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Company Perspectives:
Corporate Vision: To be the Leading Brewer in the Asia Pacific Region.
Asia Pacific Breweries Limited is one of the largest brewers in the Asian region. The company produces a variety of beers, including its prize-winning premium flagship Tiger Beer, as well as a number of other international, regional, and local beers, such as Anchor, Raffles, Heineken, and its latest brew, Touché, released in 2003. In all, Asia Pacific brews more than 40 beers. Originally focused on the Malaysia and Singapore markets, the company has expanded steadily throughout the region since the early 1990s, and now includes operations in Singapore, Malaysia, New Zealand, Indochina, Cambodia, China, Thailand, and Papua New Guinea. Singapore remains the company's largest market, while New Zealand and Indochina are both strong revenue generators for Asia Pacific. The product of a 1930s joint venture between Singapore's Fraser & Neave and The Netherlands' Heineken, the public company remains controlled by both groups, with its shares listed on the Singapore stock exchange. Asia Pacific Breweries is led by Chairman and CEO Koh Poh Tiong.
Founding a Beer Legend in the 1930s
Fraser & Neave had been present in Singapore since the 1880s and had grown into the region's leading soft drinks manufacturer by the late 1920s, when it decided to enter the beer industry as well. By then, too, Heineken, seeking to take advantage of The Netherlands' colonial influence in the region, had begun making plans to launch its beer on the international market, in part to compensate for the effects of the Depression on its European sales.
The two companies came together in 1931 to found Malayan Breweries. Heineken contributed its brewing expertise, while Fraser & Neave added its regional distribution strengths, with branches and production facilities located throughout Malaysia and Singapore and extending into Thailand and Vietnam as well. By 1932, construction on the new brewery was completed, and in that year Malayan Breweries debuted the Tiger Beer brand. The new beer was said to resemble Heineken's own beer in flavor, a natural outcome of Heineken's contribution to the company's industrial development.
The Tiger Beer brand enabled Malayan Breweries to grow quickly into the dominant beer brand in Malaysia and Singapore. The company began exporting to Hong Kong and Thailand during the decade as well. Soon it was forced to increase production capacity, expanding the brewery in 1937, and then again two years later.
In 1941, Malayan Breweries acquired the Archipelago Brewing Company. That purchase gave the company a second brewery and a new brand, Anchor Beer, a pilsener beer that was to remain the company's second main brand into the next century.
World War II had an unexpected consequence for Malayan Breweries, as soldiers returning home after the war created new international demand for Tiger Beer. Foreign sales were to remain a minor portion of the company's business, however, as Malayan Breweries focused its efforts on its core markets in Malaysia and Singapore. Nonetheless, the company made a new international expansion effort in 1958, when it purchased South Pacific Brewery of Papua New Guinea, giving it that company's premium beer brand, SP Lager. At the same time, the company had been expanding its own beer list, launching its stout and ale varieties in the 1950s.
International Expansion in the 1990s
Malayan Breweries took on new business in the early 1970s when it began production of Heineken-branded beer as well. This move was part of the Dutch parent company's move toward a decentralized brewing effort, and Malayan Breweries' production of the Heineken brand remained focused on the export market through the 1970s. In 1984, however, the company began marketing Heineken beer in Singapore as well. By the following year, Heineken had succeeded in capturing the number five position among top-selling beers in that market.
Malayan Breweries' growing portfolio of brands, as well as its market dominance in the Malaysian and Singapore markets, led it to adopt a new branding strategy. The company began a successful repositioning of its flagship Tiger Beer brand into the premium beer category. In this effort, the company was aided by strong advertising spending--including a long-running series of television and cinema advertisements--and also in its growing international recognition. Indeed, by the end of the 1980s, Tiger Beer had come to be viewed by many as among the world's best beers.
The repositioning of its other major shareholder, Fraser & Neave, provided more opportunities for the company. Fraser & Neave had engaged in a diversification drive in the 1980s, in part in response to Malaysia's new nationalization laws, which left the company in need of cash. In 1985, Fraser & Neave decided to convert its prime Singapore city locations--including the Anchor and Tiger Beer breweries--into commercial development, and construction began on a new state-of-the-art brewery, in Tuas. The highly automated facility opened in 1989 and boasted a production capacity of one million hectoliters per year.
The move heralded a new era for the company. At the end of the 1980s, the company's dominance in the Singapore and Malaysian markets had also left it heavily dependent on those countries for its sales and its profits. At the beginning of the 1990s, more than 75 percent of Malayan Breweries' profits came from its domestic sales. Under the leadership of General Manager, and later Chairman and CEO, Koh Poh Tiong, Malayan Breweries began developing a new international growth strategy.
Koh compared its new international strategy to a boxing match. "Tiger was an amateur fighter. So we thought: forget about countries like Japan and the USA with their heavyweight brands. Let's forget about Europe, but focus on Asia Pacific, a very large area. Let's grow in our own front yard and backyard. Markets like Vietnam, China and Thailand--those fit in our strategy perfectly."
The first step in the company's new plans was a change of name, to Asia Pacific Breweries, as a clear signal of the company's international growth plans. Asia Pacific then began targeting its new markets. The expertise gained from the construction of its Tuas facility, backed by Heineken's own expertise on the export market, enabled it to build new and highly efficient breweries in the region at the start of the 1990s.
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