Guinness Anchor Berhad (GAB) recently announced its fiscal year 2012 financial results. What were the highlights of the results?

IRELAND: We have just announced our Financial Year 2012 results. The financial year finished at the end of June and we were really pleased to be able to share with GAB shareholders and the market generally that we have grown our profits this year by 15% before tax, 14% after tax, against a revenue growth of 9%. To be able to record another year of double-digit profit growth is something that makes us, the whole team of GAB, very proud, especially when it is taken in the context of the previous ten years, which were also growth years for us on profit. So we have just recorded an 11th consecutive year of growth in profit and we are very pleased to be able to do that. We have done that because GAB has got a settled strategy, a great team, and some great brands, and all of those things are working together for us. We’ve got good momentum. We are in a developing country, with good market share and good performance, and we expect that will continue.

In terms of company growth, what is your outlook for GAB’s future expansion?

IRELAND: GAB expects to continue growing and performing better year-on-year. We have growth plans focused on Malaysia. Our expectation is that, for the foreseeable future, our growth will be Malaysian growth. While we have over 60% market share here in Malaysia, we do see Malaysia as being part of a very attractive market for the malt liquor industry, and we are very well positioned to keep growing and keep performing for our shareholders.

How significant are GAB’s activities outside Malaysia to the company’s overall business?

IRELAND: The vast majority of our business is Malaysian business, but we do have a small portion which is export and duty-free. That is of relatively small importance for us, but it is a sector that we can choose to grow more aggressively if we find that Malaysian growth is softening.

How do the government’s growth and development plans affect your plans?

IRELAND: The Malaysian government’s ambitions, including the GTP, the Government Transformation Programme, and the ETP, the Economic Transformation Programme, are actually indirectly very important to GAB because GAB’s performance will be influenced by overall GDP growth and the government initiatives are going to impact GDP performance. We also see a correlation between overall wealth in a country and the amount of alcohol drunk. Economies where there is a bigger middle class generally drink more alcohol. So, per capita consumption is quite low at the moment because Malaysia is still a developing market. As it becomes a more mature market, we see that there are opportunities for category growth for us.

Do you think the share price of GAB is reflective of the company’s true value?

IRELAND: Our share price has been stable and has been increasing over the last few weeks and months, and at about $15 a share, it’s kind of at those peak levels in history. I suspect that, if we can continue to perform into the future, investors will see this as a stock they want to retain or get a hold of because we are delivering consistent returns for shareholders, and we are very reliable in the marketplace overall.

How competitive is the malt beverage market in Malaysia?

IRELAND: The malt beverage market here in Malaysia is extremely competitive in that there are two big players fighting it out for market share and overall profitability. I’m delighted that, over the last eleven consecutive years, GAB has performed better than its competition every single year. We have grown revenues for the last eleven years in a row and profits for the last eleven years in a row on the back of gaining market share. But we cannot remain complacent as competition is stiff and that has implications on pricing. Sometimes pricing gets very close to cost or below cost and some of the big contracts in Malaysia get awarded at very high discount levels. It’s something we need to be very mindful of.

How would you describe the availability of water and electricity in Malaysia?

IRELAND: The supply of electricity and water has historically been very reliable; no issues at all. Going forward, I don’t anticipate any issues with electricity. However, there is debate about water, and there have been reports of water shortages. We haven’t experienced any here. We are looking at mitigation plans just in case something evolves as a situation, including making bore-holes on our 24-acre site here. I don’t think it’s going to be an issue, but we are going to be careful just in case.

What are some of the biggest transportation and logistics challenges that GAB faces?

IRELAND: I would say that Malaysia, from a transportation perspective, is actually very well set up. The road structure is adequate for the market as it is at the moment, and we don’t face any significant transportation issues, either for the domestic volume or for the smaller amount of volume that we export. Malaysia is an interesting country though, in that there is the main Peninsular Malaysia and there is East Malaysia. East Malaysia is a bit more geographically separated from Peninsular Malaysia, and that means we have to do a little bit more in terms of planning to get our supply to that segment of the market.

What are the trends in the beverage market in Malaysia?

IRELAND: The trends in the market are consistent with the trends that alcoholic beverage markets take around the world. That is, generally, as a population becomes wealthier and more sophisticated, there is a trend toward more premium brands. GAB is very well-positioned in that as it has Guinness, Heineken, Kilkenny, and a number of other premium brands, and we have been growing our overall volumes, especially in the premium segment. Malaysian consumers are becoming more interested in imported international brands, partly as an expression of their international awareness and growing affluence, and there is an emerging segment in premium imported, albeit quite a small sector of the market at the moment. The malt beverage market is only part of the total alcohol beverage market. There are other segments, namely wine and spirits, and those in Malaysia at the moment are quite underdeveloped and quite small. The malt beverage sector is probably about 80% of overall alcohol, with wines and spirits taking about 10% each. I see those segments continuing to grow, but against an overall growing marketplace for alcohol. So I think those segments can grow, and the malt liquor market can also grow at the same time.

What is your take on the current M&A activity in the global beer industry?

IRELAND: Global beer is really interesting. Beer is a huge category around the world, and relatively, it’s an unconsolidated market. When you think about mobile phones or cars, you have three or four major players around the world. If you look at beer, there are four big players which now have about 50% market share in the global market, but there are thousands, if not tens of thousands, of smaller players. I think we’re in the middle of a consolidation period with the big players emerging, such as SABMiller, Anheuser-Busch InBev, Heineken, and others, but it’s got some way to play out. I think the latest move of Heineken buying out the other shareholders of APB (Asia-Pacific Breweries) is one sign of that, and I think it’s only going to continue. I think the various battles, as they happen around the world, are all going to become a little bit intense. The big players are fighting it out for market position, against a shrinking pool of opportunities.