Upcoming Beer Industry Experiment

by: Nadav Manham

Long-time readers (Hi Mommy!) know I've written about the beer industry a few times in the past. The idea is that in order to evaluate investors, you have to be able to evaluate their investments, which means you have to know a little about business. One business that's fun to know about is the beer business. Check out the oeuvre so far, there's no quiz at the end:

Thai Bev

Beer and Mongolia

BUD and Economies of Scale

More on Beer

Jim Koch Interview

Now check out this NYT article about Beer Lao, which enjoys 99% market share in its home market of Laos. Beer is not indigenous to Laos, so I don't think it's the main source of liquid nourishment, nor does the country have a history of German immigrants who started their own breweries (like Argentina for instance). It's basically for the tourists (the ones in the photo look Australian but my physiognomy is a little rusty). Nor, the claims of Mr. Cheung notwithstanding, does it taste any different than the many other rice-based lagers sold in hot countries--trust your consigliere on this.

Nonetheless, Beer Lao is embarking on an ambitious project to expand abroad, based mostly on its cool factor. As the above posts demonstrate, the beer market in any country tends towards dominance by a very few players. That does not mean that an upstart cannot make huge inroads, or even topple the leader--it happened in Thailand. I suspect that's not what Beer Lao is trying to do here though--I think it's going for a guerrilla strategy (is that a horribly insenstive pun given the country's history?) of stealing little bits of market share in those countries with huge beer markets (US, Germany, Britain, Japan) or countries whose citizens have, or are starting to have, an ethic of travel abroad (Israel, China). Even that's hard though--Ambev tried and failed to take Brahma beer from Brazil to the rest of the world. And Brazil, in my humble opinion, is even cooler than Laos (or if you prefer, Exhibit B. There is an Exhibit C but this is a professional blog . . .).

Anyway, it's an interesting natural experiment. Keep an eye on Beer Lao's progress, and also watch how its competitors react.