MAJOR ready-to-drink tea producer Ichitan Group has set itself an annual sales target of Bt10 billion in the Indonesian market within the next five years from all its beverage products, president and CEO Tan Passakornnatee said yesterday.
This follows its newly signed partnership with PT Sigmantara Alfindo and Mitsubishi Corp to form a joint venture, Ichitan Indonesia, to tap the Indonesian market, where the value of ready-to-drink tea is around Bt73 billion – twice as large as the market for carbonated drinks.
The parties signed the joint-venture deal in Thailand yesterday.
Under the deal, Ichitan Group has formed a partnership with PT Atri Pasifik to set up Ichitan Indonesia to manufacture, sell and market Ichitan-branded ready-to-drink tea and other beverages in Indonesia.
PT Atri Pasifik is a joint venture between PT Sigmantara Alfindo – a large conglomerate – and Japan’s Mitsubishi.
Ichitan Group will hold a 50-per-cent stake in Ichitan Indonesia, with the remainder owned by PT Atri Pasifik.
Ichitan Group and PT Atri Pasifik will each initially contribute registered capital of Bt148 million. Ichitan Indonesia will later call up a further Bt444 million from each of them when a production plant needs to be constructed.
Tan said he wanted to see Ichitan Indonesia achieve success before considering pursuing a similar presence in other Asean markets.
Ichitan Thailand expects total domestic sales of Bt7 billion this year before rising to Bt15 billion in five years, he said, denying that the move into Indonesia is due to the near-maturity of the Thai market.
The company’s home market continues to grow, and the investment in Indonesia will help it expand its market base to Indonesia, which has the largest population within Asean, he said. Ichitan sees huge potential for the Indonesian ready-to-drink tea market.
Ichitan Group brings its expertise in marketing and cutting-edge production technology to the new venture, while PT Atri Pasifik and its affiliate are one of the strongest distributors in the country, with modern and traditional trade outlets nationwide.
Mitsubishi, meanwhile, brings its own global know-how to the business.
Ichitan aims to introduce the products in Indonesia within the first quarter of next year. Within the first year, at least two flavours of tea will be launched.
At the initial stage, PT Hon Chuan Indonesia will produce such products for the company on an original-equipment manufacturing basis, while Ichitan Thailand will export products to back it up.
There will be no investment in production during the first phase. Tan said that the company would start the construction of production lines in Indonesia after it reaching sales revenue of around Bt1 billion there. This is expected to be achieved in the first year of market entry.
He added that the ready-to-drink tea market in Indonesia was in its early stage, with no single brand dominant.
The joint venture is expected to be |established within the final quarter of this year.
Ichitan’s share price on the Thai bourse yesterday closed at Bt25,75, down 2.83 per cent of the day.