Thai Beverage Public Company Limited (OTCPK:TBVPF) Q4 2023 Earnings Call Transcript November 23, 2023 5:30 AM ET
Company Participants
Namfon Aungsutornrungsi – Head of IR
Ueychai Tantha-Obhas – Director and Senior EVP and COO, Thailand
Prapakon Thongtheppairot – EVP, Chief Spirit Product Group, Group CFO
Lester Tan Teck Chuan – Chief Beer Business, Thailand
Sithichai Chaikriangkrai – Director and Senior EVP, Chief Investment Officer
Edmond Neo Kim Soon – EVP, Chief Brand and Commercial
Nongnuch Buranasetkul – SVP, Chief Food Business, Thailand
Conference Call Participants
Divya Kothiyal – Morgan Stanley
Selviana Aripin – HSBC
Xuan Tan – Goldman Sachs
Permada Darmono – UBS
Thitithep Nophaket – Kiatnakin Phatra Management
Andy Sim – DBS Vickers Securities
Llelleythan – UOB
Operator
Good evening, everyone, and thank you for joining the Thai Beverage Full Year 2023 Results Call. All participants have been placed in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. I will now hand over the call to presenters, Ms. Namfon Aungsutornrungsi, ThaiBev’s Head of Investor Relations, and the members of ThaiBev’s Senior Management team. Thank you.
Namfon Aungsutornrungsi
Good evening, ladies and gentlemen, and welcome to Thai Beverage’s 2023 ended 30th September 2023 financial results conference call. I am Namfon Aungsutornrungsi, Head of Investor Relations. For the call tonight, I will start with a summary of the full year results. Then we will open the line for Q&A with our management team.
For the summary of the financial results, total sales revenue of the company for the year ended September 30, 2023 was THB279,085 million, an increase of 2.5% when compared to last year. This was due to an increase in sales revenue of spirits, non-alcoholic beverages, and the food business, although there was a slight decrease in sales revenue of the beer business. The net profit was THB30,727 million, a decrease of 10.9% year-on-year. This was due to a decrease of net profit mainly from beer business, food business, and associated companies, although there was an increase of net profit from spirits and non-alcoholic beverages business. The Board of Directors has proposed to issue a dividend of THB15,075 million or THB0.6 per share, maintaining the same level as last year. The payout ratio for 2023 dividend is 55%. Please note that the interim dividend was paid in June this year at THB0.15 per share and the final dividend will be THB0.45 per share.
In 2023, the spirits business generated a 3.1% rise in sales revenue to THB119,799 million even as total sales volume decreased by 2.1% compared to last year. In spite of challenges such as higher cost of packaging and financing, the business continued to deliver robust performance with a record high in net profit, reaching THB22,446 million, an increase of 2.5% year-on-year. The top and bottom-line improvements were mainly driven by price adjustments as well as changes in the product mix in Thailand, with higher consumption of the brown spirits.
The beer business recorded sales revenue amounting to [THB120,829] (ph) million in 2023, a decrease of 1.4% compared to previous year. This was mainly due to a 6.6% year-on-year decline in the sales volume. An increase in brand investment, marketing activities and competitive pressures, coupled with higher cost of key raw materials and packaging contributed to the net profit declining 34.3% to THB4,995 million.
The non-alcoholic beverage business recorded a 12.4% rise in sales revenue to THB19,602 million in 2023. The sales revenue was lifted by a 7.1% increase in total sales volume. Continued initiative to improve production efficiency have effectively mitigated the impact of escalating packaging costs resulted in a net profit increase of 15.2% year-on-year to THB675 million.
For the food business, it registered a 16% increase in sales revenue to THB19,070 million, in line with the rise in dine-in traffic at restaurants. Taking into account the Group’s ongoing efforts to improve brand visibility and accessibility, along with pre-operating expenses incurred in conjunction with the opening of the new stores, cost push factor, as well as increased operational and administrative cost to support sales growth. The net profit of food business declined 82.7% to THB65 million.
So, this is a summary of our full-year 2023 financial results. Now we will open the call to any questions on our results. Operator, please open the line for Q&A.
Question-and-Answer Session
Operator
Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from the line of Divya Kothiyal from Morgan Stanley. Please go ahead.
Divya Kothiyal
Thank you and good evening. I had three questions. The first one was on the spirits business. You mentioned that the product mix between brown and white has changed a bit over the course of the last couple of quarters, with the brown spirits becoming a bigger part. I wanted to know if this has gone back to the pre-COVID levels or is there still some room for brown spirits to grow and hence margins to improve? My second question is on the domestic beer business. Could you help us understand why the beer business saw a 2% decline in volumes this year despite the resumption of on-trade and the general reopening benefits? Could you also comment on Carabao’s launch and how that’s positioned versus Chang and how we are responding and how does that affect the outlook for the beer business domestically for the next year? And lastly, can you just update us of any proposals being reviewed by the new government on changes in excise tax in Thailand? Thank you.
Unidentified Company Representative
Hi, Divya. This is [indiscernible]. Well, I think the brown spirit level the volumes that we saw in the past year is still lower than pre-COVID. We’re moving back to that directions, but there are still some more room to get back to it. That’s just to confirm your thinking that there’s more potential growth for brown spirit consumption as well.
