FILLING: Boonrawd's Market Turnaround

Boonrawd is once again riding the crest of the wave of success. This Thai brewery group, drawing inspiration from its corporate traditions, is now back on level with its competitors. After being the undisputed market leader in this country’s beer market for about 65 years, Boonrawd lost substantial market share to its competitors over the past ten years. Luckily, it regained ground. With singleminded purposefulness, the group invested in its chosen market and new, state-of-the-art technology, catching up with the second largest brewery group in Thailand. In that same period, Boonrawd managed to increase its output by far more than half in an expanding market. To upsize its filling capacities still further, Boonrawd commissioned three new filling lines from Krones in its two facilities Pathum Thani and Khon Kaen at the end of 2006 and in early 2007. This went hand in hand with a paradigm shift in technology: favoring fl ash over tunnel pasteurization, dispensing with steam filling, and post-treating the returnable bottles in the washer instead.

Market share implodes, then explodes
The notion that “nothing lasts forever,” as executive vice president and director Rojrit Debhakam says, is true several times over. Founded in 1933 by the legendary Phraya Bhirom Bhakdi as Thailand’s first brewery, Boonrawd was the country’s absolute beer market leader until the mid-1990s. No domestic competitor, no foreign group, no importer even came close. With a market share of more than 80 percent—at times more than 90 percent—the beer market was sustained by the lion from the dream world, the “Singha”. But a relatively-high beer tax of 62 percent put a brake on this all-too-vigorous growth. As competitors started to develop beer which no longer came under the category of “consumer beer” but was classified as “economy beer” (with a concomitantly lower beer tax applying) Boonrawd’s sales plummeted. This situation was exacerbated by the financial turmoil of the 1997 Asian Crisis. Output, still running at about fi ve million hectoliters in 1995, fell, with Boonrawd’s market share imploding to an all-time low of almost 25 percent.

Fortunately, as Thailand’s economy recovered, beer consumption also rose up again. Between 1997 and 2005, they grew at sometimes double-figure rates. Rising to the challenge, Boonrawd now, in addition to its signature “Singha”, launched its own economy beer “Leo”, which qualified for the lower tax rate, and made a huge contribution to Boonrawd’s resurgence.

Price is a vital purchasing criterion on the Thai beer market. The firstclass “Singha”, for example, costs about 45 baht per bottle (or $1.43) in the off-license, whereas a bottle of its cheap counterpart “Leo” can be bought for around 33 baht (about $1.05). The pyramidal structure of the consumption volume in the segments of imported premium beers, consumer beers and economy beers mirrors the structure of Thailand’s society. Today, “Leo” is on its way to being the leader in the economy segment, because of its taste and attractive price. During the past three or four years, in particular, Boonrawd has succeeded in making good quite a lot of volume on its competitors. In 2006, it upped its output to 9.17 million hectoliters of beer—equivalent to a market share of 45 percent. Compared to 1995, this is an increase of about 80 percent.

Beer advertising ban threatened
Trouble might loom for beer consumption. At the instigation of the government, the minimum age for alcohol consumption was raised from 18 to 20. Advertising for alcohol is to be severely curtailed, so that the words “beer”, “brewery” and “distillery” are no longer allowed to appear. The plans do permit, by contrast, the continued use of brand names and logos. Boonrawd decorated an entire highrise building located on the feeder motorway to the new international airport, with over-dimensioned adverts showing nothing but the golden “Singha” lion—without a single mention of the beverage or the brewery. That’s what you might call trusting your brand’s image. The effects by such a ban on advertising are difficult to predict at the moment.

Prospects for growth
Debhakam sees one alternative to conventional advertising in “below-the-line” measures. Nevertheless, cutting advertising costs could entail a drop in the price for beer, which should do its bit to stabilize the volume. Thanks to Boonrawd’s 74-year history, beer has become a traditionally imbibed beverage—a part of Thai drinking and eating culture, and an ideal complement for a pleasantly spicy Thai meal. The more stringent checks for drunk driving should not have an adverse effect on output levels. In fact, Debhakam is forecasting beer market growth for 2007 of four to fi ve percent, to reach 20 million hectoliters. This means that per-capita consumption in this 62-million-head nation is still low at around 32 liters. So Thailand continues to offer plenty of scope for action.

At the same time, Boonrawd has built up a non-alcoholic portfolio, which is continually being expanded. The Singha Corporation is the market leader for packaged still water, capacity approximately fi ve million hectoliters; it produces the best-selling non-alcoholic drink; and has a market share of about 90 percent for soda water, capacity approximately 3.3 million hectoliters. Moreover, Boonrawd also produces green tea, and has a variety of functional drinks up its sleeve, like the “Amino” variant, which is rich in roughage. A total of six production facilities handle the bottling operations for nonalcoholic beverages.

