King of Siam: Thailand's Boon Rawd Brewery faces challenges in its home market, but remains an export powerhouse

Modern Brewery Age, July 21, 2003 by Gregg Glaser

The year was 1933. Thailand was called Siam. The country was primarily an agricultural nation with few large businesses, most of which were owned and managed by foreigners. There were no Thai breweries.

It was in this environment that Phraya Bhirom Bhakdi, a Thai of noble birth and a successful businessman, decided to form the first Thai brewery. He traveled to Europe, visited numerous breweries and returned to Siam with a German brewmaster. He named his brewery "Boon Rawd," after his original Siamese name. As the years progressed, the brewery grew, fast under the direction of Phraya Bhirom Bhakdi, followed by his sons, Vidya, Prachuab (the fast Thai brewmaster) and Chamnong. Today, 70 years later, Boon Rawd Brewery Co., Ltd. is headed by Santi Bhirom Bhakdi, a grandson of Phraya Bhirom Bhakdi.

Boon Rawd Today

Boon Rawd, with over 2,000 employees, owns three breweries and six soda water and drinking water factories in Thailand. The original Bangkok brewery is the site of the company's executive offices. Soda and drinking water continue to be produced at this location, and although the brewing equipment remains in place, brewing operations have temporarily ceased. Brewing of all Boon Rawd beers now takes place at two wholly-owned breweries: Pathumthani Brewery Co., Ltd., located in Pathumthani Province just north of Bangkok, and Khon Kaen Brewery Co., Ltd., located in Khon Kaen Province in northeast Thailand. These two breweries produce a maximum output of 800 million liters (6.8 million U.S. barrels) a year.

The Pathumthani Brewery was built in 1985 to produce bottled soda and drinking water. A German-made Huppmann brewhouse was added in 1990, with Krones bottling lines following the next year. In 1992, Singha Lager Beer, Boon Rawd's flagship product, was first brewed at Pathumthani. The brewery capacity is 400 million liters (3.4 million U.S. barrels) a year, and operates under the direction of two German brewmasters. The Khon Kaen Brewery commenced brewing operations in 1996.

In addition to Boon Rawd's Thai breweries, the company also owns two breweries in Germany that brew Mittweida beer (in the town of Mittweida) and Gerand Hartmanndorf beer (in the town of Gerand Hartmanndorf.) In China, Boon Rawd maintains a joint venture with the Nanning Wantai Brewery Co., Ltd., in Nanning.

Boon Rawd exports Singha to 25 countries. The largest export market is neighboring Cambodia, followed, in order of cases sold, by the U.S., the U.K., Singapore, Malaysia and Japan. There are also regional sales to China (primarily to Beijing and Shanghai), the Philippines, Laos and Vietnam. Sales to Myanmar, bordering Thailand to the west, are sporadic.

Boon Rawd Beers

Boon Rawd brews six beers for the Thai market:

1) Singha Lager Beer (bottled) and Singha Lager Draft Beer are all-malt, full bodied, hoppy pilsner-style lagers, stronger than average pilsners at six-percent alcohol by volume. A "Singha" is a mythical lion. from ancient Hinduism.

2) Singha Gold Light Beer, introduced in 1985, is also an all-malt lager, with an alcoholic content of 4.7 percent, which is more in line with standard international pilsners and lagers.

3) Singha Draft Beer is a canned 5.2 percent lager and a brand in itself, separate from the other Singhas.

4) Kloster, a five-percent lager brewed under license from Beck's for the past twenty years, replaced the Mittweida brand in Thailand.

5) Thai Beer, a 6.5 percent lager, was renamed in the 1990s from Super Lion to counter competition from the Chang beers new on the market at that time.

6) Leo Beer is a 5.7 percent standard lager.

In the early years of brewing at Boon Rawd, all raw ingredients were imported. Today, the company is almost completely self sufficient in barley, having been instrumental in the development of barley farming in Thailand, with 4,500 acres under cultivation. Boon Rawd also established its own malting company, the Chiengmai Malting Co., the first in Southeast Asia. Hops continue to be imported, with the Hallertau and Saaz varieties utilized in all Boon Rawd beers.

Other beverages produced by Boon Rawd include Singha Soda Water, Singha Drinking Water, Singha Fresh Line (several fruit juices), flavored tea and premium coffee.

Competition on the Homefront

Boon Rawd was the only domestic player in the Thai beer market from 1933 until 1966 when Thai Amarit Brewery opened. This brewery closed down early this year due to financial difficulties. Of greater concern to Boon Rawd, however, is the Chang Brewery, which opened in 1995 and began selling Chang Beer. A joint venture between a wealthy Thai businessman who owns the liquor monopoly in Thailand (a clear spirit distilled from molasses named Lao Khao--White Spirit--is the largest selling alcoholic beverage brand in Thailand) and Carlsberg Asia. Chang has quickly gained 60 percent of the Thai beer market. How did they accomplish this in so few years against an entrenched and popular beer such as Singha? The answer is discount pricing and hardball sales tactics.