Asia Brewers Network

Not Quite Time For A Tiger: Malaysia’s Beer Industry Faces Headwinds


As bars and brewers around the world face off against Covid-19’s combined health and economic shocks, Malaysia’s beer industry hasn’t been spared.

Like many other countries, Malaysia is moving out of lockdown – locally known as the Movement Control Order (MCO) – in phases. A dense web of Standard Operating Procedures (SOPs) have been issued, and continue to be updated, to provide industry-specific guidance.

The current ‘Recovery’ phase allows restaurants, kopitiam and bars with food licenses to open and operate at maximum capacity, provided they observe social distancing and closely follow other measures specified in the relevant SOPs.

However, many other beer-serving venues – karaoke parlours, nightclubs & pubs without restaurant licenses – remain closed until August 31st.

Players across the beer supply chain are now surveying the damage while planning their next acts.

Even venues that have reopened have seen significant dips in revenue as salary cuts and layoffs begin to bite consumer spending. Malaysia’s ‘new normal’ is a bitter pill to swallow.

Brewers in the Muslim-majority country were particularly hard hit. Firstly, they had to suddenly temporarily suspend their operations due to not being considered an essential service – a u-turn from regulators after previously receiving special permission to operate.

Then, after resuming production, they faced a more existential problem: their customer’s venues were either closed or operating delivery/takeaway services only.

The early numbers from Heineken and Carlsberg, Malaysia’s domestic brewing duopoly, demonstrate the very real financial consequences of lockdown.

Heineken Malaysia’s 2020 Q1 Financial Performance & Business Update is a mix of good and bad news. While there was only a 2% drop in revenue versus Q1 2019 and – quite impressively – a small increase in profitability (due to price increases and a successful Chinese New Year), March 2020 sales were down 50%. Profit before tax dropped 37% quarter-on-quarter.

Carlsberg’s data is grimmer. Q1 revenue was down by 11% year-on-year and profit dropped by 18%. Reportedly Carlsberg (as a group, which also includes their Singapore operations) laid off around half of their salesforce.

Beyond the cashed-up breweries, the impact on bars and restaurants was – as a rule – tough.

Many restaurants, hotels and bars have permanently closed. Local news media is full of interviews with frustrated bar proprietors, many of whom openly share that their runway of cash is drying up.

The tourists are gone, too. Tourism Malaysia, the country’s tourism marketing agency, had forecast 30 million inbound tourists in 2020: many of whom would have doubtlessly packed hotel bars, inner-city clubs and restaurants in areas popular with foreigners, like Bukit Bintang in Kuala Lumpur & Georgetown in Penang.

Adding to the challenge, a spate of deaths from drink-driving have put overindulgence of alcohol under the spotlight.

After a significant ramp-up of checkpoints and inspections of drivers, Royal Malaysian Police (PDRM) have arrested more than 1,236 intoxicated drivers this year.

During the heated debates around the harm caused by alcohol-fuelled car crashes, a handful of politicians mooted a potential ban on alcohol.

While that was quickly dismissed by cooler heads in the federal government, moves are being made by the federal government to implement stricter drink driving regulations. The discussion on stricter laws, particularly around blood alcohol levels which will likely be tabled in the next Parliamentary sitting

Beyond drink driving legislation, the environment in certain parts of Malaysia has become more challenging for bar operators.

Kuala Lumpur City Hall has announced future bar licenses have been frozen. In Perak and Melaka, states on the west coast of Peninsular Malaysia, local governments have announced reviews of licensing regimes.

Fortunately for the industry, it is unlikely major changes to the regulatory environment for beer are on the cards. Indeed, beer is a major contributor to Malaysia’s economy, paying more than MYR 2.2 billion annually to the country’s coffers in taxes.

Equally important for policymakers, the brewers directly employing more than 3,300 people, paying MYR 800,000,000 in salaries annually.

In a sign that beer culture is alive and kicking, a new generation of younger drinkers have migrated in recent decades toward Western-style gastro-pubs, premium nightclubs and speakeasies, while also embracing ride-hailing and alcohol delivery as options to going out.

Dedicated entertainment and lifestyle developments like Kuala Lumpur’s TREC, a 7-acre collection of largely alcohol-serving venues, cater to the rising urban middle-class drinkers. Even beyond KL, craft beer is becoming increasingly popular, with venues serving imported Antipodean and American brews popping up in Melaka, Ipoh and Cyberjaya.

Technology is changing consumer behaviour too, and mostly for the better. Ride-hailing services like Grab have become increasingly popular as an alternative to driving; a plethora of new and established alcoholic delivery services have emerged too.

To stay competitive in the changing times, savvy players in the industry like Sid’s, a British pub chain with locations in Kuala Lumpur’s leafy suburbs, and Taps, a chain of craft beer bars in Kuala Lumpur and Penang, hand-bottled draft beer for delivery.

While 2020 may not be an ideal year for Malaysia’s beer industry with closures and lockdowns, the future is not all bleak. Indeed, changes to drink driving laws and tighter municipal licensing for bars may well have the effect of improving the industry’s perception amongst the wider population. Consumer appetites and expectations are evolving, too. If anyone can do it, Malaysia boleh!

Article by:

Oliver Woods

Oliver Woods


Beer Asia

Oliver is a marketing strategist by trade and a craft beer enthusiast by choice. He is the founder of consulting firm Beer Asia and lives, works and drinks between Kuala Lumpur, Malaysia and Saigon, Vietnam. You can find him on Twitter @oiwoods

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