KUCHING: Despite the contraction in the Malaysian economy from the first quarter to the third quarter of 2009, quarter-on-quarter volume growth in Malaysia’s malt liquor market (MLM) stayed positive at a stable range of 0.95 per cent to 1.05 per cent.
Gan Jian Bo from OSK Research Sdn Bhd (OSK Research) affirmed that the contractions were driven largely by beer excise duty hikes rather than a slowdown in economic activity though the MLM volume did shrink in year 1999 and from year 2005 to 2007. Malaysia has the world’s highest beer duties on a gross domestic product (GDP) adjusted basis.
“We believe that MLM volume will continue to see positive growth, even against a weak economic backdrop this year. Other factors that should be lower raw material prices and the downward substitution from more expensive alcoholic beverages to the cheaper beer,” said Gan.
Both Guinness Anchor Bhd (GAB) and Carlsberg Brewery Malaysia Bhd (Carlsberg) outperformed the market with share prices surging by 24 per cent and 32 per cent respectively.
GAB had a strong foothold in the off-trade and traditional trade channels while Carlsberg placed greater emphasis on the modern on-trade channel. The analyst believed that off-trade and traditional on-trade consumption were more resilient due to its lower selling prices and higher patronage from habitual drinkers rather than social drinkers.
Carlsberg had been extracting more than 20 per cent of its revenue from Singapore since it acquired its Singapore distributors in 2009. Tourism was the major factor driving beer consumption growth and tourist arrivals moved in tandem with consumers’ discretionary income. The research firm believed that the Singapore’s exposure gave rise to greater demand volatility in Carlsberg’s products.
“GAB and Carlsberg are both the main players in the industry in Malaysia,” Gan stated.