Major food and beverages manufacturers are entering Myanmar to capture its vast consumer market.
The latest being Nestlé, the Switzerland based food major, that is committed to invest approximately USD 50 million in Myanmar's food and beverage industry over the next six years.
Nestlé will primarily focus on "coffee, milk and dairy products, drinking water and beverages" in Myanmar. However, the deal is awaiting approval from the Myanmar Investment Commission (MIC).
Nestlé already has a Myanmar-based subsidiary that it formed in September 2013. The food giant is also exporting many of its products to Myanmar.
Apart from Nestlé there are several other consumer companies that have entered the Myanmar market. Some of them are Unilever - opened production facility in May 2013, Coca-Cola - began a bottling factory outside Yangon in 2013, PepsiCo - opened its own bottling facility in Myanmar. In the alcohol segment, there is Heineken that recently procured a distribution license for some of its products.
2nd Myanmar Consumer Summit opens on 27-28 October, 2014 in Yangon to discuss the intricacies of the newly opened consumer market in greater detail.
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Myanmar has opened its doors for foreign investors to manufacture locally, but they, in most occasions, do not have any control over the distribution of these goods.
But in an exception to this rule, Myanmar Investment Commission (MIC), the country's investment regulator, recently granted Heineken and its subsidiary Asia Pacific Brewery to distribute beer in Myanmar.
Legal firm VDB Loi has helped Heineken and its subsidiary to secure the permit that allows the brewers for a nationwide distribution of certain products in Myanmar.
This is the first time that Myanmar Investment Commission has allowed a foreign company to distribute its products in Myanmar.
This significant milestone is expected to pave the way for others in the FMCG industry to deploy their own distribution network.
Mr. Edwin Vanderbruggen, Partner, VDB Loi Myanmar who is one of the key persons behind securing this permit will share more on the legal issues involving distribution and import licenses in Myanmar at the upcoming 2nd Myanmar Consumer Summit in Yangon on 27-28 October, 2014. Plus, Mr. Lester Tan, Managing Director of APB Alliance Brewery Co. Ltd. (Part of the Heineken Company) will join in a Panel Discussion on 'Accessing the Myanmar Market' at the same conference.
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Responding to public complaints on misleading advertising, Myanmar's Ministry of Information has proposed new rules for advertisements. The draft policy was released on July 3 and opened to public feedback. The proposed policy aims at ensuring that there is no difference between advertised and actual market price as well as guaranteeing that advertised products are of genuine quality.
The rules will be applicable to all forms of media, including online. Once public feedback has been received and assessed, the policy will come into effect in April 2015.
As per the draft policy, media organizations have to be careful while accepting advertisements for products or services, they have to ensure that the products advertised are certified by bodies such as the International Organization for Standardization or Myanmar's Food and Drug Administration.
Further, all statements or claims in the advertisements must be verified before they are printed or broadcast. The draft policy also instructs inclusion of detailed information on participation procedures for promotional activities, such as competitions, etc., as well as accurate retail price.
Media organizations will be have to ensure authenticity of different categories of ads. For instance, before an educational provider places an ad, its business licenses have to be checked with the Ministry of Education. Further ads for medicines, medical equipment or medical services must have due permission from the Ministry of Health and only registered NGOs with the government will be allowed to advertise. Likewise, ads for financial services and products must state degree of risk involved for investors.
Further, the policy proposes complete ban on alcohol, tobacco, gambling, unnatural therapies, pyramid distribution schemes and fake investments advertisements.
Although the policy doesn't contain any punishments, any violations will also likely be a breach of the Consumer Protection Law, which awaits to be enacted after it was approved in March, 2014.
Various quarters of the business have reacted differently to the proposed policy. While media organizations say they will face extra burden of verifying ads, leading to rising costs as well as impact on sales, small manufacturers are worried they will be hard hit.
However, experts say that honest businesses will benefit from this policy and it will encourage healthy competition, while the consumers will have better choice.
A session on 'Myanmar's New Advertisement Policy' by Daw. Thida Tin, Deputy Director General, Information and Public Relation Department, Ministry of Information at the 2nd Myanmar Consumer Summit will further explain the details of the draft advertisement policy. The summit opens on 27-28 October, 2014 in Yangon.
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Myanmar's consumers across 17 major cities in the country will soon enjoy PepsiCo beverages. Myanmar Golden Beverage Co Ltd (MGS) has tied up with South Korea's Lotte Chilsung Beverage Co. Ltd to produce and distribute PepsiCo drinks in the country. The joint venture - under the name of Lotte-MGS Beverage Co. Ltd, has already been approved by the Myanmar Investment Commission (MIC).
While Lotte Chilsung Beverage will have a 70 percent stake in the JV, the remaining 30 percent will be held by MGS. The joint venture is worth USD 81 million in capital.
As per the deal, MGS's existing soft drinks production plant in Rangoon's Hlaing Tharyar Industrial zone will be utilized. However, the plant will be technologically upgraded to enable production of PepsiCo drinks comprising Pepsi-Cola, 7-Up and Mirinda.
MGS ran a Pepsi plant in Rangoon before international sanctions came into play during 1994 to 2012. During this period, Pepsi products were not sold and distributed in Burma.
Post 2012, once democratic reforms came in and sanctions were lifted, PepsiCo tied up with Rangoon-based Diamond Star, giving the Burmese company exclusive rights to import, sell and distribute PepsiCo drinks in the country.
Diamond stopped the imports in October 2013.
More on the beverages market will be discussed at 2nd Myanmar Consumer Summit in Yangon on 27-28 October, 2014.
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To tap the growing consumer market in Myanmar, Heineken signed a JV with local spirits company, Alliance Brewery Company, to produce and sell Heineken beers in the country. Under this JV, Heineken plans to build a $60 million brewery in Myanmar to cater to the Burmese market.
Heineken follows the likes of Carlsberg, Coke and Pepsi in entering the lucrative Myanmar consumer market.
Heineken will manage the JV via a 57% controlling stake in its subsidiary - Asia Pacific Breweries and it will take up the onus of providing brewing and technical expertise as well as ingredient procurement and brand licensing.
Myanmar Investment Committee has already given the green nod to APB Alliance Brewery Company to build a new greenfield brewery.
The political and social reforms in the country plus the lifting of all sanctions on Myanmar by EU Council (aside from a still extant arms embargo), and also the number of MNCs tapping into the Burmese market led to Heineken's decision to invest in Myanmar.
Apart from Heineken, there has been other investments in the Myanmar's beer industry recently - Thai Bev billionaire Chareon Sirivadhanabhakdi acquired Singapore-based Fraser & Neave (assets include Myanmar Brewery), Carlsberg's acquired a 51% stake in a newly created JV (with Myanmar Golden Star Breweries) and also plans to build a brewery in the country.
A senior representative from Heineken will speak at CMT's 2nd Myanmar Consumer Summit, coming up on 27-28 October 2014 in Yangon.
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