Unidentified Company Representative
On beer, I think we can separate between Vietnam and Thailand, why the market is — why it is down, question to…
Unidentified Company Representative
Hi, this is [indiscernible] from Beer, Thailand. I think your question has two things. The first one is about the situation for the beer volume in Thailand, and second one is the detail for the Carabao launch. For Thailand, actually I think right now we’re talking about the macro-economy, the GDP is lower than expected that is 2.7 compared to 3.5 as original forecast. And I think that for this year the overall for the beer market — okay, for this year for the beer market is growing in terms of the value because both of the players meaning that the competitor and as are we in case of the price, but while the volume may be little bit sustainable. And then for the questions about the Carabao beer, they just launched on 9th of November, and then they have two brands. The first brand is Carabao beer and the second band is Tawandang. From the pricing perspective that you just asked that their pricing is higher than Chang Classic and also higher than the other payer, Leo, roughly about THB1 per bottle. And then right now we’re not sure — right now it is early to talk about the impact. But for our action, I think we already, I mean, pushed the stock into the route to market and to protect our shelf space and also make sure that our trade partner they also drive our distribution for our products in the shelf. And from the feedback so far, I think still less of the smaller of the group of people that give the positive feedback for the taste of both Carabao beer and Tawandang. However, I think it’s still early to tell.
Ueychai Tantha-Obhas
Okay. Divya, Ueychai here. The third question about excise tax. I have always said that we cannot — we do not know when it’s going to happen or anything, but if you ask me, probably second or third quarter next year we will know. After the government has really straight up their budget right now. It looks like they need money, then it’s highly likely they will increase the tax here. But we don’t know. At the moment, we haven’t heard anything yet. But just to assure you that we’ve been through price — I mean, excise tax increase for more than 15 times already and we always come out better in terms of P&L, in terms of profit. So, bottom line, we haven’t heard anything, likely maybe next year if the government needs money, they likely need money, it could be because we — spirits and cigarettes are on the priority list, on the top of the list. But lastly, we will be able to manage it. Okay, thank you.
Divya Kothiyal
Okay. Thank you very much.
Operator
One moment please for the next question. The next question comes from the line of Selviana Aripin from HSBC. Please go ahead.
Selviana Aripin
Sure. Thank you very much for the opportunity. I have two questions. The first one is around expectation for volume moderation. I guess, the volume decline this time around, it’s understandable that it’s due to pricing increases, but when do you expect volume to normalize and I guess for the price increase to be fully digested? So that’s the first question. The second question is around, can management actually speak about the expectation around input, particularly molasses and malted barley over the next six months and 12 months? Thank you.
Ueychai Tantha-Obhas
Expectation volume on beer, spirit or NAB? Please say it again.
Selviana Aripin
Beer and spirits.
Ueychai Tantha-Obhas
Okay. Beer and spirits. First question is our expectation on beer and spirit, whether the situation normalized. And then the second question is on the raw materials, molasses for spirit. And then beer is…
Selviana Aripin
Yes, directionally whether — how should we think about, I guess, input costs going into the next six months and 12 months?
Ueychai Tantha-Obhas
Okay. On the spirit questions, Khun Prapakon will respond on both questions and then come to beer, okay.
Prapakon Thongtheppairot
Yeah. Okay. So the questions about the volumes, spirits actually majority of volumes reported mainly in Thailand. We do have volume growth in Myanmar, we do have volume growth in other countries, but those still representing in combination, probably less than 10% of the total volumes. So if you look at the volumes in Thailand itself. We actually experienced a slight decline in volumes, and that have to do with the larger base of sale loading from price increase of white spirit in the previous year. So when you compare with this year, the white spirit sale reporting a slight decline from the year before but the brown spirit reporting higher volumes. That was explained earlier. So I think the price increase are not resulting in overloading in this FY ’23. So that’s the answer. So in terms of the molasses input cost, at the moment, the crop — the new crop is still not harvested, but we’re expecting that crop to be much shorter in supply than the previous year. So we’re expecting the molasses cost should rise from the previous year, okay. That’s what I have.
Ueychai Tantha-Obhas
For beer, we’ll start with Thailand…
Selviana Aripin
Sorry, can I stop there and actually ask about expectation for — I guess, volume for spirits? Should we expect positive sort of volume growth going ahead for spirits in Thailand?
Namfon Aungsutornrungsi
Selviana, in terms of our policy, we don’t give the forward guidance in terms of the forecast. Yeah. Sorry about that.
Selviana Aripin
Sure, got it Sure, no problem. Can we go on with the beer, sorry.
Ueychai Tantha-Obhas
I think if you ask us, definitely on budget, we expect the volume to grow, but we cannot tell you exactly what it is because we aim to grow our sales. Okay, Thailand, beer?
Unidentified Company Representative
Hi, this is [indiscernible]. I think for the — molasses price for the beer business in Thailand, for today price — the prices for the molasses is about EUR740 per ton. And for us actually we already seek out the molasses price for the whole year. And for the number, I think lastly about in the EUR500 something. So that for the whole year of the molasses price. And then second one, I think just for the packaging mainly is aluminum can and I think from our tracking right now, we can secure the price as well. And for the price of the packaging, I think is slightly lower than last year.
Ueychai Tantha-Obhas
Moving to Vietnam…
Selviana Aripin
For beer, how — like typically, how long does it take for price increases to get digested? I guess that’s my first question.
