Ichitan still bullish on sales despite cost pressures
The green tea producer Ichitan Group remains bullish on its sales prospects despite growing pressure from rising production costs caused by the Russia-Ukraine war.
Tan Passakornnatee, the group's chief executive, said high oil prices have yet to affect much of the company's operation costs, with the group having signed a six-month contract with suppliers that is due to end in June.
"If the conflict lasts until June, we may start feeling the pinch in the third quarter of this year," said Mr Tan. "But we believe we are able to cope with such difficulties through the business strategies we have already prepared both for overseas and domestic operations this year. We will keep on growing our sales as expected."
According to Mr Tan, in line with higher operation costs, the company has already increased the wholesale price of its beverages by 2 baht per case.
Tanapan Khongnuntha, the company's executive vice-president of beverage business, said the company expects to increase sales by 24% this year to 6.5 billion baht this year. Of the total sales, 78% will stem from the beverage business in the domestic market, and the remaining from overseas operations.
Mr Tanapan said the company will achieve its goal via the "3 Ns": new products; new markets such as the Middle East, Malaysia, Singapore and Brunei; and new businesses.
The firm plans to launch new beverages with cannabis ingredients and carbonated drinks, and resume sales of its Bailey orange drink next month. It also plans to collaborate with an unnamed global food firm to launch co-branded products in May.
Moreover, it is about to sign an original equipment manufacturer contract with two new customers, he said.
Mr Tan said the company will continue to focus on expanding its ready-to-drink tea via traditional trade because the consumption of the beverage through this route is still growing when compared to newer trade channels.
Due to the Covid-19 outbreaks, consumers have shifted to buying products via traditional outlets adjacent to their homes rather than going to modern retail stores, he said.
According to Mr Tan, the recent investment in Predictive Co, a data intelligence service provider, will also help strengthen the firm's business.
In January the group announced it would invest in Predictive Co by buying 25% of the shares for 122.6 million baht. This was intended to support marketing in the digital era using bid data as the key factor to drive business through marketing, in terms of consumer data analytics through artificial intelligence.
"Despite the hardest-ever time for the business due to prolonged Covid-19 outbreaks, the overall ready-to-drink tea beverage market continues to grow both in value and volume against the contractions in other business categories," said Mr Tan. "Our ready-to-drink tea in January this year also grew by 28.65% over the same period last year, and growth momentum is also anticipated in February. It is fortunate that our rising sales are helping to offset our operating costs."