Genup: Please tell us a little bit about yourself?
Tak: Okay. I’m the third child in my family, which is an entrepreneurship type family for a long time. Our family is quite big. We were part of the Chinese Thai who arrived a long time ago and began building up banks, real estate, etc.. I mean, a lot of things. And then we collapsed during the financial crisis.
Genup: The 1997 crisis?
Tak: In ’97, yes. And after that, we became more conservative. We still own pawn shops, goldsmith and other business, and also partnered with other business-like Thai Bev, Goodyear, Central Group. I think the family member decided to remain more silent and do what they felt comfortable, like investing, stock investing, something like that. Rather than ad hoc services, like building the buildings, building factories, something like that.
Genup: Did you go to school in Thailand or overseas?
Tak: I graduated from Chulalongkorn University, and then studied abroad at Eastern Michigan. And then, come back to do another Master’s degree in Thailand, Stamford International University. At that time, I also wanted to pursue a PhD too, but then decided not to.
So I have an MBA in Finance, International Business, and Marketing.
Genup: And so, entrepreneurship is in your DNA?
Tak: Yeah. I was helping my family since I was a child, because at that time we also got a license to produce White Spirits in Thailand. My family was granted the right to sell in Suphan Buri, the whole province. So on the weekends, my relaxing time was going to the warehouse, counting all the liquor bottles, put the stamp on and then preparing the document and ship to the other provinces. We got a rare concession from the government.
And then because there was this liquor war during that time, my family and Khun Charoen (Thai Bev), began to fight and the government had to intervene and stop the price war. So they asked both companies to merge together, so from then, we become a monopoly.
Our family got concession from the industrial department. Khun Charoen got concessions from the finance department, so he owned about 12, 13 distilleries, which is located in the Eastern Provinces, but they blocked him from selling nationwide. They can sell only in the territory, but Khun Charoen was very very clever, and he found a way to sneak out of the system and so this is why they got a price war. But Mekhong, for which we had got concession earlier, and so we had enough retained earnings to fight the price war, until Khun Chaoren felt he about to go bankrupt.
So they finance ministry asked both companies to join, merge together.
Genup: Could you tell us a little bit about your business?
Tak: Okay. I was assigned to help the beer business in my family since before the financial crisis, so it became my favorite on the beverage side, looking after the beer market. Actually, I looked other liquor business too, but I felt like beer is more interesting compared to the other liquor, because when you do other liquor in Thailand, it’s very limited in terms of production. You can do only imported, so that means you never own your brand. Even if you do OEM, you still have a problem to produce yourself. So beer is one of the liquor business in Thailand that allow you to open up.
Even if the law is very strict in terms of like applying to get the license. It has a few ways to get the beer license in Thailand, one is microbreweries and another one is the big breweries, and that is what we are doing in the next couple of years from now.
Genup: So you are setting up a factory to brew beer?
Tak: Yes. We are working on this project for almost ten years now. At first, we tried to find a site that close to the other breweries, like Thai Asia Pacific, which is owned by Heineken, close to Ayuthaya area to get the license, but that place is protected by the government, since they zoned Ayuthaya as an ancient city for culture. that Ayutthaya is registered as the ancient city. So being a historical place so we could not do anything in that area, so we decided to move someplace else, where we could get a license. And we found a new location in Chachoengsao that fit our requirements and so we decided to set up there.
Genup: Who is your ideal customer?
Tak: Oh, okay. Since I was in the beer business for a long time and during the time, I spent working on building up my brewery, we began to assist other brands in the market in term of production, so those are our clients, like most of the Craft Beer big brands right now. So those are all our customers. And they know us very well and know that I am working on a brewery, and so they said they will move production to our facility right away when we are ready.
Genup: Are you able to compete with the bigger breweries in terms of cost of production?
Tak: Yeah, normally the price is higher than the local price, since the beer is imported. But once we produce in Thailand, that means the cost of production will be almost the same as the big breweries.
This is also because are not investing in pricey equipment, we’re using effective equipment rather than expensive ones, compared to the big breweries, they are using expensive German equipment. But we too are using German technology, but using Chinese manufacturers that are able to get us the same quality.
So this means, in terms of money saving, in terms of depreciation, we are in a better position to compete with the big brands.
