Dear Shareholders,

The COVID-19 pandemic has resulted in unexpected economic and social changes on a global scale in 2020. It has reshaped our world and created challenges for businesses across all sectors. I am proud to report that Thai Beverage Public Company Limited (“ThaiBev”, or the “Group”) has however, proved to be resilient during this difficult period and is preparing to come back stronger than ever, despite the impact of the control measures which involved temporarily shutting down key distribution channels such as restaurants and entertainment venues and temporarily prohibiting the sale of alcoholic beverages in the third quarter of the financial year. Coupled with weakened consumer purchasing power due to the economic situation, the impact of the measures caused revenue for the year ended 30 September 2020 to decline by 5.2% year-on-year (“y-o-y”) to Baht 253,481 million. Nonetheless, the Company was able to register a net profit of Baht 26,065 million, representing a decline of only 0.1% y-o-y, due to strict cost control measures that we have put in place.

We are delighted to report that our spirits business has not only remained stable amid the pandemic, but also recorded both revenue and profit growth. The spirits business generated sales revenue amounting to Baht 117,297 million despite being directly impacted by the temporary closure of entertainment venues and restaurants, as well as the temporary ban on alcoholic beverage sales. Demand remained strong and the business managed to recover quickly as ThaiBev has a diverse spirits portfolio and most of the products in the portfolio are typically consumed off-premise. Significantly, the spirits business’ net profit grew 14.7% y-o-y to Baht 22,271 million – the highest since the Company was listed on the Singapore Exchange. Its profit margin was also higher due to an increase in gross profit and a decrease in selling expenses. In addition, we continued with our efforts to strengthen ThaiBev’s leadership position in the spirits segment by enhancing the portfolio. We launched a new premium rum, “Phraya Elements”, which won a gold medal at the San Francisco World Spirits Competition 2020, as well as “Niyomthai Special Aromatic Rice”, a white spirit that is made from rice, has a 40% alcohol content, and is packaged in a stylish green glass bottle.

For the beer business, as a result of the temporary ban on alcoholic beverage sales in Thailand and temporary lockdown measures in both Thailand and Vietnam, as well as Vietnam’s promulgation of Decree 100 legislating zero tolerance for drunk driving, the beer business’ sales revenue decrease 11.3% y-o-y to Baht 106,871 million. However, it achieved a satisfactory net profit growth of 7.3% y-o-y to Baht 3,519 million due to our tight cost control measures and shift in focus of marketing activities from crowded, physical events or concerts to online platforms, as well as the Thai and Vietnamese governments’ good management of the COVID-19 situation. We also continued with our product and packaging innovation initiatives. In Thailand, we launched “Chang 25th Anniversary Cold Brew Lager” in modern packaging. In Vietnam, we celebrated SABECO’s 145th anniversary by launching “Bia Lac Viet”, a beer brewed by the Vietnamese for the Vietnamese, and “Bia Saigon Chill”, a beer produced with cold-filter technology – these developments mark another important step in expanding SABECO’s product portfolio.

Sales revenue generated by our non-alcoholic beverage business amounted to Baht 16,281 million, down 3.1% y-o-y. We are, however, pleased to report that the business reported a net profit amounting to Baht 656 million despite the pandemic – a 165.7% improvement from the net loss recorded previously. This success is attributable to our efforts to focus on selling products with higher profit margins, selling through more profitable distribution channels and through our tighter control of advertising and promotion expenses. As consumers are increasingly looking for healthier drinks amid the pandemic, we launched “V-Boost”, a drink containing beta-glucan and 200% of the Thai recommended daily intake of vitamin C, which helps boost customers’ immune system and provide them with health benefits. V-Boost has received the “Healthier Choice” logo for being a healthier product for Thai consumers.

2020 was likewise a very challenging year for the food business as it was directly impacted by the temporary closure of shopping malls and restaurants. The business generated sales revenue amounting to Baht 13,172 million, down 15.4% y-o-y. To manage the impact of the pandemic and accommodate changing consumer behavior, we accelerated the expansion of our presence in the fast-growing take-out and delivery channels. We have also continued our product development efforts, adjusted service platforms and restaurant models to reach as many consumers as possible and implemented stringent cost control measures. Accordingly, the food business recorded an EBIT of Baht 144 million and a net loss of Baht 101 million.

In October 2020, we unveiled a group-wide Transformation Program which will be executed between 2020-2025. This Program aims to deliver “PASSION 2025”, which encapsulates our ambition for the next 5 years, covering 3 key domains: BUILD – creating new capabilities and business opportunities; STRENGTHEN – reinforcing the Group’s core businesses for market leadership positions; and UNLOCK – releasing ThaiBev’s potentials for value creation.

We also set up the ThaiBev Situation Room to closely monitor information and news on the COVID-19 pandemic, anticipate problems that may adversely affect the Group, and formulate measures to avoid or mitigate risks. Doing so has enabled us to manage ThaiBev’s business smoothly and ensure the continuity of our product distribution. During the state of emergency in Thailand, we produced and delivered over 18 million packs of drinking water to meet consumer demand across the country. Moreover, ThaiBev Situation Room tracks and collects data related to the health and safety of more than 98% of the Group’s employees via mobile application, helping us to better take care of the well-being of our employees, who are critical to business continuity. All of ThaiBev’s stakeholders are important to us and we also rolled out various external initiatives. For example, we produced alcohol-based cleaning products for medical use and collaborated with the Ministry of Interior and the Thai Red Cross Society to deliver them to the public health operations teams and management units nationwide. We also invested in setting up a mask production line and our own COVID-19 testing center to safeguard the health and safety of our employees and reinforce consumers’ confidence in our operations.

We are committed to operating in a socially and environmentally responsible manner amid our pursuit of business growth and stability and are proud that ThaiBev has been recognized as the Global Leader in the beverage industry in this regard for the third consecutive year, following our achievement of the highest sustainability score among peers evaluated in the latest Dow Jones Sustainability Indices (“DJSI”) assessment. We have also retained ThaiBev’s status as a member of the DJSI World and DJSI Emerging Markets families for the fourth and fifth year. These accomplishments bear testament to the Group’s standing as a stable and sustainable total beverage business leader.

I would like to express my gratitude towards all shareholders, customers, partners and parties from all sectors for their constant support and unwavering trust in us. I would also like to express my appreciation for the determination and support by the Board of Directors and the hard work demonstrated by the senior management team and all our employees in combating the challenges faced throughout the year. We will continue working closely with all our stakeholders to pursue sustainable progress and business growth, while upholding high corporate governance, as well as social and environmental responsibility standards, in order to create and share the value of growth to all our stakeholders.

Thapana Sirivadhanabhakdi

President and CEO