Sector Insight... Malaysian beer brands face pricing problem

Malaysian beer marketing is very different to its counterparts in most of Asia. In a market where alcohol promotion is restricted and drinkers form a niche audience, different tactics are required.

The pressure on brands is growing. In recent years, they have suffered after a series of tax hikes. Feeling the squeeze, brewers raised prices by 30 to 40 per cent. Beer drinkers balked, and consumption fell 14 per cent from 1.4 million to 1.2 million hectolitres between 2004 and 2006.

“We’ve seen a contraction,” says Charles Ireland, MD of Guinness Anchor Berhad (GAB). “There was a bit of a recovery afterwards, but last year was fairly flat. Perhaps we’ll see modest growth if excise taxes aren’t increased.”

This sense of adversity is what prompted GAB to join with its sole rival, Carlsberg Malaysia, to form the Confederation of Malaysian Brewers Berhad (CMBB) in July 2005. GAB and Carlsberg are the CMBB’s only members, and until the licensing last year of Napex Corporation, were the only two brewers allowed on Malaysian soil.

The CMBB is keen to point out that a beer costs 10 per cent more than a burger in Malaysia, while in the US a burger costs only 40 per cent of a beer. High prices are driving beer drinkers to hard liquor and homebrew, argues the CMBB.

What is certain is that the tax issue has allowed GAB to overtake Carlsberg. In 2000, Carlsberg’s share was 55 per cent to 45 for GAB, including beer and stout, but by mid-2006, GAB was up to 55 per cent. This shift reflects the two firms’ portfolios. GAB sells pricier beer brands - Guinness, Tiger, Heineken and Anchor - and affluent drinkers imbibe despite price increases. Much of Carlsberg’s volume came from its lower-priced Carlsberg green label.

Soren Jensen, MD of Carlsberg Malaysia, recognises the problem. “Once you have high duties you don’t have much cheap beer,” says Jensen. “The premium brands have strengthened because the relative price difference is smaller.”

He insists that the shares of the two firms have been stable in the past 18 months after Carlsberg overhauled its portfolio. “We’ve added Tuborg and Skol Super, and extended the Carlsberg range with Carlsberg Gold,” he says. Carlsberg has also began importing Corona from Mexico.

In terms of marketing, last year Carlsberg was outspent by GAB, which budgeted RM10.4 million (US$2.8 million) for its market leaders, nearly half of all of Malaysia’s beer adspend, according to Nielsen. Carlsberg spent RM6.8 million advertising its namesake brand last year.

Malaysia’s drinkers include the Chinese, Indians, foreign workers, expats and tourists. Drinking is a social activity and 70 per cent of consumption is on-trade, according to Euromonitor. 

“There is a high prevalence of eating out in Malaysia,” says Ireland. “There are ‘coffee houses’ which are casual dining areas open to the elements. They are an everyday eating and drinking location for many of our customers.”

As a result of this limited market, Malaysia’s beer adspend of RM22.3 million last year was the lowest in Asia, except for Indonesia, which has none.

“We are restricted but there’s not a total blackout. We don’t advertise in ‘public’ media because the Government doesn’t want the Muslim non-drinking population exposed to alcohol advertising,” says Ireland, “We use ‘private’ media - ones people have to buy into.”

TV, radio and outdoor are not used. Print accounted for 70 per cent of beer adspend last year, cinema 19 per cent and point-of-sale 11 per cent. Relationship marketing, consumer promotional activity and trade marketing are also used.

Carlsberg sponsors Malaysian golf, and both companies benefit from broadcast spillover from their parent companies’ global relationships - Carlsberg with Liverpool FC, Heineken with the UEFA Champions League. Ireland argues that Malaysian beer brands benefit from these ties. It’s a sign that, with consumption in decline, the onus is now on brands to make the most of the opportunities that come their way.

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