Unidentified Company Representative
For beer in Thailand, last year fiscal year, we increased price two times. First time at the first quarter of fiscal year, mainly, I mean, for the Chang large bottle at the end of November and then second time at the second quarter, lastly end of February. So, not sure your question is when we’re going to increase the price for the next round or…
Ueychai Tantha-Obhas
Right. Or on the price increase. Hold on, hold on — I think we did increase the price last year to cover all the cost push or the cost increase. So we don’t expect the cost to increase big time this year. So, the next price increase, if it happens, it will only happen if the excise tax increase, because our policy is to retain profitability in terms of percentage to sales. So, if the excise tax doesn’t move, I don’t think we will move our price, right? Because it’s only that if the excise tax increase, then the company will consider because if the excise tax increase, everybody increase. So the competitive playground is the same, okay. So, in terms of — he didn’t respond on the volume expectation. Of course, this year because we hope the tourism will come back more. At this moment, the Chinese tourist hasn’t come in as expected. Next year, everything — I mean, this year we should expect to have more tourists because this year — the whole year is only 26 million. And then next year probably a lot — quite a bit more, especially the government has a policy of free visa for India, for China. So, we expect to have a better consumption situation for Thailand, okay, that’s all I can tell you. But please, you have to understand that when we do the budget, we always look up to the growing volumes, right? We cannot say we are happy with the volume to go down, right, but our bonus depends on that. Thank you.
Selviana Aripin
Thank you very much. That was clear.
Operator
One moment please for the next question.
Ueychai Tantha-Obhas
You want to hear about Vietnam?
Operator
The next question comes from the line of [indiscernible] from USB. Please go ahead.
Unidentified Analyst
Hi, thanks for letting me ask my question. So most of my questions were answered previously, but now I have just two short questions. So the first question is could you share an update about the market share for the beer segment in both Vietnam and Thailand, especially in Thailand? And my second question will be, just something about the financial. So could you share why the share of profits from associates and joint venture fell in this year as compared to the previous year? So it was like a THB2 billion drop, if I’m not wrong. That’s all from me.
Ueychai Tantha-Obhas
Thank you. Okay. Now Vietnam is asked. Please start with Vietnam.
Lester Tan Teck Chuan
Hi, [indiscernible]. This is Lester here. Talking about market share in Vietnam. I think for us — we’re talking about last FY, right? We don’t know about Q1, sorry.
Unidentified Analyst
Yes, last FY or the last…
Lester Tan Teck Chuan
Yeah. So our share is picking up. At the end of the financial year, last year we had crossed over to become the market leader in Vietnam. I think it’s again, no forward-looking statements here, but it’s looking positive. So, in a declining market, obviously, we are looking at trying to grow our market share and profitability. I think at the Sabeco call last week, I mentioned the same things, that talking about Selviana’s question earlier about volume normalization after a price increase, it’s down to quite a few different factors. In Vietnam, there were two price — all the producers, there were two price increases in 2021, the market was able to absorb it quite quickly. Then there were another two price increases in 2022, followed by another price increase in 2023. But after 2021 and you see the market, the overall macro situation starting to come down. The market is taking a little longer to digest these price increases. So, really it is dependent on quite a few factors. So on that part, at the moment now, the current set of increase is still taking a while to digest simply because the market is on a downtrend and the macroeconomic picture is not looking so healthy. So on that part, given this sort of conditions, we are looking to grow market share as opposed to volume, and we’re looking to grow profitability as well moving forward. So, long answer to that is that market share is looking good and we will continue to focus on growing market share in the months ahead.
Unidentified Company Representative
Okay. This is [indiscernible] Thailand. For the market share of our beer business in Thailand, in the ranks, I mean, roughly about 50% market share. Last year, we make Chang Classic to hit almost that — hit for the number one. We hit at the narrowest market share gap with the number one ever. And then the second point that I want to add is Chang global, we can put Chang global now to be the top four beer bet in Thailand. So that’s it.
Ueychai Tantha-Obhas
The second question Kun Sithichai will respond, Sithichai?
Sithichai Chaikriangkrai
For our share of profit, we have two major part. First one is F&N, Fraser and Neave. Second one is Frasers Property Limited, FPL. F&N, they are higher profit compared to last year. You can see that they get higher dividend also, this year they get THB0.055 compared to last year THB0.05. FPL investment property are just fair value what Thai Beverage’s cost. So their core profit a little lower, not much, but the one that make it lower is BLI scale. Last year they had more, like, gain compared to this year. But even each other profit they are like lower than last year. But in term of dividend they pay higher, they used to pay THB0.035. This year they pay THB0.045, yeah.
Operator
We seem to have lost this line. Shall we move on to the next question?
Namfon Aungsutornrungsi
Antika, you can go ahead with the next question in the line.
Operator
Thank you. The next question comes from the line from Xuan Tan from Goldman Sachs. Please go ahead.
Xuan Tan
Hi, good evening. Thanks for the question. I think earlier, Lester, you mentioned Vietnam beer focus is market share and profitability, right? Can you still also talk a bit more about key focus for spirits in Thailand beer?
Lester Tan Teck Chuan
I think for Thailand beer, for sure, we focus on three things, we call internally as MRP. Maybe number one, we focus our market share, meaning we want to be share number one and also to be beer number one. Second one, we focus on our top line, we call it revenue, I mean in both of the volume in liters and also in the revenue in Thai baht. And the last one we focus on the bottom line for sure, the profit — both of the profit internal bar and also percent profit margin. Yeah. So that is all the three things that we focus.
Ueychai Tantha-Obhas
On spirit market share, I think on brown spirit, Nielsen report that we have 95% market share. I think we cannot go more than that otherwise. And then in term wise period, we don’t have the Nielsen report, but from the reliable source of excise payment, we are in the region of 88% to 89%.
