F&N's brewery arm in Myanmar must brace for these 2 giant rivals

They're out to splurge US$110m.

According to DBS, with the opening of the Myanmar market, competition is picking up. Two international brewery groups – Carlsberg A/S and Heineken - have announced plans to partner local Myanmar companies and invest US$50m and US$60m, respectively to build breweries and distribute their respective brands there. 

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The oft cited reason was the low beer penetration at 3liter/capita compared to other South-East Asian countries. This could create pressure on MBL, though in the near term, the distribution and brand strength could aid MBL in defending its market share.

FNN has a 55% stake in Myanmar Brewery Limited (MBL), which was established in 1995 and has grown to be a market leader with an estimated 60-70% market share.

The brands MBL brews and distributes include Myanmar Beer, Myanmar Double Strong and Andaman Gold. MBL also brews Tiger Beer under license from APB (Asia Pacific Breweries Limited).

While FNN has sold its stake in APB to Heineken in late 2012, we understand that the license agreement for Tiger Beer will continue for another 5 more years. We estimate MBL to account for c.10% of the Group’s PBIT, though this is likely to taper down as contribution from other business segments, particularly development properties picks up in the latter part of FY13F and in FY14F.