This one is for the future, maybe the distant future:
An article in today's WSJ about political protests in Thailand reminded me of a company I've been watching from afar, Thai Bev. It's the dominant brewer in Thailand but it's listed in Singapore.
I see this model in a bunch of other countries where beer is not a "native" product: one company manages to become "the national beer of ______" and makes a lot of money: Think of Quilmes in Argentina or Bavaria in Colombia, or South African Breweries (Castle), or Efes in Turkey, or the Fix brewery in Greece going back a ways (although Fix may have been granted a monopoly by the King of Greece, himself a German import, in which case never mind). It's usually lager beer, and everyone complains how it tastes like water and/or something worse, but it has a 50%+ market share, tastes really good on a hot day in the tropics or on the beach, and its owner winds up selling out to InBev or SAB/Miller and showing up on the Forbes List. Like this guy:
So a dominant beer in a given country can be a very good business. By the way, why is there a tendency towards natural and stable monopoly in beer? I think there are two "tipping points" that create increasing returns to scale which, once established, confer more or less permanent competitive advantage. The first is in distribution, which is a big cost. The company that establishes the lowest distribution costs per unit of volume has an advantage, which tends to increase over time as volume grows. The second is in marketing and promotion. Anheuser-Busch made the following point in its 2005 annual letter:
Anheuser Busch sells 2.5 times as much beer as our nearest competitor in the United States. We are 4 times as large as the third-ranked brewer. This allows us to maintain the leading share of voice with our advertising, including a powerful array of major sports marketing and media properties. But we are still able to keep the lowest media cost per barrel.
Back to Thai Bev. It's already dominant in Thailand so it can't really grow much more there, but its position is extremely strong. It earns high returns on equity and assets, has been deleveraging, is committed to shareholder transparency, and pays out over 50% of earnings as cash (think of Buffett and PetroChina). According to its web site it currently yields about 5.6%, which is good but not great for the "equity bond" that I see it as so I'll keep watching. It's expanding overseas as well, which I'll call a free option worth something between zero and a lot, but won't pay anything for.