International expansion drives growth at APB

A 15-year drive to develop a network of international breweries continues to pay dividends for Singapore's Asia Pacific Breweries, which has reported a 19 per cent increase in profits for the first quarter of 2005.

APB posted pre-tax profits of S$34.3 million for the three months to 31 December, reflecting "strong growth in sales in the key markets where we are present", according to CEO Koh Poh Tiong.

In 1989, some 68 per cent of the company's pre-tax profits came from Singapore, but by 2004 this figure had dropped to just 13 per cent as APB spread to New Zealand, Papua New Guinea, Thailand, Malaysia, Vietnam, Cambodia and China.

But the group has not just focused on neighbouring countries - its flagship Tiger Beer brand is making inroads into Europe and the US as well. Indeed, APB's focus on developing Tiger (rather than concentrating on developing local brands after acquiring breweries) is at the heart of its success, allowing it to reap the benefits of its added-value brand as the beer sectors in many of its core markets have developed.

The latest overseas market to begin local production of Tiger was Thailand in July 2004, and the beer has since been distributed throughout Thailand, backed by a strong marketing campaign. Already established in China, the company has now developed a new Tiger Beer variant, Tiger Crystal Lite, a beer brewed to suit local taste in Shanghai, the brand's biggest market.

China, however, remains the hardest market for APB, which operates via a joint venture with Heineken. The company continues to languish in the red there, ironically through its decision to focus on premium beer brands such as Tiger. The Chinese market is dominated by cheap, local brands, with just a handful of major cities (in particular Shanghai and Hong Kong) having much of a taste for premium beers.