Brewing Tiger Beer overseas makes commercial sense, but brand remains Singaporean: Observers
The move also makes commercial sense given Singapore's high operating costs, they said.
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SINGAPORE: The decision to stop producing Tiger Beer in Singapore will not affect the brand’s reputation as a local beer, observers say, even as high operating costs make the manufacturing shift a logical commercial move.
Tiger Beer's positioning has long shifted to that of an international brand, said Associate Professor Lau Kong Cheen of the Singapore University of Social Sciences (SUSS).
“The narrative that it is Singapore born and brewed is secondary,” he said.
Asia Pacific Breweries Singapore, which produces Tiger Beer and is owned by Heineken, may have to tweak its narrative slightly, but the beer's claim to quality does not depend on where it is brewed, Assoc Prof Lau added.
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He contrasted this with Fiji Water, which builds location into its marketing as a core authenticity claim. Tiger Beer, by contrast, stakes its reputation on accolades from global competitions.
“The brand’s strength lies in its global acclaim rather than its identity as a Singapore brand or Singapore-brewed beer,” said Assoc Prof Lau, who heads the marketing programme at the SUSS business school.
Shifting production out of Singapore does not diminish the beer's heritage and history, and the place of manufacture has little bearing on how consumers perceive it, he added.
Heineken announced on Tuesday that it will scale down brewing operations at its Tuas facility. All production of Tiger Beer and other products will be moved to breweries in Malaysia and Vietnam, while the site will be redeveloped to support regional logistics and innovation, including a pilot brewery.
Mr Yeo Eng Kuang, co-founder and brewmaster of The 1925 Brewing Co, said he does not expect the brand to be affected.
“Tiger Beer has already shifted its branding a couple of years back, instead of being brewed in Singapore, it has been changed to born in Singapore,” he said.
The company can still champion it as such, even after manufacturing in Singapore stops. “Just because it’s a local brand doesn’t mean it has to be made in Singapore.”
“IT MAKES PERFECT SENSE”
The commercial logic is hard to argue with. Rental, manpower and raw materials are all expensive in Singapore, said Mr Francis Khoo, managing director of Little Island Brewing Co.
Breweries also face costs consumers may be unaware of. Singapore charges an excise duty of S$60 per litre of alcohol, and producers must also pay a licence fee to brew. His company pays more than S$8,000 (US$6,200) a year for its licence alone, and larger breweries would have to pay more.
“It’s very expensive to operate a brewery in Singapore,” he said.
Mr Yeo agreed. “The fact is, even if they make it overseas and they bring it back to Singapore, it might still be cheaper,” he said.
With Malaysia just next door and significantly lower costs in both Malaysia and Vietnam, the decision was inevitable. “It makes perfect sense, unfortunately.”
COUNTING THE COST
Heineken has likely been planning this for some time, said Assoc Prof Lau.
The company has been expanding capacity at its regional breweries, and the facility in Vietnam can produce nearly five times more beer than the one in Singapore. The management may have concluded that local manufacturing is no longer commercially viable, he said.
Rising labour and operating costs, coupled with competition from lower-cost regional brewers, make large-scale brewing in Singapore difficult to sustain, said Mr Nathanael Lim, Asia Pacific insight manager for beverages at Euromonitor.
Imports from China and Malaysia in particular have intensified the pressure on margins, he added.
TASTE DIFFERENCES?
Besides branding and costs, some consumers may wonder if Tiger Beer brewed in Malaysia and Vietnam will taste any different. The short answer, according to those in the industry, is probably not.
“They have a standard recipe and (operating procedure) for their product,” said Mr Khoo of Little Island Brewing Co.
Mr Yeo of The 1925 Brewing Co said beer generally tastes best close to where it is brewed, fresher and less exposed to heat or handling in transit, but acknowledged that commercial brewing is engineered to overcome that.
“The beer is being made to travel … basically it’s like McDonald’s, you do it in Malaysia, you do it in Vietnam, it’s going to taste the same. It’s built like that.”
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