PROSPECTUS THAI BEVERAGE PUBLIC COMPANY LIMITED ...

Part 2 Issuing CompanyThai Beverage Public Company Limited1.1.2 The Company is engaged in a highly competitive business. Adverse actions by competitorsor other changes in the competitive environment in which the Company operates couldhave a material adverse effect on its business, financial condition, results of operationsand prospects.The alcoholic beverages business in Thailand is highly competitive. The Company competesmainly on the basis of brand image, price, customer service, distribution network and product quality.The Company has to compete primarily with producers and distributors of other brands of alcoholicbeverages.Beer products of the Company have to compete primarily with the portfolio of beer brandsproduced by Boon Rawd Brewery Co., in particular with its Leo Beer brand, which is also aneconomy beer and which competes with Chang Beer of the Company. As for spirits products, theCompany has to compete with potential new producers of white spirits and brown spirits, localproducers and illegal producers as well as imported brands of international producers such as 100Pipers.In 2007, beer products of the Company had approximately 46.7% market share of the overalldomestic beer market. The Company believes that its beer market share decreased slightly in 2007compared to 2006 due to a decrease in the sales of Chang Beer, which has higher alcohol content thanthose of competitors. In 2005, the Company’s spirits products had approximately 74.0% market shareof the overall domestic spirits market. Although the Company has no information on the domesticmarket share of spirits products in 2006 and 2007, the Company believes that its spirits market sharehas not materially changed from 2005.A change in the number of competitors, the level of marketing or investment undertaken bycompetitors, competitors’ pricing policies, an increase in the volume of cheap competing productsimported into Thailand, the introduction of new competitive products or brands to the market, or otherchanges in the competitive environment in markets could cause a reduction in the consumption ofproducts of the Company and in its market share, and could lead to a decline in its revenue and anincrease in its marketing or investment expenditures, which could have a material adverse effect on itsbusiness, financial condition, results of operations and prospects.1.1.3 An increase in taxes or a change in the tax calculation method may affect the demand forproducts of the Company and could adversely affect its business, financial condition,results of operations and prospects.The Company must pay excise taxes for the alcoholic beverages (Spirits Tax), municipaltaxes, contributions to Health Promotion Fund, contributions to the Thai Public Broadcasting Service(“Thai PBS”) and excise tax for soda water products. These payments had been recorded as the costof sells in the amount of Baht 47,065.0 million in 2005, Baht 49,143.0 million in 2006, Baht 50,558.1million in 2007 and Baht 25,565.3 million in the six-month period ended June 30, 2008, representing72.2%, 70.9%, 71.3% and 68.9% of the Company’s cost of sells, respectively. The excise taxes forbeer and spirits are calculated based on the greater of (A) a Baht per liter of pure alcohol quantity; and(B) a percentage of the greater of the ex-factory price announced by the Excise Department and theactual ex-factory price for the product. An increase in taxes rate or a change in the tax calculationmethod may cause the Company to increase the price of the products, resulting in lower volume ofconsumption and, therefore, lower revenue from sales. In addition, the Company may have to whollyor partly bear the cost arising from the increased taxes. Each of these scenarios could adversely affectthe business, financial condition, results of operations and prospects of the Company.Part 2 Page 3