Beer Sales Outpace Economic Growth in AsiaJason Gale and Suttinee Yuvejwattana
Thailand will ban alcohol sales near universities and technical colleges, putting the nation at the forefront of efforts in Asia to curb consumption.
Under amendments to the Alcohol Control Act endorsed by the government yesterday and to be implemented nationwide late next month, bars, clubs and retailers will be prohibited from selling alcoholic beverages within a 300-meter (328 yards) radius of colleges. The measures are aimed at promoting a healthy lifestyle and tackling alcohol-related problems, including underage sex, the Ministry of Public Health said.
Thailand is moving further than other governments in countering growing demand for alcohol in Asia and the Pacific, the fastest-growing beer market for brewer Heineken NV. The World Health Organization has called for a 10 percent reduction in the harmful use of alcohol by 2025 from 2010 levels, implicating it in more than 200 diseases and injury conditions that the UN agency says kill about 3.3 million people a year.
“Thailand has the strongest tradition of trying to curb alcohol consumption and reduce alcohol-related harms,” said Juergen Rehm, professor and chair of addiction policy at the University of Toronto’s Dalla Lana School of Public Health.
Thailand’s government has a taxation mechanism that “enables them to tax the hell out of any beverage which is attractive to youth,” said Rehm, who has worked with Thai authorities on alcohol programs for the past decade.
Beer Outpacing GDP
Vietnam, Philippines, Indonesia, China and some states of India have also introduced policies over the past few years to sap alcohol demand. Beer sales in Vietnam have been climbing at at least double the pace of gross domestic product growth the past five years and have averaged 6.2 percent annually across the region since 2009, according to Euromonitor International.
Anheuser-Busch InBev NV, the world’s largest brewer, opened a brewery near Ho Chi Minh City in May, bolstering its supplies of Budweiser and Beck’s beer.
“Asia Pacific is now the third largest zone of AB InBev in terms of volume, and Vietnam is considered the next turning point for us in Southeast Asia,” said Michel Doukeris, the Belgian brewer’s Asia-Pacific president, at an opening ceremony. The plant will eventually produce as much as 1 million hectoliters a year of the amber liquid.
Asia-Pacific will contribute more than 70 percent of global beer growth in the next five years, Heineken’s regional president, Roland Pirmez, told a conference in March 2014, citing Canadean projections.
Per-capital alcohol consumption averaged 29 liters in the region in 2013, compared with 59 liters in Europe and 48 liters in the rest of the world, presenting “untapped growth potential,” Pirmez said. The Amsterdam-based company increased its stake in United Breweries Ltd., India’s biggest beermaker, to 42.1 percent on July 7, less than a week before opening a $60 million brewery near Yangon.
Myanmar has no national policy or action plan to tackle alcohol and there is no legal requirement that alcohol advertisements and containers carry health warnings, the WHO said in its 2014 Global Status Report on Alcohol and Health. Worldwide, more than a dozen countries had no legal minimum age for the consumption of alcohol.
“This task of creating or strengthening a regulatory framework for alcohol turns out to be a task that countries ignore to their economic peril,” said David Jernigan, director of the Center on Alcohol Marketing and Youth at the Johns Hopkins Bloomberg School of Public Health in Baltimore, Maryland. The school was renamed in 2001 in honor of Bloomberg LP founder Michael Bloomberg, a major donor. “Alcohol can be a serious risk not just to health, but to development given that in much of the world it’s the leading cause of death and disability for people ages 15 to 49.”
Thailand recognized this years ago and is now considered a “model worldwide” for its ability to combine research and community mobilization to “strengthen the national public health voice,” Jernigan said in an interview.
Even still, the sales restrictions announced yesterday may do little to stop people from enjoying a tipple if they really want one, and may have a “limited” impact on sales volumes, said Philip Gorham, an equities analyst with Morningstar Inc. in Amsterdam. Under existing regulations, retailers are also prohibited from selling alcohol between midnight and 11 a.m. and between 2 p.m. and 5 p.m.
Public Relations Stunt?
“I see them essentially as PR stunts by governments attempting to appear to be doing something good for public health,” Gorham said in an e-mail. “The broader point, however, is that developing markets are catching up on the regulatory front, or at least making efforts to.”
Taxation on alcohol has been used effectively in developed markets to limit consumption and “disruptive tax increases would be a risk to emerging market volumes,” Gorham added.
After growing steadily for about 25 years, alcohol consumption plateaued in Thailand after the 2008 release of a national policy on alcohol that helped persuade more than two-thirds of Thais to abstain from booze, WHO data show.
Other governments are following suit.
The Philippines introduced a so-called sin tax on cigarettes and alcohol in 2012 that’s increased the price of a liter of premium beer by 22 pesos (50 cents).
Path to Prohibition?
India’s Kerala state in August enacted a law that would put it on the path to almost-complete prohibition in 10 years, the Press Trust of India reported in August. In mandates that only luxury hotels can sell liquor, and the number of state-run liquor and beer outlets will be cut by 10 percent a year. At least 400 bars attached to smaller hotels have already been shut after being denied licenses, and 300 may close soon.
The regulatory and tax challenges in India are increasing, Gilles Bogaert, chief financial officer of Pernod Ricard SA, told analysts on a conference call in February. “The Indian market is not easy from a regulation and tax standpoint,” he said.
Alcohol laws are becoming “more stringent” worldwide, said Spiros Malandrakis, senior alcoholic drinks analyst with Euromonitor International, who sees the biggest risk for beverage companies coming from any further reduction in consumption in mature markets, where sales are flagging.
“Any additional measures to cut down consumption will perhaps have a much bigger effect than in emerging markets, which are anyway moving in a more-or-less positive direction, as middle classes are advancing and consumers are trying to emulate Western drinking habits,” Malandrakis said.
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