Xuan Tan
So do you know the focus…
Namfon Aungsutornrungsi
Go ahead.
Xuan Tan
Yeah. Thank you. So the focus on the spirits would then be profitability. Is that fair?
Prapakon Thongtheppairot
Yeah. This is Prapakon. Yes, I think from the spirits group perspective, we take the business on the two pillars. One is providing growth in term of product sale, but at the same time, we pay cautious on focus on our managed profitability. So with the input cost pressures, we will be looking at higher efficiency in terms of other expenses that we have, so that we can manage our profit comfortably. So we’re looking at profit growth as another pillar that we focus on.
Xuan Tan
Got it. Thank you. Can you also talk a bit more about SG&A, especially for Thailand and Vietnam beer for 2024? Yeah.
Lester Tan Teck Chuan
Okay. Hi, this is Lester here. Let me talk about SG&A for Vietnam first. I don’t know if you attended the call last week for Sabeco. Obviously, one of the things we’re looking at is A&P spending. And so we’re importing a model that I have experienced with when I was looking after beer, Thailand. We have internal sources that help us to build a model to look at the ROI for each of the A&P activities that we run in the market. So, what we do is we look for those activities that are the most — that brings in the best volumes at the lowest cost, and from there we reorder the prioritization of each of the activities in the market. And after that, then we look to improve the spend efficiency. So we experienced quite good success with that model in Thailand. I’m trying to introduce it, I’m not that I’m trying, I will be introducing it in Vietnam in the year ahead, so that we can improve the SG&A spending and the returns per liter of beer that we sell. So that’s what we’re doing to improve not just the total cost, but actually the efficiency of the spend as well.
Unidentified Company Representative
Yeah. Just to add maybe for Thailand, I think Lester just shared with you the approach that we take. But I just want to make the point that despite the lower consumer demand that we are facing, it’s become extremely competitive, especially in the segment that we are most dominant in mainstream. So, spending in A&P is a must. I mean, we need to spend to defend our leadership position. So that is the reason why we focus on A&P efficiency spend. I don’t want to say how much we spend because it depends on the situation. It’s very fluid at the moment, but clearly our gains in market share in recent months show that this is working. So we’ll continue to do that. Thank you.
Xuan Tan
Thank you. Can you also update what’s the situation — latest situation in Myanmar?
Unidentified Company Representative
Well, I think the situation in Myanmar is when you see the news, the news always tend to talk about the incident that’s how dangerous. But these are not really in the main consumption area of the Yangon or Mandalay areas, where majority of the consumer are still living their life quite normally. I think lots of these news reports are up in the north. Those are probably from the consumption perspective, representing maybe 5% to less than 10% of the actual alcohol consumption of the country. And I think so far from the spirits perspective, Grand Royal Whiskey have performed very well in the past year and still continue to perform exceedingly well in the first month of October that we have seen.
Xuan Tan
Okay. Thank you. That’s all from me.
Operator
One moment please for the next question. The next question comes from the line of Permada Darmono from UBS. Please go ahead.
Permada Darmono
Hi, good evening. Thanks for the opportunity. My first question is, you’ve done a few acquisitions recently in the spirit side, Larsen and also Cardrona in New Zealand. As a percentage of the overall business, this appears pretty small. And also in September, you filed basically a company in Hong Kong Spirits Co. So can you explain to us what’s the thinking there?
Prapakon Thongtheppairot
Okay. On the two acquisitions we made in September, the one is Larsen Cognac. The other one is Cardrona Distillery in New Zealand. The two actually play a different — well, play in the same premium portfolios, but did that have a different lifecycle in the portfolios. The Larsen Cognac, which is a cognac business, it’s an ongoing business that the brand has been around for close to 100 years. So those brands have been around and so it is a cognac business that we would like to add the premium portfolios into our international sell network. Currently, or even before the acquisitions, our subsidiary in China called Asiaeuro International Beverage, or we call it AIV, operating in China and Hong Kong, already the distributor of Larsen Cognac in China and Hong Kong. So by acquiring Larsen Cognac allow us to representing our own products in China. So that’s why we made these acquisitions. So it’s allow us to have better control of what we distribute, including scotch whiskey from our in warehouse distiller groups up in Scotland and the Larsen Cognac from France. So that’s from the cognac business. From the Cardrona Distillery, this one is a very young distillery. The business has been around less than 10 years. So, this one is a very small distillery, but at a very premium end of the market. The focus is to continue to build on the stock and expansions and focus on premium marketings of this brand. So, I think as it stands, when we acquired the business, the distillery doesn’t have a lot of stock available. So we will be putting basically increase the utilization to a maximum capacity and start to build stock and that payout will probably be looking at — looking at five-year to seven-year onward. So that’s a very long-term investment for us. So that’s the two acquisitions. As for the Spirit Co. registration, it’s a registration of name. So similar to Beer Co., Spirit Co. So perhaps in the future, if we would need to do certain group restructuring in terms of management restructurings of the business, we would be able to use that name. So just a placeholder on the name. Yeah.
Permada Darmono
And the source gen of Cadrona is really very nice, of course. Is the idea really to bulk up the international spirits business to primarily cater and expanding the Chinese market? Is that the thinking?