And as for the size that we plan to do right now, it’s like we can match the customer requirements, so we have small line, you can do from 1000-liter, 3000-liter to 5000-liter, 6000-liter. And then if you want to do bigger than that, we can do like two brew or three brew at the end.
So the smallest size is 1000 liters per batch or per flavor. So that would be fitting in terms of private brand, the owner of a hotel, owner of a restaurant, who would like to do their own brand.
Genup: Do you strictly follow a business plan?
Tak: Well, we have like a framework for the business plan, like I said our project has been in the works for 10 years right now. So during all this time, we’ve learned from experience. Like when I go into work in Cambodia… Cambodia has a special economy of its own, that you can rent a place 99 years, which is very cheap, and then everything is free tax. So when I got that idea, At first would we wanted to open up in Cambodia too And then, my team was just like, “why don’t we find that one in Thailand?”. But we took some time to find the right location because beer, normally the brewery consumes a lot of water, so if we can have a space in an industrial estate, then we might have a problem with the water supply too. The one that we chose was because most of the customer in that industrial park are in the auto-industry, so they don’t use much of water- So they have plenty of water left for us to use, so this is why I think it’s a good fit for us.
Genup: Could you talk to us about a big mistake you made in the beginning and how did you overcome?
Tak: Yeah, I think that was during the financial crisis in 1997. At first, I discussed all the debt issues with all the debtors, but I forgot to talk to Bangkok Bank, who was our guarantor.
So we had to change from the debtor, which were like all foreign banks, to Bangkok Bank right away, because they guaranteed our debt like 99%, so they become the majority debtor. And the main mistake I made was I knew the main foreign department boss who was the husband of my ex-boss. So I could have actually walk up talk to him, ask him not to execute the guarantee and take away our breweries. that would be fine and then we’re not going to lose the whole breweries at that time. I also made a bigger mistake by not splitting our assets and keeping at least one brewery license for ourselves. Instead, we lost them all. But at that time, we thought, ok we should go into financial rehab to rebuild ourselves. So we ended up giving up everything.
Genup: Anyway, now you are almost back. What is the name of your new brewery?
Tak: I am calling it “Independent Thai Craft Brewery” or ITCB. Because a lot of people ask me, “oh are your breweries doing OEM?” So I said, “okay, let the name say itself”, Independent Thai Craft Brewery, so people can understand what we do.
Genup: And is your funding from venture capital or your own?
Tak: Our own funding. At first, we were talking with a private fund company as well, and we are still working with them, they’re still saying that, “once you need the capital, just let us know”.” Some Venture capital firms are also talking to us like for six years already. They keep asking us for updates. They want to group all the Thai Craft companies to become one and they would invest like 60-70% on them. So I told them that’s too much. Anyway, we are not really going to do anything for now. We just want to build the brewery first.
Genup: What marketing channel do you use? How do people know you?
Tak: Right now, it’s more like word of mouth, because not only do the Thai craft industry know, but all the breweries also already know that I’m working on it. Also, some imported brands as well as they would like to use us a production hub to export and sell locally.
Like they are doing for Cambodia, might as well use Thailand. It’s closer, the shipping, the logistics is much better.
Genup: Would the quality be better here in Thailand? The water, the hops, or is there no major difference?
Tak: Actually, everything is mostly the same, it depends on the processing, exporting, importing etc. Thailand is much better in terms of like complying with the international standards. If you import anything to Cambodia or Vietnam, sometimes you don’t have to pay tax, but for international companies, they might feel very weird that sometimes you transfer funds to New Zealand account, and then you get the product in Cambodia, something like that. So Thailand is much more straight forward that way.
So, like big foreign brands they’re not willing to go there, but if you have a factory in Thailand, they’re interested to do that because it’s more transparent, they can send the brewer here to stay and execute what they want compared to Vietnam or Cambodia, where they do not allow you to unless you are very close to them.
And then there are some attitudes in Vietnam and Cambodia that are often against the Westerners. So let’s say like, the brewer is Canadian, and he went to brew in Vietnam, he wouldn’t get good cooperating from them. But if they came to Thailand, there would be no problems for them at all.
Genup: What is the single most important factor in making good beer?
