ICHI: Non-Drink Products to Reduce Business Risk

The green-tea market was at its peak with the market valued as high as 15 billion baht during 2014-2016, however, since 2017 market value slowly declined to 13 billion baht then down to 11 billion baht in 2018 before up to 12 billion baht last year, becoming a red ocean business where many firms intensely compete but the peak has already passed.  

 

As the market for green-tea market in Thailand is gradually turning saturated, the well-known ready-to-drink green tea beverage producer like Ichitan Group Public Company Limited (ICHI) of Mr.Tan Passakornnatee is set to step into the non-drink business in order to increase the opportunities for business growth.   

 

The Covid-19 pandemic affected ICHI’s market cap. to drop by 12.71% for the first half of this year. ICHI had once recorded a profit of more than billions baht per year, but in the past few years, the profit dropped to 300-400 million baht.  

 

ICHI previously introduced new products apart from tea (non-tea beverages) such as herbal drink, juice drink and milk tablet OneMorr. And recently launched a vitamin water drink to the market to diversify its products.

 

However, products like this have many competitors that dominate the market. In the end, it was inevitable trade war or price war. In order to compete in a highly competitive market, aggressive promotions to attract as many customers as possible are requested, which will eventually return to the cycle of high sales volume but low profits, allowing limited growth.

 

The demand for such products is still growing, analysts expect the vitamin water drink market to value more than 5,500 million baht in 2020 and will increase to 6,000-7,000 million baht next year aligned with the healthy trend, but once demand slows down, it will end up like the green-tea market.

 

By the way, ICHI has learned its previous lesson, to ensure sustainable growth, the Company has to boost the non-drink business stronger, but we have yet to know if it will succeed or not.  

 

The rumor has said that ICHI is negotiating with a few health-related product companies for possible joint investment, expecting to come in agreement by 2021. Moreover, ICHI targets to raise the sales contribution of non-drinks to 50% of total revenue by 2025.

 

The movement to reduce business risk by diversifying the beverage product choice.

 

Let’s keep eyes on this new direction of ICHI whether it could reinforce the Company’s growth.