Prapakon Thongtheppairot
Well, the Cardrona Distillery, the New Zealand whiskeys are meant for the European and US market. So on the other way around, they do — we do also have the wheat vodka, which is a premium vodka coming from New Zealand. So these two acquisitions, it’s about building up a better portfolio of premium spirit that we sell internationally. In addition to that, because you were touching on the acquisitions, we do have product portfolios that are going to be coming out from Thailand that will be going into the premium segment as well. We have launched and recently made that available only on duty-free in Thailand, and we will be expanding our portfolio which is a premium in Ruang Khao white spirit. We made it out in an aged rum type of products. We also have pre-aged rum. And in the very near future, we’ll be launching additional SKU of — with an age statement on those aged rum. In probably the next six months, we will be taking to the market our single malt whiskey from Thailand as well. So that’s something that is in the pipeline. So we are adding products, premium product forms Thailand into our international sales network portfolio as well.
Permada Darmono
Thank you, Prapakon. My next question is on rising interest rates. I think if I recall in the past, ThaiBev had said one of the rationale to list BeerCo ASAP is because of rising rates. Now rates have risen. What’s your thinking or strategies in terms of refinancing some of your debt? And any comments on average cost of debt?
Prapakon Thongtheppairot
Yeah. In terms of the debt portfolio, let me explain. There’s certain advantage being a Thai company. The interest rate environment in Thailand is considered relatively low than the other markets around the world. The floating interest rate before the margin today in the interbank market stand at 2.5% floating. And if you take that flow to fix out into a fixed rate for five years — four to five years, the fixed premium is only about 10 basis points, so you can actually get from flow to fixed from 2.5% to 2.6%, 2.7%. So the yield curve is relatively flat. And our capabilities in terms of fundraising, because we are a Thai company and most of our debt on the balance sheet actually sit at ThaiBev Public Company — Thai Beverage Public Company, the Thai company, the ListCo itself, and therefore, we can have a very good investment-grade ratings in Thailand that we can raise fund from the Thai baht debenture market. So to answer to that, yes, the interest rate — the interest costs have risen in the previous year, but actually less than 0.5% because we do have a large part of the fixed interest rate in our portfolio. As that become due, we do refinance into additional fixed rates, which you can see from our disclosure in the past year, we do have a series of Thai baht debentures continue to come out. So hopefully, that explains to you and confirms you that we actually do have good control of interest rate and the interest rate environment in Thailand are much lower than, say, the international — in other international markets.
Permada Darmono
Yes. That’s great and super helpful. Finally, with Carabao producing in Thailand, and I do understand that they produce out of Tawandang 1999, which is privately held. Is the Thai capital market or securities market potentially becoming more tolerant of a possible listing of an alcoholic beverage company in Thailand or in your view that has not changed?
Ueychai Tantha-Obhas
Well, we cannot — this is Ueychai, we cannot tell you exactly what will happen. But I think the people who protest alcoholic beverage to go into the secured market is still around. I think I can’t tell whether they would do the same. But personally, I think they will not allow. Okay? because they don’t particularly not allow only Chang, but any alcoholic beverage things because they claim that this is a Buddhist countries and all. So I’m quite sure that this group will still be anti for beverage companies to going in unless they do backdoor listing or things which is — I don’t know — not allow. Okay?
Unidentified Company Representative
Thank you, Kun Ueychai. And one more question, if I may, to Lester. You commented last week that — and I know it’s been only one week, that consumption will remain probably weak for more than six months. But anything that you might have seen to change that outlook or not really?
Lester Tan Teck Chuan
Yeah. No, it’s — nothing much has changed in 1 week. Again, Beer is a pretty standard product. It’s not like a bubble tea where you get trends, you get sudden spikes and then quite big dips. Beer is fairly standard. So not much would have changed in 1 week. I think generally, the consensus is still six months and I’ve seen one report saying not until Q1 2025. I know that’s a little bit extreme, but I think all of us have our fingers crossed towards H2 next year.
Permada Darmono
Thank you so much. Those are all my question and all the best for the first quarter of fiscal year 2024.
Operator
Thank you. The next question comes from the line of Thitithep Nophaket from Kiatnakin Phatra Management. Please go ahead.
Thitithep Nophaket
Can you hear me?
Namfon Aungsutornrungsi
Yes, we can.
Thitithep Nophaket
Hello?
Namfon Aungsutornrungsi
Hello.
Thitithep Nophaket
Yeah, I have two questions. Number one, if you look at your SG&A as a percentage of sales and at consolidated level, it was roughly about 17% in 2019, and it came now to around 15% during COVID. And then as of — for the fiscal year 2023, it went back to 17%, which means it went back to the pre-COVID level. Should we expect the ratio to stay at this level around 17%? Or do you think it may go up further because now we have new entrants in the beer market? That’s number one question. Number two, Tawandang seems to be very confident that they can grab 10% market share in beer within this year. Now I know that you said it’s too early to estimate the impact. But do you think that their target is realistic or it’s on the optimistic side? Thank you. Only two questions.
Ueychai Tantha-Obhas
Thitithep, I will respond on Carabao Dang. Their total capacity is about 200 million liter. And then the total market in Thailand is about 2,000. So if they have to achieve 10%, they have to do 100% capacities every month, which I don’t think it will be possible. For me, personally, maximum, if they get 5% this year, I think they are great already. Okay? So we don’t think 10% is definitely possible because we know when we run the breweries, we cannot 100%. And then the beer business, we cannot produce, I mean, stop ahead of time because we will have to worry about the freshness of the beer. It’s not like spirit. Spirit is possible because you can run over the capabilities because spirit is not rotten, but beer is. So I don’t think they will get 10%. Okay? Maximum, they will get is 5%, but let’s say, because they use a lot of PR to make public think that things really, really going well with them, but the actual fact is not that. But okay, I will stop there because — and then on the SG&A, [indiscernible].