Sixth line at Pathum Thani
After production was discontinued at the brewery’s original nucleus—the Samsen Brewery—Boonrawd started producing its beer on the Chao Phraya River, still in Bangkok, but somewhat outside the center. Here, all four beer bottling lines, plus the canning line, came from Krones, supplemented by two kegging lines and two water lines. Boonrawd commissioned the sixth line from Krones (for small beer containers) in the spring of 2006. The line is rated at 36,000 bottle per hour and fills the 630-milliliter Singha and the samesize Leo bottle, handling both bulk glass and returnables largely pre-cleaned by external collectors of recyclables. For this purpose, a Type 3A robot—a a first for Boonrawd—is used for unloading the pallets. “Its movement sequences are better, with faster cycle rates,” explains Boonlert Nark-urai, the Bottling Hall manager. This lift-off depalletizer works with gripper cups, since the bottles arrive on reusable inverted trays with 10-centimeter-high edges and cannot be unloaded by a sweep-off machine.

Cleaning is done in an immersion/jetting rinser based on a Lavatec KD 0 double-end bottle washer, with a dwell time for the bottles of 12 minutes. A post-treatment feature using chlorine dioxide in the final rinsing bath is integrated into this rinser/washer, which features a caustic bath but no glass-fragment and label-removal systems. The volatile chlorine dioxide briefly reacts in the bottle, and after only a few seconds dissolves without leaving any residues. At the same time, the product is fl ash-pasteurized in a Krones machine. The filler used for bottling the draft beer under low-germ, microbiologically-safe conditions is a pneumatic Mecafill VK-PV in enhanced hygienicfilling design with an air-conditioned enclosure. A downstream warmer dries the bottles’ surfaces, thus preparing them for being dressed by a Solomatic in shoulder and back labels, and neck foils. In this line, Boonrawd also uses a Wrapapac wrap-around packer, featuring a divider inserter like the one premiered at the last drinktec, for packing the bottles into 12-packs. But the market is still accustomed to conventional cartons. “Consumers in Thailand want to use the cartons for other purposes after the bottles have been drunk,” explains master brewer Chumpon Phiancharoen, “so they prefer conventional cartons coming out of a carton erector. We’re happy with Krones. The machines are very compact in size and ultra-reliable.”

Two glass lines for Khon Kaen
This general assessment from the grassroots is also shared by the management. So Boonrawd placed a follow-up order for two more glass lines, to be installed at its Khon Kaen Brewery, built about ten years ago in Thailand’s central lowlands. So far, four lines supplied by competitors and featuring steam filling have handled production in Khon Kaen. Boonrawd has now taken a deliberate decision to abandon steam filling. One of the two new lines has been earmarked for exclusive bottling of non-returnables, featuring a Variojet without any chlorine dioxide treatment; the other one is for bulk glass and precleaned returnables, in a layout identical to that installed in Pathum Thani with an immersion/jetting rinser. In both lines, however, which were commissioned in early 2007, Boonrawd returned to fullsize cartons being produced in a Variocart carton erector, true to the motto “Give the consumer what the consumer wants.”

Flash instead of tunnel pasteurization
By the end of 2006, Boonrawd had changed over all its filling lines from tunnel to fl ash pasteurization. For the head of Brewing and vice president Khun Isara Khaola-iead, this was first and foremost a question of space constraints and of energy costs. “A fl ash pasteurizer does, of course, enable us to reduce the space required quite substantially, and cuts our water and energy costs into the bargain. So far, we had not really been using the tunnel pasteurizer for pasteurizing proper, we only ran it at 54 degrees Celsius. Many lab trials showed that this is sufficient. And now, we’re also aiming for just fi ve PUs with the fl ash pasteurizer. In each of the two new returnables lines from Krones in Pathum Thani and Khon Kaen, we’ve installed a chlorine dioxide system for post-treating the bottles in the final rinsing bath of the washer for this purpose. When this is monitored on a continuous basis, there won’t be any problems. This has also enabled us to abandon the steam filling technology from competitors we’d been using, which I’d been less than satisfied with. Thailand is a tropical country. So it’s really warm and moist in the bottling hall anyway. And this warm moisture is increased still further by steam filling, with vapors condensing and contaminating the filler, which in its turn necessitates time-consuming, laborintensive cleaning routines.”

What Isara Khaola-iead has come to especially appreciate about single-sourcing the complete line from Krones is the fast response the vendor provides for Thailand in terms of service support. And he’s looking forward to the future: “If we keep on growing like we did in the past two years, we’ll have to expand. For sure, we’re going to do this with all due circumspection, because the past has taught us to be cautious.”

Plans for a third brewery
The capacity of the Pathum Thani Brewery on the Chao Phraya River in Bangkok has come up against its limits, with space constraints ruling out any further expansion. With an output of seven million hectoliters, the Khon Kaen Brewery has reached a size where, according to Executive Vice President Debhakam, “further expansion is counter-indicated.” So Boonrawd is on the lookout for a suitable location to accommodate a third brewery with a planned capacity of initially four million hectoliters of beer. This would increase the installed capacity to 15.5 million hectoliters.

“We want to keep on expanding,” is how Debhakam clearly defines the company’s goals. “At present, we’re concentrating on Thailand where we aim to create a solid foundation, so that we’re also forearmed against possible market entries by international conglomerates. We will then be able to up our exports from their present four to a planned ten percent. If appropriate, we will expand into neighboring countries like Vietnam.” So Boonrawd has growth in its sights. The Lion of Asia is roaring once more.