Corporate Info

Strategy

Thai Beverage's strategy is to maintain and build on its leading position in the Thai alcoholic beverage market and expand business internationally by investing in a portfolio of existing and new brands to cater to key segments of the market, while remaining focused on profitable growth and shareholder value creation.

One of the successes of our Group has been the Chang Beer brand. This achievement has enabled us to establish a market leadership position in the economy beer segment of the Thai market, in addition to our existing leadership in this segment of the spirits market. To maximize our ability to penetrate new market segments, we are building brand equity, especially in the higher priced segments. We launched Chang Light and Chang Draught in bottles in March 2006 to capitalize on the growing demand for lighter beer by urban consumers. In October 2005, we also launched Blue, an admix brown spirit, and in March 2006, we re-launched Hong Thong, a brown spirit, and launched Niyomthai, a white spirit. We are currently in the process of rationalizing our existing portfolio of spirits brands in response to market developments.

Continued Investment

We plan to continue to invest in our leading products through our marketing and distribution efforts to maintain our market leadership. We are increasing our support for distributors by sending representatives from our retail team to points of sale to provide merchandizing materials, introduce new products, perform brand building activities and take product orders. We are increasing our resources for our direct sales and modern trade channels, such as supermarkets, by establishing key account managers. We have formed a team for hospitality channels and a team for the premium segment of the market to develop our distribution channels in these categories. We established exclusive agent relationships with 470 agents to distribute Archa Beer, Crown 99 and Niyomthai in designated areas. In addition, we also established exclusive agent relationships with 100 of these 470 exclusive agents to distribute Chang Light in designated urban areas. We plan to continue using innovative marketing methods to promote our brands effectively, which we will continue to develop in response to our own consumer research panels. We aim to maximize profitability without affecting existing sales volume by optimizing the mix benefits of having a portfolio of brands and leveraging the price differentiation that is available to us through our wide range of distribution channels.

Continue to integrate our distribution system and production facilities and centralize group services in order to enhance efficiency

Although our distribution network is one of the most established and far-reaching in Thailand, we see significant opportunities to further improve our Group's distribution and production platform. Since the formation of Thai Beverage, we have centralized certain group services including procurement, marketing and logistics in order to realize cost savings.

We are also in the process of constructing recycling terminals at each of our breweries and distilleries to receive and process reusable glass bottles more efficiently. This should ensure greater environmental protection, guarantee the quality of the bottles we use in our production process as well as enable us to reduce our packaging costs.

International Expansion

In 2004 and in 2005, our international sales were small, accounting for less than 1.0% of our total sales. Our initial focus for profitably growing our international beer and spirits business is on the ASEAN markets, in particular countries sharing a border with Thailand, as well as China, Japan and Taiwan. There are opportunities for both increasing export sales and diversifying production capacity outside Thailand through joint ventures or acquisitions. The Company is now looking at the USA, Europe and Canada through acquisitions or joint ventures.

Industrial Alcohol Products

Thai Beverage's industrial alcohol plant was acquired in 2002 and the Company will increase exports of industrial alcohol products to key markets such as Japan, India and the Philippines. Since September 2004, the Company has produced ethanol to make gasohol fuel as a substitute for 95-octane gasoline, which the Government has resolved to eliminate by 2007. We have increased our capacity of ethanol production to meet the expected demand for gasohol.