Thai Beverage buys entire KFC chain in Thailand

Thai Beverage, the country’s largest beverage company and the brewer of Chang Beer, broke into the fast-food business last week by buying up all 240 existing Kentucky Fried Chicken restaurants in Thailand for a reported $340 million.

The final value of the deal is bound to increase because negotiations are still ongoing for Thai Beverage to also purchase an undetermined number of restaurants that are still under development. Kentucky Fried Chicken (KFC) is owned by Louisville, Kentucky-based Yum! Brands Inc., which also owns the Pizza Hut restaurant chain.

The agreement is another example of the expanding investments of Thai companies, several of which have purchased outright or taken stakes in well-known foreign brands and companies in recent years, both in overseas markets and at home. Thai Union, the world’s largest tuna producer, for example, recently bought a controlling stake in the Red Lobster restaurant chain in the United States.

KFC is the number one quick service restaurant chain in Thailand with the largest market share and the highest number of shops. It was one of the first fast food chains to enter the Thai market in the 1980s.

“The acquisition of the KFC stores represents more than just an opportunity to enlarge ThaiBev’s food business. KFC’s extensive network in Thailand will give the group direct access to multiple customer touch points across the country, enabling us to understand trends and stay at the forefront of the industry. This is essential for sustainable growth over the long term,’’ said Nongnuch Buranasetkul, a senior vice president with Thai Beverage.

The QSR of Asia Co., a subsidiary of Thai Beverage, will be the firm administering the chain of KFC restaurants. Nongnuch said QSR’s expertise in restaurant management would help KFC regain its momentum after sales in Thailand slipped last year.

Thai Beverage has 131 subsidiaries, including 18 distilleries, three breweries, and 11 non-alcoholic beverage production facilities in Thailand. The group also has an extensive distribution network covering 400,000 points of sale in the country. In addition, ThaiBeverage has a presence in over 90 countries.

The company has been slowly shifting away from alcohol products and into wider varieties of food as the Thai government has placed limits on alcohol advertising and has been waging campaigns to discourage drinking.

The Bangkok Post newspaper reported that thecompany’s long-term objective is to generate 50 percent of its revenue from overseas and non-alcoholic beveragesby 2020. That’s expected to drive more deals in the region.