Thitithep Nophaket
Kun Ueychai, thank you very much. From my observation, I don’t think 10% is optimistic, but that’s what they are claiming. They claim that they are running at a full capacity.
Ueychai Tantha-Obhas
I think beer, we’ve been in this business for many years, we cannot 100% every month. Okay?
Thitithep Nophaket
Right. Okay. That’s very helpful. Thank you very much.
Ueychai Tantha-Obhas
We will respond on the SG&A.
Unidentified Company Representative
Kun Thitithep, [indiscernible] here. I think for the SG&A overall, this year, when we look at the common side, it looks a little bit higher than last year because some of the — we’re tracking up in terms of the external control, like fuel, on the logistic cost, somewhat spending in terms of how we ramp up the sales transaction in terms of the market. Probably coming up when we compare with the last year. So that’s why it will be slightly higher than last year. While if we’re breaking in the component of the administrative in our group sales in the details, actually, we have been growing up in terms of the efficiency. Means that, we still put in the efficiency control on the overhead cost in the company. We doesn’t expect anything to be significant in growing in terms of the year-on-year.
Thitithep Nophaket
Right. So we should not expect the percentage to go up further because of the new entrants.
Unidentified Company Representative
Yeah, I think it should remain a little bit the same, Kun Thitithep.
Thitithep Nophaket
Right. Okay, sure. Thank you very much. That’s all the questions I have.
Unidentified Company Representative
Thank you, Thitithep.
Operator
The next question comes from the line of Andy Sim from DBS Vickers Securities. Please go ahead.
Andy Sim
Hello, hi, can you hear me?
Namfon Aungsutornrungsi
Yeah, we can hear you.
Andy Sim
Okay. Thanks — thank you for the opportunity. My first question is related to SG&A, but also — but more targeted at spirits itself. I notice that actually spirits, in the presentation, the spirits SG&A has gone up as a percentage of sales. Can we understand the reason toward that? Is it due to the mix of brown spirits which traditionally has higher spending or because of the slower expected reopening, timing issues or any competition? Any reason for it in terms of the higher brand investment and marketing expenses for spirits itself? That’s my first question. And second question, actually, if I may, is with respect to the earlier question on Tawandang market share. I just wanted to clarify, have you seen any market players take 5% market share within the year? I’m not sure whether I’ve seen that globally, right? I think the third question is actually in terms of the inventory. The inventory days for beer noted that it actually has gone up a bit to 14 days from nine days last year. So I just want to understand what’s driving this? And what would be the comfortable figure for the group as a whole itself. Yeah, that’s my question.
Prapakon Thongtheppairot
On the spirits, I think the SG&As have gone up slightly. I think they have to do with the market reopening. The brown spirit as we’ve seen at the brown spirit, growth have gone up, so we actually increased some money on the brown spirit, but we would expect this percentage to be quite maintained going forward.
Andy Sim
Okay. So we wouldn’t expect it to increase significantly a lot going forward.
Prapakon Thongtheppairot
No, I don’t think so.
Andy Sim
Okay, would there be any timing issue for debt also because I think second half was slightly higher compared to first half?
Prapakon Thongtheppairot
Yeah. I think the second half, so it’s slightly lower. I think the spending is quite maintained throughout the period. That’s why you see the percentage may be slightly higher.
Andy Sim
Right. Okay. Thank you.
Operator
One moment please for the next question.
Andy Sim
Sorry…
Namfon Aungsutornrungsi
Second question, you talked about the inventory of the beer as a total, right?
Andy Sim
Yeah. That’s the third question in terms of inventory. The second question is actually in terms of — I mean there’s a follow-up with respect to the stake about market players taking 5% within a year. I’m not sure whether — I’ve probably never seen any market player within the first year take 5% market share. I’m not sure, maybe I could be mistaken. Yeah.
Edmond Neo Kim Soon
Hi, Andy. Edmond here. I think based on experience, I mean you’re right. To have a 5% growth in 1 year is not very common unless your proposition is very compelling, and you have a very strong differentiator. I think just to share, I think what has happened is actually Chang Classic did that because we transformed from brown to green bottle, that was very significant, a very strong and compelling proposition, and we gained quite a significant share. But looking at what we have with Carabao, I mean what they’re offering is nothing exceptional, yes? It is very much an offering that is riding on the Carabao brand as well as Tawandag. But it is nothing that is going to — it’s not a groundbreaking and it’s not transformational. So having a 5% share growth in 1 year, I think — we think will be probably quite optimistic. So I think a more realistic number could be, I don’t now, between a range of perhaps — I don’t know, it’s hard to tell, yes? But I think that’s where we are.
Ueychai Tantha-Obhas
Andy, that’s what I responded earlier that because they claim that they’re going to do 10%, what I said is if they get 5%, they are great already. They’ll be a Superman. Okay? I don’t think I will see that, but I cannot — we cannot say anything more than that. I think maximum 2%, 3%, they are good already.
Prapakon Thongtheppairot
So Andy, on your last question regarding the inventory levels, this is a consolidated number. So it’s a combination of factors. One is, of course, the slow economy in both Thailand and Vietnam, also because of the shrinking market in both countries, the shrinking beer market and production going down. And the third one is in Vietnam, we start to prepare our stocks for Tet, which is in February. I know it starts a little bit early, but they also contributed to this increase in the ratio, but it’s under control. Okay? So it’ll come down.
