Buried deep within Thai Beverage Public Company Limited's (OTCPK: <a href="https://www.otcmarkets.com/stock/TBVPF/overview" alt="TBVPF">TBVPF</a>) recent earnings transcripts lies a tale of unexpected resilience and profitability. While analysts obsess over domestic beer market share and the impact of new entrants, a quieter, more compelling story is unfolding in Myanmar. Despite the political and economic turmoil gripping the nation, ThaiBev's spirits business there, primarily through its Grand Royal Whisky brand, is experiencing a surge in both volume and profitability. This unassuming success story, largely overlooked by the financial community, presents a unique investment opportunity for those willing to look beyond the headlines.

Let's unpack this intriguing narrative. The prevailing perception of Myanmar is one of chaos and instability, painting a bleak picture for any business operating within its borders. However, ThaiBev's recent performance tells a different story. During their <a href="https://seekingalpha.com/symbol/TBVPF/transcripts" alt="Q4 2023 earnings call">Q4 2023 earnings call</a>, <span class="highlight">Lester Tan Teck Chuan, Chief Beer Business, Thailand, and Prapakon Thongtheppairot, EVP and Chief Spirit Product Group, both highlighted the continued growth of Grand Royal Whisky, attributing the success to expanding margins and higher volumes in local currency.</span>

This is no small feat considering the significant economic challenges facing Myanmar. The country grapples with depreciating currency, limited foreign currency reserves, and operational hurdles in securing essential raw materials. Yet, ThaiBev's spirits business not only navigates these obstacles but thrives. The key, as revealed in the transcript, lies in strategic price adjustments.

Facing cost pressures from depreciating currency, ThaiBev implemented significant price increases for Grand Royal Whisky. These increases, however, exceeded the level of cost increases, leading to expanding margins. This strategic pricing, coupled with an inherent resilience in demand for the brand, has allowed ThaiBev to turn adversity into a profit-generating opportunity.

This begs the question: why is this success story flying under the radar? One explanation lies in the sheer dominance of the spirits business within ThaiBev's overall portfolio. During the <a href="https://seekingalpha.com/symbol/TBVPF/transcripts" alt="Q2 2024 earnings call">Q2 2024 earnings call</a>, management revealed that <span class="highlight">brown spirits hold a staggering 95% market share in Thailand, while white spirits command a hefty 88%-89%.</span> With such overwhelming dominance, investors are naturally more focused on the beer business, where competition is fierce and market share battles are constantly waged.

However, dismissing the success in Myanmar as a mere footnote would be a grave mistake. The resilience of the spirits business in a challenging environment showcases the inherent strength of the Grand Royal Whisky brand and the adeptness of ThaiBev's management in navigating turbulent markets.

Furthermore, while current volumes from Myanmar represent less than 10% of ThaiBev's overall spirits volume, the potential for growth remains significant. As the political situation stabilizes and economic reforms take hold, consumer spending could see a rebound, further fueling demand for Grand Royal Whisky. This potential for outsized growth in a largely untapped market presents a compelling argument for investors seeking exposure to Southeast Asia's dynamic consumer landscape.

"MARKET SHARE BREAKDOWN: THAIBEV SPIRITS Spirit Type Market Share in Thailand Brown Spirits 95% White Spirits 88%-89% Source: ThaiBev Q2 2024 earnings call transcript [https://seekingalpha.com/symbol/TBVPF/transcripts]"

Analyzing ThaiBev's Beer Business Performance

Despite the success of its spirits, ThaiBev's beer business is facing challenges. The following graph displays hypothetical data representing the volume sales of ThaiBev beer, highlighting the decline experienced in 2023.

Beyond the numbers, the story of Grand Royal Whisky in Myanmar speaks to the enduring power of consumer staples, especially in emerging markets. Even amidst political turmoil and economic uncertainty, people seek comfort and familiarity in their chosen brands. ThaiBev's strategic pricing ensures the brand remains accessible, while its consistent quality and brand recognition continue to drive loyalty.

This understated triumph within ThaiBev's portfolio serves as a reminder that valuable insights often lie hidden beneath the surface. While the allure of high-stakes market share battles grabs headlines, the quiet resilience of a well-managed business in a challenging environment might just hold the key to unlocking greater shareholder value.

"FUN FACT: Whisky was originally used for medicinal purposes! In the early days, it was considered a cure-all for ailments ranging from the common cold to smallpox. Thankfully, today we can enjoy it for its taste and social merits. Cheers!"