Beverage behemoth in the making with Thai Bev now controlling F&N

CIMB estimates $910m market size for 100Plus in Thailand.

CIMB expect ssynergies to accrue both ways - Thai Bev will benefit from F&N’s extensive distribution network in Singapore, Malaysia and Brunei; F&N products can now piggy-back on Serm Suk’s distribution network in Thailand.

Here's from CIMB

Serm Suk could do with an established range of products to feed through its channels, after breaking up with PepsiCo last year. Thai Bev’s beer business, which is still suffering slight EBITDA losses, can erase the red ink by harnessing F&N’s distribution clout in Singapore, Malaysia and Brunei to improve export sales of Chang Beer.

We think that the low-hanging fruits could be plucked quite quickly, by bringing 100Plus and perhaps some of F&N’s green teas into Thailand. We are not sure what the intention for F&N’s soft drinks is, since Serm Suk has gone on to create its own carbonated drinks after the end of its PepsiCo partnership.

In2011, FNH Bhd announced plans to distribute 100Plus in Thailand, but has yet to see substantial results, presumably because of a lack of a strong distribution network. Now, Thai Bev can channel 100Plus and F&N’s teas into Serm Suk’s extensive network, including local eateries and establishments. Developing market shares in Thailand should not be too difficult.

Other possibilities are: 1) pushing Oishi’s products into Singapore and Malaysia; and 2) pushing Chang Beer into Singapore and Malaysia by using the beverage distribution network. We estimate that successful sales traction for F&N’s 100Plus and green teas in Thailand will derive business synergies that are worth up to 14% to Thai Bev’s CY12 earnings. Getting Oishi out of Thailand can add 1% to CY12 earnings. Synergies from growing the export market of Chang Beer is less clear.