Did the World Cup help kick ThaiBev's gloomy sales?

The company’s price has fallen down 20.7% YTD.

Alcohol consumption in Thailand is still low and the FIFA World Cup did not seem to have much of an effect on beer sales in May, RHB Research said. According to a report, the effect of weak alcohol demand has been largely been priced in, given Thai Beverage’s share price has fallen 20.7% YTD.

RHB Research analyst Juliana Cai is still positive towards the company’s prospects, however. Consumer confidence is at a 40-month high and GDP is growing at its fastest in five years, boosted by robust exports and tourism.

“This should eventually have a trickle-down effect to rural income,” Cai said. Price increases for rice and maize as well as a slower contraction of rubber prices should help to raise farm incomes.”

The general election is also expected to take place in May 2019. “We expect more cash and incentives to be circulated in the rural areas, as campaigning kicks off ahead of the elections. These factors should help raise consumption in the upcountry, and benefit ThaiBev,” she said.

Over the last 12 months, ThaiBev has also launched new products such as Kulov Max Seven and Star Cooler to target the ready-to-drink segment and female consumers. “It also introduced more premium products such as Ruang Khao Silver, Blend 285 Signature and Federbrau to capitalise on the rising affluence of consumers in the medium term,” the analyst added.

“These could help raise margins over the next two to three years, as consumers trade up to these premium drinks with rising wages,” Cai concluded.

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