Big beer battle brewing in Burma

Dutch brewer Heineken is to open a new operation in Burma this weekend after a 20-year absence – a move that will bring it head to head with Carlsberg.

The brewer is set to open a US$60m facility in the country on Sunday, just two months after Carlsberg opened a $75m brewery.

Located near the capital Yangon (formerly Rangoon), the brewery will create 200 jobs and produce 100 million litres (22m gallons) of beer a year when fully up and running.

Both Bloomberg and the Financial Times have predicted a “war” for control of what is an increasingly lucrative market, with Heineken joining forces with local brewer Alliance Brewery and Carlsberg with Myanmar Golden Star Breweries as they square off in the battle for market control.

Heineken and other major brewers suspended their activities in Burma (also known as Myanmar) two decades ago when the country was hit by international sanctions due to the widely condemned actions of the country’s former military rulers.

With the political situation in the south-east Asian country improving, international businesses are heading back, particularly brewers hoping to capitalize on a flourishing beer market.

With 53 million people, Burma has one of the largest populations in the region and 80% of adults drink beer. Beer sales in the country rose 14% to $265m between 2009 and 2013 and are forecast to hit $675m by 2018 according to Euromonitor.

Heineken has been pursuing an aggressive business strategy in Asia for some years now.

In 2012, after a long bidding war with a Thai rival, it acquired a controlling stake in Singapore-based Asia Pacific Breweries (which makes Tiger Beer) in a deal worth $959 million.

Last year it was quick to show an interest in buying shares being sold off by the Vietnamese government; the company has been operating in Vietnam since 1991 and it is the brewer’s third biggest global market.

Finally, just this week, it acquired the final part of what is now a 42% share in India’s United Breweries from Diageo for £89m.

“I fully understand and endorse the big brewers’ push into Myanmar,” Trevor Stirling, an analyst at Sanford C. Bernstein told Bloomberg. “It has a lot of long-term potential.”