Andy Sim
Okay. So I mean, going forward, we should see actually normalized back to like maybe just under 10 days.
Prapakon Thongtheppairot
Yeah, it will come down moving forward. Thank you.
Ueychai Tantha-Obhas
Andy, we will drink more to get rid of that four days.
Andy Sim
Okay. I’ll do that, too. Thank you.
Operator
The next question comes from the line of [Alvin Yong] (ph) from Asia Resource Corporation. Please go ahead.
Unidentified Analyst
Hi, can you hear me?
Operator
Yes, we can hear you.
Unidentified Analyst
Okay. I just have two questions regarding your CapEx spending. So I understand from the questions asked earlier, was on the acquisition of Larsen Cognac and the Cardrona Distillery. So sorry, I didn’t get the person who replied to that question, but he mentioned that the payout for Cardrona Distillery can only happen after a period of five to seven years. So does that mean that we can expect higher CapEx spending? Do you have a figure in mind? And also, would you be able to disclose what’s the acquisition price of the Cardrona Distillery? So that’s my first question. The second question concerns the food business of ThaiBev. So I understand from your Investor Day earlier this year that you intend to grow the number of restaurants incrementally over a period of time and the focus is on both KFC and Oishi. Maybe you could share with us or give us an idea what’s the average start-up costs of starting up a KFC restaurant as opposed to starting a restaurant or Oishi-branded restaurant. Are there significant difference in the start-up costs? Thank you.
Prapakon Thongtheppairot
On the Cardrona Distillery, what I referred to is that it’s a very long-term investment because in aged whiskey, the product need to be cap-aged and probably come to market around seven years onward. So as we increase stock and those stock that we invest today, it will only come to market, say, seven years out from now. So in terms of our projected cash flow positive for this project, will probably take another three years to four year. The acquisition cost of the Cardrona Distillery has been disclosed on the filings, I think just yesterday as well. The amount is very relatively small for our business group — spirit business group, is about NZD28 million.
Unidentified Analyst
Sorry, just to follow up on the reply that you need to invest in aged stock and negative cash flow. So does that mean that you only grow your aged stock organically, you do not purchase matured casks from the market to rebrand into Cardrona or…
Prapakon Thongtheppairot
No, this is a New Zealand distillery, where — distill aged from New Zealand. So it’s only being distilled from our distillery. So in terms of working capital investment in the next three to five years, it will be less than NZD20 million.
Nongnuch Buranasetkul
Yeah. Hi, this is Nongnuch. On the further questions on the investment of the outlet, basically, the Oishi one is a bit lower than KFC. However, it depends more on the model, okay? If it’s like a drive-through, it’s almost double of the normal outlets that we invest. So — and this year, because after COVID, situation is coming back, so we have opened lots more of the store than earlier a few years back, okay, and also doing the — some of the renovation of the store to upgrade the store to ensure that customers are coming back. Okay? Thank you.
Unidentified Analyst
Sorry, yeah. So, Nongnuch, just to follow up on that question also. Are you all contractually obliged to open a fixed number of KFC stores? If I understand that you are a franchisor of the KFC brand. Is there like a minimum number of stores which you are required to open and commit to a minimum amount of CapEx?
Nongnuch Buranasetkul
Yeah, we do. We have the minimum that we need to open per year.
Unidentified Analyst
Okay. Could you give us some guidance on that? Is that a fixed number or is that a percentage?
Namfon Aungsutornrungsi
Sorry, this one is confidential information that we do not disclose, sorry.
Unidentified Analyst
Okay, no worries. Thank you.
Operator
One moment please for the next question. The next question comes from the line of Llelleythan from UOB. Please go ahead.
Q – Llelleythan
Sorry, just I got cut off. So that’s why I didn’t respond but I just have one last question. So I understand from a previous question earlier that ASPs for next year won’t likely increase unless there’s excise taxes in the second or third quarter. But from what I recall from the last briefing that the brown spirits, there was expectations that the brown spirits have moved for price increases. So my question is basically, it’s expectations-based or brown spirit is also — there won’t be any more ASP increases for the brown spirits as well? Yes, this is just my last question.
Namfon Aungsutornrungsi
Llelleythan, you are talking about price increase in the brown spirit?
Llelleythan
Yeah, for the brown spirit, yes.
Namfon Aungsutornrungsi
You mean, going forward, are there any new price increase for the brown spirit or not, something like that, right?
Llelleythan
Yeah, because from the last meeting, I remember that it was mentioned that there was room for price increases, there was expectations for that. But then from what I heard in the comments just now that there probably won’t be any more ASP increase unless there’s excise tax increase.
Prapakon Thongtheppairot
The price increase is a gradual process that we manage in the market where we see the potential gap and in terms of what we can push through price with the consumer. So last year, in Thailand, we’re talking about Thailand. Last year in Thailand, we have a price increase much earlier in the year with some of the SKU with larger bottle. This year, already started in November, we have started to do push for price increase in a smaller SKU, that still have some more room for a price increase. And these SKU have not had any price increase for the past five years. Since right before COVID, we were planning to do something and then COVID came. So we haven’t really adjusted those prices. So we are now pushing for those price gradually. In other markets like Myanmar, price increase is a way of life, because with the high inflation, price continue to rise and then input costs, so we adjust upward. In the other international market, we do have opportunity for price increase. So we continue to push forward because as in the other international markets, the other international players also have been pushing for price increase due to higher input costs as well.