Tak: I think, in terms of production, it’s water. But in terms of becoming a finished product, I think the palate taster is the important one. Because sometimes if you find a person who can have a very good palate taste, you can predict what the consumer wants. Let’s say, if you’re tasting like Hoegaarden, or other beers also, and you can know whether this is going to be good for mass market.
Genup: And do we have a good palate tester in Thailand? Or do we have to import them?
Tak: Not many. it’s about experience. You can see like Heineken, Heineken used to do very good beer in Thailand because the brew master was the one who did the palate test, and then right now they keep changing the brew master all the time and so some batches are really bad. Even though they have a standard, but the one who finally tastes is very important.
Genup: So what is the actual timeline of your brewery?
Tak: Well, today we just got approved on the building design and right now we are working on the detail of the building interior and construction details. We want to get approved and we submit to the licensing department, but I mean they already know we are working on this. and the invest department already know us that we are working on this. We already have the environment inspection approved. That means we have the half of it. And then the license should be easy. Because we have to understand the process and the Environmental team also have to understand the process. We are lucky that because we have been in the market for long. We can teach the EIA team to understand what we’re doing.
Genup: What is your long-term vision for this business?
Tak: After finishing this one, we plan to do another location, and we actually got another location already. We want to do medium sized deliveries to other countries as well, and then we hope to list in the Singapore market.
Genup: Not Thai stock market?
Tak: They do not allow alcohol listing here.
Genup: Do you have your own beer brand as well?
Tak: We have our brand, it is Khaosan Lager. It is more like a generic one compared to our customer, but we do like Houston dark lager, and Castle Lager. Most of our customers do IPA so we do not compete with them.
Genup: How do you stay motivated? What passion drives you?
Tak: In the past that only Lager controlled the world. And now we in an era where any type of beer is possible and can be successful. We have been trying to do new beers in Thailand since 2000 and we got good response. So, there is a lot of opportunity in Thailand for new beers, we feel, and I really enjoy bringing new beers to the market. I remember the first time that we launched Pilsner in Thailand and we got a very good response from some customers, but some said it tasted like “banana beer”, and so we started to educate them about different styles of beer. That’s mainly what we do now all the time. We also guide customers about what beer is suited to them, like restaurants that serve spicy Thai food, we tell them they need a light beer that can complement their food. And for some other customers we ask them what beer they like and if they say they like German style wheat beer, then we try to come up with something different, so they have a niche in the market. So, I really enjoy doing this.
Genup: Who do you admire? Who inspires you?
Tak: My uncle who has now passed away. My elder uncle the one who looked after the liquor business in our family. He had a very good long-term vision. He was the one who managed to get the concession from the government to make white spirit. He also imported other products like Seagram Cooler, shoes, smoke detectors. He did all kinds of new things. He was a visionary, and he knew how to execute well. I don’t know how he managed all the business at that time. I mean, like, I was very young but most time I went to his office talking to him and then he taught me quite a lot too. And the way that he invests the money he made, selecting the right property etc. That’s very fascinating. He found land that was going to have new roads, so the investments all turned out to be really good. And then he started the pawn shop business long ago and that is very successful for our family. We still have 15 pawn shops.
Genup: What does success in life mean to you?
Tak: Working. I still love to work. Like my brother is always asking me “Why you have to do all this?” We already have a lot of wealth in our family, we don’t have to work. But I told him, this is what I do. I feel alive, I enjoy going out, sitting with customers, talking to people, talking to new brewers. Taste new beer. That’s what I feel like doing all the time. The market in Thailand to growing and there’s a long way to go. Not only like market size, but also the possibility of production. So that’s like a lot of things in the industry that we can do.
Genup: What advice would you give somebody who’s starting their own business?
Genup: What advice would you give somebody who’s starting their own business?
Tak: I got a lot of people coming to ask things like, “Oh, I would like to do this and that,” then I say that first what you want to do? You have to understand, you have to have knowledge on what to do. You have to know the answer that. You have to know all the details, like the legal side, the business side. And also, the costing side. I think the more you get in deep into that, then that prevents you from failing.
I mean, sometimes you don’t have to be success, but if you are happy doing your business, even if you lose a bit it is still fine. But try to know everything about your product and market first. Research your market. Because even if you lose some money you may gain a lot of knowledge for future businesses.
Genup: Khun Tak, thank you so much!
Tak: You’re most welcome!
ITCB: For the Love of the Craft
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