Ichitan banking on 'three N' strategy

Ichitan banking on 'three N' strategy

Ichitan Group president Tan Passakornnatee is optimistic about the ready-to-drink market's growth this year.
Ichitan Group president Tan Passakornnatee is optimistic about the ready-to-drink market's growth this year.

Ichitan Group Plc, the producer of Ichitan ready-to-drink green tea and Yen Yen beverage, has diversified into the trading business to reduce risk from the "red ocean" green tea market.

The company is expanding under a "three N" strategy: new products, new markets and new business, both domestic and foreign, said Tan Passakornnatee, the company's president.

"We've adopted this new business model for months, and it works," Mr Tan said. "Ichitan will no longer market only beverages, but also have a diversified product portfolio. This move is aimed at boosting our group sales to 10 billion baht in the near future."

The company is ready to invest in potential new businesses that have promising growth, he said.

Mr Tan said the company will launch a new business soon, focusing on trading businesses for daily goods in the mass market.

"There are new businesses that we've never done before," he said. "They will require a relatively small investment but generate a fast return on profit. We will no longer invest heavily in businesses with high risks as in the past.

"New trading businesses will expand both into the local market and abroad via our overseas networks in Indonesia, Cambodia, Vietnam, Myanmar and China."

Mr Tan said the company is seeking a business partner to expand its businesses in China.

In an initial step, the company plans to export Ichitan Wang to China this month via the JD.com channel to test the market's response before expanding to market via the offline channel there.

In a bid to build brand awareness among Chinese customers, the company will market its herbal drink in popular tourist destinations and through the modern trade channel.

"Apart from the product, the distribution channel in China is also challenging," Mr Tan said.

For Indonesia, brand awareness of Ichitan products has significantly improved after the company entered the Indonesian market via a joint venture with a local partner a few years ago.

"We will continue to promote our products, particularly our Thai milk tea and Ichitan coffee, and extend to more traditional trade channels," Mr Tan said. "With these strategies, we expect our business in Indonesia to gain a profit next year."

Domestically, the company has stopped marketing Bireley's juice and T247 energy drink and reduced the number of product items that have a poor performance in order to efficiently manage the portfolio.

Only three drinks brands remain in the company's product portfolio: Ichitan, Yen Yen and Tsuoka premium green tea.

In addition, the company has slashed its marketing budget and will employ tailor-made campaigns to reach specific customer groups.

According to Mr Tan, ready-to-drink green tea in Thailand has a better outlook after a hiccup over the past 5-6 years.

"The impact of the new excise tax on sugary content in ready-to-drink green tea has already passed," he said. "We have only one green tea item that contains sugar content of 10%."

Thailand's ready-to-drink green tea market was valued at 6.43 billion baht in the first half of this year, up 5.5% from the same period last year.

Oishi controlled a 44.6% share of the market, followed by Ichitan's 31.9%. The remainder belonged to other brands.

"Thailand's ready-to-drink market has resumed growth in the first half after a contraction averaging 10-12% over the past few years," Mr Tan said.


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