Llelleythan
Okay, thank you. Very clear. Thank you.
Operator
One moment please for the next question. The next question comes from the line of Permada Darmono from UBS. Please go ahead.
Permada Darmono
Thank you. Just one follow-up question. There was a comment earlier, I think by Lester that the sales to the trade channels leading into Tet has begun. And in the past, Saigon Beer has commented that it’s competitor habitually trade low during Tet. Are you seeing a similar behavior, especially after they’ve suffered quite a bit doing that earlier this year?
Lester Tan Teck Chuan
Hi, Permada, Lester here. Yeah, we see in the market, it started in October that a lot of players, not just within the beer industry, but actually across the market — sorry, across all product groups starting to push out Tet stocks already. Yes. So the stocks are starting to go up. It’s not as heavy as last year. In the beer market, we see a little bit of a hangover from the middle part of the year where promo stocks in the middle of the year continue to be in market. So we see that the Tet pushout has been a little bit slower than normal. In fact, the Head of our IR [indiscernible] was out in the market, and she gave me some feedback on some of the stocks that she saw that actually, generally, all of us start to see that this year’s Tet pushout hasn’t been as heavy as last year. But again, it’s early days. Tet is actually in February next year. So it’s a little bit early. So we expect that in the next few weeks, next few months, it will start to ramp up. But I think it’s a little — we expect it to be a little bit muted this year, but still, it is the highest selling season of the year. All of us will be fighting really hard for market share during this period.
Permada Darmono
Thanks very much, Lester, for the color. Much appreciated.
Operator
Thank you. [Operator Instructions] The next question comes from the line of [indiscernible] from DBS Vickers Securities. Please go ahead.
Unidentified Analyst
Yeah, hi, can you hear me?
Operator
We can hear you.
Unidentified Analyst
Okay. So just one question. I just wanted to get a bit more color in terms of CapEx. So CapEx seems to have spiked up for ’23. So just wanted to get a bit of understanding what’s causing that spike and what’s the kind of outlook in terms of CapEx spend in the coming years. Thanks.
Unidentified Company Representative
Hello, [indiscernible] here. I think actually, when we look at the CapEx for investing, if you look at the line that you said is quite lacking actually, if you see on the line that purchases of the PPE, actually, we’re increasing. But just a matter of the classification in terms of the current investment in Vietnam, we are sharing from the current investment to the cash. That’s why it shows some positive in the investing activities. So you see that is somewhat lower. But you look at the PPE sales, actually, we’re increasing.
Unidentified Analyst
Okay. So what does that mean? So that means that it’s just a reallocation. Is that what you’re trying to say?
Unidentified Company Representative
Yeah. Based on the accounting standard, actually, when the short-term investment classification like a short-term deposit, when you change from the sales tax from current investment to the cash, this one will present in the cash flow as a positive cash flow in investing. That is only the classification.
Unidentified Analyst
So, actually I was talking more about the net spend on PPE. It seems to be higher, it’s about THB4.5 billion for FY ’23.
Unidentified Company Representative
Yes. That’s why I mentioned it THB4.6 million, right, increasing from last year, mostly that we explained that we increased on the investing, whether it’s on the factory upgrading, some of the capacity expansion also we’re lining up in this year as well compared with last year.
Unidentified Analyst
Okay. But I guess, going forward, I would think that you would reduce that CapEx because, I mean the volumes are not really coming…
Unidentified Company Representative
We haven’t had any plan to reduce the CapEx right now.
Sithichai Chaikriangkrai
Sithichai, CIO. Invest in CapEx, it’s a growth market. If you need to renew the CapEx, how can you get more profit, how can you get more sales? It’s a future expansion for growth. [indiscernible].
Unidentified Analyst
Okay, yeah. Understood. Thank you.
Operator
One moment please for the next question. The next question comes from the line of Xuan Tan from Goldman Sachs. Please go ahead.
Xuan Tan
Hi. I just have one question on effective tax. I think the tax rate increased year-on-year. I just want to check if there’s any one-off and what would be a fair assumption going forward?
Unidentified Company Representative
Hi, Xuan Tan. I think actually, the effective tax rate this year is increasing a bit in terms of the some of the profit in Thailand base also increasing and some of the tax incentive privilege of some of the — our subsidiary also expire this year. That’s why we have some of the — slightly increasing in terms of the effective tax rate this year.
Xuan Tan
Okay. Would this be a good base going forward?
Unidentified Company Representative
I think it could be some of the best line, but we also have the new incentive coming in for the new project for something like some of energy production. We also get some new incentive. Probably, we will try to balance in terms of how we manage in terms of the effective tax rate in the future.
Xuan Tan
Okay. And sorry, I didn’t catch what was mentioned earlier on molasses. It was EUR740 per ton, and then now the new price is EUR500. So it’s lower in 2024 versus 2023. Just want to check if I caught that correctly.
Unidentified Company Representative
You got it correctly.
Xuan Tan
Okay. Thank you. That’s all from me.
Operator
There are no current questions. [Operator Instructions] As there are no further questions, we will now begin the closing comments. Please go ahead, Ms. Namfon Aungsutornrungsi.
Namfon Aungsutornrungsi
Okay. Thank you for joining the Thai Beverage conference call tonight. If you have any more questions, please feel free to contact IR department at ir@thaibev.com. Thank you, and have a good night.