Oishi scraps plans for new bottling plant in Pathum Thani

The move was decided after it was determined the government's recent decision to charge excise tax on coffee and tea products would seriously hurt its business.

Tan Passakornatee, CEO of the group, which manufactures Oishi bottled green tea and coffee, claimed sales of the products were expected to plunge 30-40 per cent after the new tax was implemented.

"With such a significant drop in sales, we won't have to build a new factory, because our existing facilities in both the Amata Nakorn Industrial Estate and Navanakorn will be able to meet demand very well," Tan said.

The government announced plans recently to levy up to 20-per-cent excise duty on bottled, canned and packaged beverages, including coffee and tea.

The move is in line with the government's policy of boosting its tax collection to offset a shortfall in revenue.

"Our plan to set up a third green-tea factory, to be opened in the next 18 months, was in preparation for sales growth in our green-tea products, forecast at 20 per cent per annum," he said.

Construction of the new factory, which would have had monthly production capacity of 20 million bottles, had been awaiting shareholder approval at its extraordinary meeting next month.

The company's two existing factories in Amata Nakorn and in Navanakorn have a combined production capacity of 50 million bottles of green tea a month.

Tan said cancelling the new factory would hurt more than 10,000 people in supporting factories that supplied their products to Oishi, including plastic bottles, plastic bottle caps and labels.

Contract farmers in Chiang Rai who plant green tea and supply the leaves to Oishi would also be affected.

"We had decided on a new |factory because we were confident |in the growth potential of our green-tea products, but this new tax |measure will seriously affect |Oishi and its supporting manufacturers.

"We [Oishi] expect to increase the retail price of our bottled products Bt4 or Bt5 after it takes effect, to help compensate for a 30-40 per cent drop in sales," Tan said.

He said bottled drinks contributed 60 per cent of Oishi's revenue, while the rest came from its Japanese restaurants.

"We need to revise our strategy to boost the contribution of |our Japanese restaurants and offset the decline in green tea. But it |will take three to five years for |this offset to be completed and |the damage minimised," he said.