“Ichitan” reveals strategies for the second half of the year, which will drive revenue growth. Domestic products outperform the market, with maximum production capacity resulting in lower cost per bottle and continued penetration of the CSD market. The OEM business closes 2 new deals, while Ichitan Indonesia doubles in size and expands into new markets in the Philippines with the addition of more than 1,300 sales channels to support a long-term profit base.
Mr. Tan Passakornnatee, CEO of Ichitan Group Public Company Limited (ICHI), reveals that the business outlook for the first half of the year is strong. Revenue from sales increased by 10% to 3,058.8 million baht, with a net profit of 256.5 million Baht, or an 8.4% net profit margin; with an expected continuous increase in the second half of the year due to the strength of traditional trade sales channels; and being the No.1 popular brand for 3 consecutive years and reiterates its “3N” business strategy (New Product, New Market, New Business) to achieve sales by 6,500 million Baht, or 24%, over the previous year.
The New Product strategy will generate revenue from new products launched with YenYen herbal tea, plum flavored, with the aim of becoming the top 3 SKU in the RTD Tea market. ICHITAN No Sugar, a healthy green tea drink with 0% sugar and 0 calories, in response to the trending health care needs of the consumer. And the product highlight for the non-tea category; “TANSANSU” carbonated beverages (CSD) is set to launch in October with an annual sales target of 500 million baht to penetrate the youth market. This product founded on the idea of K-Pop cool carbonated drinks will compete for a market share value of over 31 billion baht. And also Ichitan alkaline water PH Plus 8.5 + CBD, combines the benefits of alkaline and CBD, a natural hemp extract.
The New Market Strategy; In the overall export market, intensive campaigns are being run to welcome countries reopening after the pandemic situation, particularly CLMV, which is expected to improve in the second half of the year. While the success of the Ichitan Indonesia joint venture continues to send positive signals, with a realized profit share from joint venture investments of 44.6 million Baht, an increase of 100.9% from the same period last year. As a result of the business plan adjustment and the success of uniquely Thai products. A plan to launch new products to penetrate the Thai tea and cold brew coffee markets has been established. The next big step for Ichitan Indonesia is to expand Thai tea to a new market in the Philippines through more than 1,300 Alfamart branches under SM Group—the Philippines’ largest supermarket chain—and Rebisco Philippines, which is expected to significantly return a profit to Ichitan Group with a set target of around 75 million Baht in profit sharing in 2022.
“Nestle Ichitan Ice Cream, Green Tea Honey Lemon.” is still going strong thanks to the collaboration between Ichitan and Nestle, achieving a better response than expected, and is ready to expand further with “Nestle Green Tea Shizuoka Ice Cream” to create more awareness in new markets.
For OEM business, the latest deal closures with two new customers, Acer Predator Shot Vitamin Drink by Acer Computer Co., Ltd. and Thaitanium Power Energy Drink, will soon be launched in the market, supporting a higher production capacity rate in the second half of the year, resulting in greater economies of scale and an increased production capacity rate by nearly 8%, which helps reduce the cost per bottle.
In the 2nd quarter of 2022, Ichitan continues to grow compared to the 1st quarter in both revenue and profit, owing to seasonal factors of the high season. Sales revenue hit 1,616.5 million Baht, an increase of 8.3% from the same period last year (YoY) and 12.1% compared to the previous quarter (QoQ). Domestic sales increased 11.4% with a net profit of 152.5 million Baht, a decrease of 7.1% from the same period last year (YoY), but an increase of 46.8% from the previous quarter (QoQ), resulting in a net profit margin of 9.4%, indicating continued recovery despite higher raw material and oil prices in the second quarter. The cost of distribution is reduced as a result of adjusting in management strategy to improve efficiency.
Meanwhile, Nielsen data show that the ready-to-drink tea market grew by 20.4% in the first half of 2022 compared to the same period last year, with a market value of 6,865 million Baht, outpacing the overall beverage category.
Symbol: ICHI