High transport costs hinder export of drinking water
High transport costs hinder export of drinking water
Lao Brewery Co Ltd will focus its efforts on protecting its drinking water market rather than possible exports to the Middle East market, according to a top company official.
“We have studied the possibility of selling drinking water to the Middle East but one of the major obstacles is the cost of transport,” the company's managing director Mr Kissana Vongsay said in an interview with Vientiane Timesrecently.
He made the comment in response to observations from Lao business operators who have visited Kuwait and other Middle East nations recently. They said one of the products these countries had expressed interest in was Lao-produced drinking water. Drinking water in the Middle East is very costly because of the lack of fresh water in that part of the world.
Laos has plenty of rivers that provide a cheap raw material for the production of drinking water. One of the brands in Laos is Tigerhead, which won gold medals from Belgium in 2003, 2006 and 2010. This has inspired confidence in the brand and could enable Laos to export the product to Middle East countries.
Mr Kissana said the water exporting business was fraught with difficulty due to the high cost of transport, and the fact that shipping heavy goods was not as easy as moving goods of lighter weight. The transport cost would therefore make the price of Lao drinking water uncompetitive.
He also admitted that another challenge for the company in selling drinking water to the Middle East market was their lack of experience. He pointed out that other companies such as the makers of Evian have years of experience in the export market.
Mr Kissana said the Lao Brewery Company would focus its efforts on popularising its beverage products in other countries before considering exports to markets further afield such as the Middle East.
He said that once the brand had become established, the brand name and production licence could be sold to companies in other countries so they could manufacture products for the overseas market, adding that this would save on transport costs.
Many drinking water and soft drink brand names such as Pepsi and Coca Cola have had success with selling their production licence. These companies do not export products from their base country because the cost of transport is prohibitively expensive and it's better to seek local partners to produce goods for the local market.
Mr Kissana said the focus of the company in the next few years was to protect its domestic market, adding that opening up the Lao drinking water and beer market to other countries would pose a big challenge for the Lao Brewery Company.
However, he was optimistic that despite tougher competition, the company would continue to grow.
vientiane times
