Oishi, F&N Holdings enter Malaysia distribution deal

Oishi Group, a non-alcoholic-beverage unit of TCC Group, has formed its first distribution synergy with Fraser and Neave Holdings in Malaysia, which will be the distribution 

centre for Oishi ready-to-drink beverages, including green-tea products, in Malaysia, Singapore and Brunei.

The distribution contract was signed in Bangkok yesterday, less than three months after Singapore-listed Fraser and Neave, which owns 57 per cent stake in its Malaysian operation, was acquired by TCC Group in February. 

Oishi Group says the move is a significant step in fulfilling its international aspiration to expand the availability of its beverages around the world, especially in Asia, Europe and the United States. 

The potential for Oishi in Malaysia by way of F&N goes beyond beverages and into snack foods, restaurants, or even ice cream, said Ng Jui Sia, chief executive officer of F&N Holdings.

He said the company would set up its beverage facility in Kuala Lumpur to produce and can Oishi ready-to-drink green tea at a cost of Bt50 million. 

In addition to the domestic market in Malaysia, the company will expand the distribution of Oishi beverages to Singapore, Brunei and other markets in Southeast Asia.

“Both Oishi and F&N have strengths, and so we have built synergy together,” Ng said. 

He said Oishi led the ready-to-drink-tea market in Thailand with world-class production facilities. Meanwhile, F&N is Malaysia’s largest beverage distributor and manufacturer, covering 90 per cent of outlets nationwide.

“Oishi products are able to fit in with our portfolio as they are able to complement our corporate strategy to expand the range of healthy choices. They also help strengthen F&N’s tea portfolio, as we are able to leverage on Oishi to capture the market potential in the green-tea market,” Ng said.

“We want to be the prominent, No 1 tea leader in Malaysia by 2017,” he added. 

F&N Holdings now covers 72,000 retail outlets in Malaysia, 90 per cent of the total. The company has 79 distributors, 411 van routes, 5,100 vending machines, and 60,000 coolers.

F&N has a 27-per-cent market share of the beverage market in Malaysia, divided into 32 per cent of the ready-to-drink-tea market, 55 per cent market of the energy-drink market, 28 per cent of the Asian-soft-drink market, 86 per cent of the isotonic-drink market, and 28 per cent of the carbonated-soft-drink market.

F&N reported a net profit of 54.6 million ringgit (Bt537 million) on revenue of 882 million ringgit for its fiscal second quarter ended March 31. For the first six months, the beverage company registered a net profit of 111.7 million ringgit and revenue of 1.75 billion ringgit. 

Matthew Kichodhan, president of Oishi Group, said Oishi green tea available in 380-millilitre plastic bottles had been on shelves at more than 200 7-Eleven convenience stores in Malaysia since Monday. However, it will be in all 1,460 of the country’s 7-Elevens within the next three months, before expanding to other selected chains such as My News.Com, Guardian, and Watsons.

He said Oishi was currently a leader in the ready-to-drink green-tea markets in Laos and Cambodia and was increasingly popular in Myanmar.

Kichodhan said that with its new manufacturing facility in Wang Muang district, Saraburi, Oishi was able to produce more than 60 billion bottles of ready-to-drink green tea per month.

On the F&N link-up, he said: “There are tremendous synergistic opportunities between the two companies and we’re now looking at priorities.” 

 He said the company expected its exports’ contribution to total revenue would increase significantly, from about 3-4 per cent currently to between 7 and 10 per cent by the end of next year. 

Kichodhan said the green-tea market in Malaysia had quite a lot of potential. It has a population of 29 million, 44 per cent aged between 15 and 39. 

About 72 per cent of them live in urban areas, and 48 per cent of households have an average income of Bt30,000 and above. 

 

Potential for growth 

The total beverage market in Malaysia is worth Bt70 billion, and only 3 per cent of that is held by the ready-to-drink-tea market. This presents potential for growth. About 52 per cent of tea is consumed outside the home.

Oishi Group operates restaurants and bakeries. Primarily focusing on Japanese-style foods, the company’s restaurant brand names include Oishi Japanese Buffet, Oishi Express, Sabushi, Oishi Ramen, Oishi Sushi Bar, OK Suki, IN&OUT the Baker Cafe, and Char for Tea.