Jun 4, 2013

Oishi green tea to be sold in Malaysia

Headline taken from here;

which prompted me to do some more reading.

To refresh up on related events, Thai Bev had in March 2013, ''released'' some shares of Oishi Pcl to increase free float. Thai Bev still retains 79.66%, after a net of 2564 million baht, about SGD106.8 million.
I also noticed hands from Singapore have also a small piece of the pie, with DBSV, UOB KH, Phillip Securities, Raffles nominees, HSBC (SG) nominees having some form of direct and indirect stake among the top 10 shareholders.

The latest Thaibev-FNN synergy-related news is about FNN Malaysia distributing Oishi's bottled green tea in 1460 7-Eleven stores in Malaysia.

According to Oishi, the growing bottled tea market in Malaysia is valued at 2 billion baht, green tea approximately SGD33.3 million. Ready-to-drink tea consumption per capita in Malaysia is 0.94 litres per person per year compared to Thailand's 5.8 litres. The distribution plan aims to have Oishi tea available at 3800 convenience stores and petrol stations by the end of 2013.

Personally I am unsure whether the low consumption of bottled tea in Malaysia has potential to grow, as we are talking about tea; it is just another beverage flavour, unlike beer or liquor's general appeal. I am happy that these plans are able to be achieved in a matter of a few months, which should not be of surprise as FNN Malaysia already commands the largest distribution network in Malaysia, with 27% market share of soft drinks distribution and manufacturing.

This is a right step in utilizing the reach of FNN in growing its non-alcoholic beverages segment. However it will be an uphill battle as this segment posted a net loss 1Q13 though EBITDA stayed positive. This was mainly attributed to increased advertising and promotion expenses and staff costs, largely related to the launch of new brands by Serm Suk.

A source from Standard Chartered expects the Singapore and Malaysia soft drink market to form 25% of Oishi's sales in 5 years time.

Amidst all these talk about synergy, it seems people have forgotten about 1 significant stumbling block, me included, which hit me like a kick in the nuts, as I recall now that Heineken and FNN had signed a non-compete clause which bars FNN from selling Chang beer in clubs and restaurants in Singapores, however it is free to do so in supermarkets. And I still held hope that one day all the coffeeshop uncles would be drinking Chang instead!

On the bright side, I think the clause runs for 2 years only and only covers Singapore, Papua New Guinea, Cambodia and Vietnam.

I will be waiting with bated breath for more news on the expansion of more of Thai Bev's products into ASEAN.

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