Dear Shareholders,

In 2018, we remained resolute to accomplish Vision 2020 and strengthen our position as the leader in ASEAN’s beverage industry. While this year proved to be a challenging year for the domestic market due to a number of factors including weak purchasing power and high level of debt in the low-income households as well as lackluster demand caused by an increase in domestic beverage prices following the higher excise tax rates and an Elderly Fund tax in late 2017 and early 2018 respectively, we diversified our portfolio geographically and across product categories through three major acquisitions. The first of these acquisitions was through the successful bid for a 53.59% stake in Saigon Beer - Alcohol - Beverage Corporation (“Sabeco”), the biggest beer producer and distributor in Vietnam and ASEAN. We also branched into the spirits business in Myanmar through the acquisition of a 75% stake in Grand Royal Group, the biggest player in Myanmar’s whisky market; and also grew our food business significantly by acquiring the rights as a franchisee to operate KFC restaurants in Thailand. As a result of these acquisitions,  ThaiBev’s revenue for the year ended 30 September 2018

increased 20.9% to Baht 229,695 million, with a net profit of Baht 20,726 million.

The revenue of ThaiBev’s spirits business for the year ended 30 September 2018 decreased 3.1% to Baht 105,900 million, while net profit decreased to Baht 17,720 million due to lower domestic sales volume. However, we strengthened our domestic portfolio by expanding into the ready-to-drink spirits segment with the launch of new products – “Kulov Max 7”, ready-to-drink vodka, and “Star Cooler”, ready-to-drink wine cooler, thereby strengthening our domestic spirits business as a whole. We also worked with Grand Royal Group to revamp their packaging through the modernization of their product labels, projecting a premium image for the brands. Additionally, “MacArthur’s” was also launched, marking the first brand of Scotch whisky imported from Scotland and bottled in Myanmar.

The slow economy and fierce competition in 2018 presented a challenging operating landscape for all players in Thailand’s beer industry. Despite this, the consolidation of Sabeco’s revenue drove our beer business’ revenue up by 64.8% to Baht 94,486 million, with a net profit of Baht 2,805 million, propelling ThaiBev to the leading position in ASEAN’s beer industry. We also further enhanced our presence in Myanmar, another market with high growth potential, through an investment by Fraser and Neave, Limited (“F&N”) with our local business partners, in order to establish Emerald Brewery Myanmar Ltd. This new brewery is expected to begin production in late 2019. In order to keep up with changing consumer preferences, we have also been consistently putting in effort to build our beer brands and launch new products. This year, we launched “Tapper Original X-Tra” to target new generations of consumers who prefer strong beer, as well as “Huntsman” and “Black Dragon” craft beers to appeal to younger generations of consumers that seek out unique products. At the same time, we started working closely with Sabeco to advance our beer business in Vietnam, finding new ways to improve performance, explore business opportunities, and review the brands and brand portfolio to boost long-term sales growth.

The sales revenue of our non-alcoholic beverage business in 2018 decreased 3.5% to Baht 16,184 million. Even with the growth in sales volume for drinking water and carbonated soft drinks, the green tea market was weak, significantly impacted by excise taxes imposed on green tea with effect from September 2017. This pushed players in the green tea business to increase their prices. However, we implemented various strategies to ease the impact of this additional tax cost, such as offering smaller bottles and introducing new variants of green tea with lower sugar content. The latter also ties in with the increasing trend of healthier beverages. In addition to continuously improving our existing products, we are also proud to bring “Sarsi”, F&N’s famous root beer, back to the Thai market after a hiatus.

Our food business performed extremely well in 2018, with revenue soaring 96.8% to Baht 13,265 million and profit growing to Baht 450 million. This was the result of our acquisition of the rights as a major KFC franchisee in Thailand and better management of costs and prices. To facilitate the expansion of our food business, we acquired a stake in Havi Logistics (Thailand) Co., Ltd., an expert in cold chain logistics and distribution, to ensure that proper temperature is maintained for the products when they are transported from the factories to consumers, and to provide services for our clients in the restaurant industry in Thailand.

I am pleased to report that ThaiBev was once again selected as a member of Dow Jones Sustainability Indices (DJSI) for the World Index family and Emerging Markets Index family. We achieved the highest sustainability scores on a global scale and were recognized as an industry leader. This encourages us to continue operating in a socially and environmentally friendly manner while delivering healthy financial performance, in order to generate stable and sustainable growth as well as good returns for our investors in the long term.

In human capital management and development, we are working towards the “Limitless Opportunities” goal outlined in Vision 2020. Over the years, we have continuously provided career opportunities for our employees. This year, we initiated the use of Individual Development Plan (IDP), a tool for the employees to systematically develop the competencies required for their jobs and plan their career paths in alignment with the Company’s growth and goals.

in our journey to achieve our goals, and I would like to express my gratitude towards all shareholders, customers, partners and relevant parties from all sectors who have provided us with unwavering support and trust. I also truly appreciate the determination and hard work demonstrated by the Board of Directors, the senior management team, and all employees throughout the year. ThaiBev will continue working with all our stakeholders to pursue sustainable progress and business growth, while upholding good corporate governance and social responsibility, in order to create and share value of growth, as well as maximize benefits for all.

Thapana Sirivadhanabhakdi

President and CEO