TTWMB faces a brave new world

Facing the gradual liberalization of Taiwan's NT$80 billion alcohol market, the 99-year old Taiwan Tobacco & Wine Monopoly Bureau (TTWMB, 菸酒公賣局) is rapidly discovering the value of marketing.

Until 1998, the bureau had no marketing budget. The reason was simple, a TTWMB official explained, "We had a monopoly, there was no need for us to market our products." However, as its market share declined with the gradual opening of Taiwan's alcohol market, the TTWMB began to aggressively promote its products.

Since 1998, the bureau has spent approximately NT$600 million per year on advertising and promotion, according to Secretary General Wey Yau-shiuan (魏垚萱).

The bureau has invested some of that money in a successful advertising campaign featuring rock star Wu Bai (伍佰). The campaign, which cost only NT$46 million, increased beer sales by more than NT$800 million, a monopoly official said earlier this year.

The TTWMB has also arranged a wide variety of activities to promote its products, including building a beer can `Christmas tree' in the Hsimending (西門町) shopping district and issuing a special limited edition year 2000 beer.

According to an industry source who requested anonymity, the bureau's expenditure on TV advertisements ranks fourth among companies selling beer, behind Kirin, Heineken, and Asahi.

"Our market share is shrinking. If we do not start marketing our products, we will be unable to compete with other companies," said a bureau official.

After the government lifted its import ban on foreign wine and tobacco products in 1987, the bureau's share of the beer market gradually fell, hitting a low of 70 percent in 1998. However, since the monopoly started to promote its beer, its share of the market has climbed to 82 percent, the highest this decade, said an official.

Bureua statistics show the total value of Taiwan's alcoholic beverages market is NT$80 billion. Beer accounts for the largest part, NT$37.4 billion in 1998 -- NT$25.6 billion from TTWMB's products and NT$11.8 billion from imported beer. Other alcoholic products together totaled NT$46.7 billion -- NT$32.7 billion from the bureau and NT$14 billion from imports.

Since 1987, a tariff of NT$30 per liter has been charged on imported beer. Once the market is fully liberalized, all beers -- including those produced by the bureau -- will be taxed at NT$26 per liter. Currently, no tariff is charged on the TTWMB's alcoholic beverages. Instead, the monopoly gives all its profits to the government. In 1998, the government received NT$60 billion from the bureau's NT$80 billion sales.

Pending changes in the law, the bureau remains the only organization permitted to make alcoholic beverages in Taiwan. It still has a great advantage over imported alcohol products, especially in the beer market, officials claim.

"Freshness is very important. Because our beer is produced here, we have the freshest beer," said Chang Lang-shou (張良壽), director of the production division.

Chang said that one of the TTWMB's missions now is to change its product image from a local to an international brand. The bureau is considering a joint venture with a small US brewer to produce an `American-style' beer, he said.

When asked how the bureau is going to compete in future, Director General Shih Yen-shiang (施顏祥), said it will focus more energy on marketing, creating new products and providing better service.