(Bloomberg) -- Carabao Group Pcl, Thailand’s second-biggest maker of energy drinks, will accelerate its push in neighboring countries to counter slowing sales in its home market.
Rising demand in nearby Cambodia and Myanmar will help the company achieve revenue growth of about 20% in 2020, said Managing Director Nutchamai Thanombooncharoen. Carabao is spending 700 million baht ($23 million) to boost production of cans and glass bottles used in overseas markets, she said.
Carabao and rivals Osotspa Pcl -- the best-seller in Thailand -- along with the local bottler of Red Bull beverages, have stepped up their competition outside of Thailand, where the economy is poised for its biggest contraction in more than two decades.
“It has been a difficult time because the pandemic has posed enormous risks to both our production and sales,” Nutchamai said in an interview Thursday. “But the outlook is showing much improvement with more businesses reopening and consumer demand recovering.”
The company’s shares jumped 4.7% on Friday, the biggest advance since May 15, while the benchmark SET Index dropped 1%. The stock has gained 14% this year compared with a 12% slide in the broad gauge.
About 58% of Carabao’s sales in the first quarter were in the CLMV countries: Cambodia, Laos, Myanmar and Vietnam, according to a company report. Net income in the January-March period climbed 91% from a year earlier, to 800 million baht.
Its share of Thailand’s energy-drink market in 2019 was 30%, compared to 13% for Red Bull’s local version, according to Euromonitor International.
“Revenue growth this year will probably miss the company’s target because of slowing demand in the domestic market,” said Pannawitch Ritthasirhinan, an analyst at ASL Securities Co. Weak markets in China and U.K. will also weigh on the company’s growth efforts, he said.
Nutchamai, Sathien Setthasit and Yuenyong Opakul, lead singer of a popular Thai rock band called Carabao, are the company’s main founders. The name Carabao comes from the Filipino word for buffalo. Nutchamai’s 21% stake is valued at about $658 million, while Sathien holds 32%, according to data compiled by Bloomberg and company filings.
Here are more details from the interview:
- Carabao increased the number of suppliers in China as a pre-emptive measure against raw-material disruption in case of another disease outbreak
- Sales in China may rebound further as most businesses reopen
- Partnership with a gas-station operator in China will also help network expansion
- Introduction of a new soft drink in March will be a key growth driver
- Border restrictions with Cambodia and Myanmar have affected product transportation to those markets
- The company is mulling a bigger push into Vietnam because of its large population and economic growth
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