.
The market will undoubtedly grow, but most likely not fast enough to support 40 different
brands.
Rick Linck, Manager of Cambodia Brewery which produces Tiger, ABC, and Anchor believes
that the Cambodian market will grow 10-15 per cent annually over the coming years,
down from last year's growth of 20 per cent.
Growth in certain areas in the Kingdom - Battambang particularly - may spurt more
dramatically, up to 50 per cent for several years, if peace in Cambodia is achieved,
according to Anthony Ainsworth of IMIC.
Beer companies face the challenge of attracting and maintaining the allegiance of
the Cambodian consumer (expats comprise only 1-2 per cent of the market).
Because the consumer market is only four years old, the average Cambodian has yet
to develop strong brand allegiances.
Consumers often change their minds on a whim or, more likely perhaps, on the marketing
power of the beer hostesses.
Beer hostesses are crucial in the present stage of the development of Cambodia's
beer market, because the bulk of consumers, Cambodian men, prefer their personalized
service.
Along with their other marketing costs, then, companies must devote resources to
selecting and training their hostess corps.
Advertising and promotional campaigns are also important, especially for brands trying
to break into the market.
Beer advertising has shot up 145 per cent in 1996, according to IMIC, and this figure
will grow even higher through the end of the year.
In 1995 beer companies spent $803,000 on advertising in newspapers and TV, while
they have spent nearly $1.5 million through the end of July this year.
In addition, Fosters, VB, Tiger, Guinness, Grolsch and San Miguel have been able
to boost sales by offering cash or prize awards when a certain number or picture
appears on the pull-tab or bottom of the can. Most new brands will run a promotional
campaign.
To be successful, beer companies must pay attention to certain unique characteristics
of the Cambodian market. For instance, unlike most other Asian countries, Cambodian
beer drinkers prefer cans - primarily because they offer the status of an international
image - over keg beer and bottles.
Angkor beer has until now only sold its beer in bottles, because the equipment to
produce cans has not been available in Cambodia.
However, the company plans to import the necessary machinery and begin canning soon.
A beer company must also pay attention to the provincial market, where 65 per cent
of the country's beer is drunk, according to IMIC. Cambodia Brewery, however, estimates
that 50 per cent of the beer market lies in the provinces.
Improper market positioning may damage the image of the brand, and it is difficult
to win back fickle consumers.
Carlsberg and San Miguel lacked an effective marketing campaign and suffered distribution
problems. Heineken is currently trying to rebuild its image that declined after UNTAC
left.
Stouts - particularly when mixed with Red Bull, which is a potent chemical shake
- are popular in Cambodia because they have a "macho image", says Ainsworth.
Currently there are seven stout brands available in Cambodia. Despite their popularity,
the number of brands is likely to fall because the size of the market is still limited;
there were only three stouts in the beginning of 1996.
Beers produced in certain Asian countries may not sell well due to the countries'
overall image in Cambodia. Vietnam-made BGI and Thailand-made Singha have only been
able to capture a small market share. Copycat brands, such as Gold Lion and Topping
whose cans look similar to Tiger's, may be causalities of the increasingly competitive
market.
Not only do many consumers consider the quality of their beer to be sub-par, but
also drinking a copycat beer is not very prestigious in status-conscious Cambodia.
Despite the inevitable change in the beer market, prices are unlikely to fall, because
they are already selling at prices that bring in low margins.
Drink shops earn a 2-4 per cent margin on each can, while the markups in retail and
nightclub markets are higher.
Cambodia's beer market is currently dominated by Angkor and Tiger, with Angkor's
extensive distribution system in the provinces giving it the number one position.
Together, the two companies hold up to 60 per cent of the market, IMIC estimates.
Cambodia Brewery is aggressively preparing for the future by investing $46 million
in its brewery which will be able to produce 2.6 million liters of beer a year.
The remaining 40-odd per cent of the market is roughly divided into two clusters
of international brands. The first cluster is comprised of Fosters, Grolsch, Guinness,
Heineken, VB, and Stella Artois, each holding a 1.0%-4.5% market share. In the lower
tier come a host of brands, including Pabst Blue Ribbon, Budweiser, BGI, Pilsner
Urquell, Fischer, Dancing Beer, Beer 333, and others.
Although Cambodia's beer market will grow in the near future, perhaps spectacularly
in some areas, it will be too small to support the current plethora of brands.
The result will be increasing competition to assume market share. Companies that
do not adjust to the Kingdom's unique characteristics or cannot position themselves
properly may be forced to drop out.
