Carabao and Red Bull lock horns in China

The Myanmar Times - Weekend - - International Business - DE­CEM­BER 8, 2017

THAI ty­coon Sathien Set­th­a­sit plans to pour $300 mil­lion into help­ing his en­ergy-drink com­pany Carabao Group Pcl take on Red Bull in China. A re­cent slide in the firm’s shares sig­nals in­vestors see a tough fight ahead.

The out­lay is ear­marked for mar­ket­ing and dis­tri­bu­tion in the next three years to tap ris­ing Chi­nese de­mand for en­ergy bev­er­ages, Mr Sathien said in an in­ter­view. Mr Sathien is Carabao’s chief ex­ec­u­tive of­fi­cer, but is fund­ing the in­vest­ment via a sep­a­rate com­pany to avoid pres­sur­ing Carabao’s fi­nances.

“China has large growth po­ten­tial for en­ergy-drink con­sump­tion,” Mr Sathien, 64, said in his of­fice in Bangkok on Dec 4. “But mar­ket­ing costs as a newcomer will be mas­sive. We have to make a big pro­mo­tional splash to be suc­cess­ful.”

China of­fers an en­ergy-drink mar­ket that’s set to ex­pand a third to $10.1 bil­lion by 2020, ac­cord­ing to re­searcher Euromon­i­tor In­ter­na­tional. The chal­lenge for 16-year-old Carabao is how to fight the dom­i­nant Red Bull brand in the world’s sec­ond­largest econ­omy, as well as es­tab­lished lo­cal ri­vals and re­cent en­trant Mon­ster Bev­er­age Corp.

Carabao has al­ready spent $100 mil­lion on mar­ket­ing this year, ac­cord­ing to Mr Sathien, as it strives for in­ter­na­tional recog­ni­tion af­ter over­tak­ing T.C. Phar­ma­ceu­ti­cal In­dus­tries Co’s Red Bull in Thai­land. Pro­mo­tional ini­tia­tives in­clude spon­sor­ship of Chelsea FC as well as the English Foot­ball League’s Carabao Cup, with the UK a pri­or­ity over­seas mar­ket.

Com­pe­ti­tion in China also comes from other bev­er­age types, such as co­conut wa­ter and ready-to-drink tea, said Loris Li, a food and drinks an­a­lyst at con­sul­tancy Min­tel Group Ltd in Shang­hai. At the same time, there’s an ap­petite for in­creased prod­uct op­tions as more Chi­nese em­brace per­sonal fit­ness, ac­cord­ing to Ms Li.

Carabao’s shares surged af­ter list­ing in 2014, mak­ing it one of the South­east Asian na­tion’s 50 largest firms by mar­ket capitalisation and turn­ing Sathien into a bil­lion­aire ear­lier this year -- but only briefly.

In the past month, the stock slid about a fifth, partly af­ter the com­pany re­ported a 12% slide in thirdquar­ter net in­come to 387.7 mil­lion baht ($11.9 mil­lion) from a year ear­lier. The drop in the shares stripped Mr Sathien of his bil­lion­aire sta­tus.

Sales in China ap­pear to be com­ing up short of ear­lier guid­ance and are on course for 150 mil­lion cans in 2017 ver­sus a tar­get of 170 mil­lion cans, Chaiy­a­torn Sricharoen, an an­a­lyst at Bualu­ang Se­cu­ri­ties Pcl, wrote in a Nov 27 note. The com­pany re­tains long-term po­ten­tial, Mr Chaiy­a­torn added.

Mr Sathien’s tar­get is to dou­ble sales of the Carabao Daeng drink to 300 mil­lion cans in China in 2018. The ven­ture that will make the $300 mil­lion out­lay has the prod­uct’s dis­tri­bu­tion rights in China. The ven­ture started op­er­a­tions this year and cur­rently has of­fices in eight ma­jor provinces and a staff of more than 800.

China will be a “very tough chal­lenge for Carabao” and such con­cerns have weighed on the shares re­cently, said Na­ree Api­sawait­tkan, an an­a­lyst at Phillip Se­cu­ri­ties (Thai­land) Pcl in Bangkok.

Named af­ter one of Thai­land’s most suc­cess­ful rock bands, Carabao sits on a val­u­a­tion of more than 40 times blended for­ward 12-month earn­ings. That’s the sec­ond high­est among the coun­try’s 50 largest stocks, adding pres­sure on Mr Sathien to make a suc­cess of the planned over­seas expansion. – Bloomberg/bangkok Post

of pop­u­la­tion size, and char­ac­ter­is­tics of pop­u­la­tion change in the ar­eas of fer­til­ity, mor­tal­ity and mi­gra­tion. The pre­vi­ous edi­tion was re­leased in 2015.

Glob­ally, there are about 962 mil­lion peo­ple aged 60 and above to­day, which is more than dou­ble the 382 mil­lion in 1980. This size of this group is ex­pected to dou­ble again to al­most 2.1 bil­lion by 2050.

Like­wise, the older pop­u­la­tion in the de­vel­op­ing re­gions is grow­ing much faster than those in the de­vel­oped re­gions. Based on UN pro­jec­tions, 79 per cent of those aged 60 and above in the world will be liv­ing in the de­vel­op­ing re­gions by 2050. Be­tween now and 2050, the num­ber of older per­sons is ex­pected to grow fastest in Africa, by more than three­fold to 226 mil­lion.

“Growth in the num­ber of older per­sons is a global phe­nom­e­non: it is ex­pected that be­tween 2017 and 2050, vir­tu­ally ev­ery coun­try in the world will ex­pe­ri­ence a sub­stan­tial in­crease in the size of the pop­u­la­tion aged 60 years or over,” the UN re­port said

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