Thursday, January 26, 2006

Healthy profits seen in green-tea drinks

Healthy profits seen in green-tea drinksThai Charoen Commercial Group (TCC) is set to take a significant stake in the country's largest green-tea producer, Oishi Group Plc, according to sources.

The deal, which is due to be announced later today, would see TCC, established by liquor tycoon Charoen Sirivadhanabhakdi, take up around a 30% stake, with the remaining being taken by other, as yet unidentified, investors.

The 55% currently held by Oishi founder Tan Passakornnatee and his family, are being sold to new investors at around 30 to 32 baht a share.

Mr Tan, the CEO of Oishi Plc, is likely to continue as a shareholder and manager.

Shares of Oishi rose 0.25 baht yesterday at 31.75 baht a piece on trade of about 15.3 million baht.

Insiders say TCC was looking to harness the potential for growth in health drinks as well as the low-margin restaurant business such as the Oishi Buffet and Oishi Grand, to be managed by Mr Charoen's hotel business, The Imperial Group.

Meanwhile, Mr Tan revealed yesterday that the company was confident in the green-tea market and planned to set aside a 500-million-baht budget for marketing in order to stimulate consumption this year despite slow growth last year.

He expected the value of the green-tea business to rise by 6-7% from last year to tap about eight billion baht, due to heavy marketing among producers.

He said last year's sales of green-tea drinks declined to about six billion baht, due to several negative factors including oil-price hikes, flooding and bird flu.

Commerce Ministry attempts to cut the retail price of 500ml of green tea to 15 baht from 20 also caused a slow down.

Mr Tan said he also expected intense competition among other producers.

Therefore, Oishi plans to expand business by opening its second green-tea factory at Amata Nakorn industrial estate in March, bringing the total monthly capacity of Oishi to 45 million bottles.

Sales this year are expected to total 4.5 billion baht, up from 3.5 billion in 2004.

Besides green tea, the company plans to spend 100 million baht to expand its food-chain business.

Source : Bangkok Post

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