Interbrew to licence Kloster

Belgian brewing giant Interbrew has signed an agreement with the Boon Rawd Brewery of Thailand to produce the Kloster beer brand under licence in the Asian country.

Interbrew owns Kloster through its stake in the German brewery Beck & Co, where it is the third largest brand, and it has been sold in Thailand since 1975 under a licence agreement with the Thai Amarit Brewery.

The decision to grant the licence to Boon Rawd is indicative of Interbrew's plans for the brand in Thailand. Boon Rawd is the biggest brewer in the country and owns the popular Singha and Leo brands, and is clearly seen by the European company as a better prospect for developing Kloster.

Not that Kloster has been underperforming under the tutelage of Thai Amarit. Interbrew said that the brand was particularly popular in Bangkok and its surrounding areas, and already had a strong reputation as a premium brand.

Nonetheless, the production, distribution and marketing of Kloster will be transferred from Thai Amarit to Boon Rawd at the beginning of 2003, and the brand will immediately begin to benefit from Boon Rawd's vast knowledge of the local beer market.

Interbrew said that Thailand was a key part of its Asian development strategy. With more than 70 million people living there, and an average of 10 million tourists visiting each year, the potential for sales is significant, not least because many of the tourists will already be aware of many Interbrew brands.

Furthermore, Boon Rawd's breweries technologically advanced, ensuring not only that the quality of the beer is not affected by the production licence but also that there is a solid and reliable base on which to build market share.

In Thailand, where beer is generally considered a luxury product, beer consumption per capita went from 9 litres in 1994 to more than 19 litres in 2001, according to figures from Interbrew. Beer therefore accounted for 16 per cent of total alcohol consumption per capita in 2001, and this figure is likely to grow further.

"We are very happy to have come to this agreement with Interbrew to start distributing and producing the Kloster brand in Thailand. It will be an opportunity for both companies to work more closely together and to, perhaps, explore other ventures opportunities,"​ said Santi Bhirom Bhakdi, president of Boon Rawd. "This licence agreement definitely seals the good relationship between the two brewers."​

Hugo Powell, CEO of Interbrew, agreed: "This licence agreement transfer from Kloster to Boon Rawd is the result of a long standing and excellent relationship between Interbrew and the Bhirom Bhakdi family, owner of Boon Rawd Brewery. Interbrew is fully committed to working closely with Boon Rawd to continue to develop Kloster's market share in Thailand."​

While beer sales are growing all the time in Thailand, the key to really carving a market share in the country is to entice drinkers to trade up to the premium imported or foreign beers, such as Kloster, and away from the cheaper lagers which currently dominate the sector, including both Singha and Beer Chang, which have been engaged for some time in a bitter price war at the lower end of the market.

Interbrew is also throwing down the gauntlet to Carlsberg, its main European rival in Thailand and brewer of Beer Chang.

Boon Rawd certainly has the expertise to market Kloster as an upmarket brand, and even if the majority of the drinkers remain tourists and not locals, that is still a significant number of drinkers.