Chairman's Statement

Dear Shareholders,

Since our listing on the Singapore Exchange in May 2006, the Company has begun to plan for changes that will make it more professional and competitive inside and outside of Thailand. It was the Board’s intention when we were established as a public company, with all that that entails regarding corporate governance and greater professionalism. While these internal projects have not warranted detailed reports previously, needless to say, we believe that improvements to our human resources structure and greater accountability at all levels of management will assist us in implementing the strategies we have made public since listing. On that note, I would like to spend some time to review these strategies as they will have a material impact on our future.

Strategic Direction

A key strategy to date has been to develop the local market and maintain market leadership by managing the marketing mix and the pricing of individual brands. To enable us to offer a spirits portfolio at every price range, the Company has acquired two white spirits brands, White Tiger and White Bear, which give us the opportunity to offer economy spirits to compete with local community spirits and homemade liquor. The value of these acquisitions is in our ability to now compete at every price level.

We also intend to continue what we call a premiumisation process by launching higher margin products to lift our portfolio into the standard and premium ends of both spirits and beer. This will enable us to gain higher margins over time and prepare for consumer aspirations as the economy improves in the long term. To achieve this, we will continue to invest in our brands by investing in integrated marketing communications and premiumisation. Some passing examples would be the introduction of gift boxes for some of our spirits products like Sangsom and Mekhong. We also introduced some new beers to the Thai market, Chang Light and Chang Draught in bottles and these have done well, in fact, surpassing some foreign competitors whose beers were introduced to the Thai market several years prior to the arrival of our brands.

The key strength of ThaiBev has always been its phenomenal distribution network, which covers the entire country. We will need to leverage this infrastructure by taking on products from other companies, and we need to develop it to be more modern and efficient. To assist in this, the Company commenced the construction of five major distribution centers in different regions in August 2007. Together with greater implementation of SAP enterprise resource planning software throughout our group of companies, we envisage being better able to forecast the inventory needs of our dealers and to ensure that products are pushed through the network in the most effi cient manner.

Foreign Expansion Strategy

We have also begun to establish a platform for strategic international expansion. We now export our products to 80 countries globally. I am pleased to inform you that our acquisition of Inver House in October 2006 is now bearing the fruit of integration. Not only have we been able to make Inver House’s Airdrie headquarters the base for all operations in the UK, and thus save on several costs, but our distribution of Chang beer in Australia came about because of Inver House’s contacts. In a later chapter, we will report in more detail on our overseas strategies. However, suffice to say that there are plans to increasingly export our products as premium offerings and acquire businesses that add more value. Our investments aim to have an internal rate of return (IRR) in the suitable amount. As a public company, we have not rushed into foreign acquisitions over the past year. We are focusing on the Asian region as there are many cultural and consumer similarities among Asian countries that would make the region more attractive for us at the beginning. We are already making inroads into certain markets such as Singapore and Malaysia for instance, but our eye must be on markets such as China and India as these are phenomenal regional growth markets.

In Europe, the USA and Australia, ThaiBev has commenced selling Chang beer in its export version as a premium beer, while Mekhong rum is being positioned at the high end of the consumer market. This is a signal of the confidence we have in the quality of our products. We intend to enter continental European markets as and when we can set up distribution, which is a critical success factor. While entry through Thai and Asian restaurants and outlets is an appropriate first step, we will certainly be seeking to penetrate the mainstream drinks markets over time.

Domestic Factors

Most shareholders will be aware of the political events in Thailand in our recent history that left the country in a state of uncertainty for over a year. These problems, we hope, have been ameliorated by the general election of December 2007. Nevertheless, this uncertainty led to an economic slowdown and this had some effect on this company as it did on others in the industry. GDP growth for 2008 is now forecasted as a moderate 4.5 - 5.5% by the Office of the National Economic and Social Development Board, however, the Consumer Confidence Index has risen to 119 at the end of 2007 (source: Bureau of Trade and Economic Indices, Ministry of Commerce), which should be cause for optimism.

As the domestic market still counts for 96.4% of total sales, I should like to bring to your attention sales growth of 2.8% in 2007, compared with 2006, and a commensurate increase of 3.3% in net profit year-on-year. This increase reflects the strength of the company under less-than-ideal economic conditions. Massive flooding over much of the country from the end of 2006 into the first half of 2007 meant that many of our agents were unable to handle large orders during our peak period. In spite of these difficulties, we managed to grow our revenue.

Two tax rises were implemented in Thailand, one in August 2007 and one in January 2008. The former had been discussed for some time and the Company was to some extent prepared for it. The second rise, of one and a half percent, was to cover the establishment of a public broadcasting system. Shareholders will want to know if there is any way to forecast future tax increases, however, this depends on government policy and tax collection targets that may change from time to time, making forecasting unfeasible.

Diversification into Non-alcoholic Beverages

One other strategy not listed above is the diversification of the Company into non-alcoholic beverages. This is a deliberate move to ensure that we explore other products that fit in with our portfolio. Post year-end, the acquisition of Wrangyer in January 2008 was our entry into the energy drinks market. This diversification will allow us to enter into a new market that is growing 3-4% a year and where our distribution network will contribute considerably to further sales growth. The construction of the five distribution centers mentioned above will help us to manage the increase in the portfolio too. The Company will be looking very closely at fruit juices and other non-alcoholic beverages; we will keep you informed about planned acquisitions when they become material.

Corporate Development

As we enter into 2008, our vision of the evolution of the Company is an important issue for shareholders. We want to continue improvements to the management structure and build a team that is able to react faster to events and think further ahead. We will rely more and more on professional management to drive our growth. We will then also be better able to satisfy our distributors by offering more professional services.

I have a vision of ThaiBev as a leading player in the ASEAN region and want to assure shareholders not only that our above-mentioned strategies are well thought-out, but that we have the ability to implement them successfully. The natural outcome will be higher revenue growth and profitability.

As for our relationship with you, our shareholders and other investors, we must now strive towards a goal of becoming a role model of transparency and good corporate governance so that you remain fully aware of our plans and achievements moving forwards.

I believe ThaiBev will be an even better company five years from now and I shall continue to work with the Board of Directors to help guide the Company to ensure that we not only achieve our goals but satisfy all stakeholders in the process.

Mr. Charoen Sirivadhanabhakdi
Chairman