CARABAO Group Plc, the listed manufacturer of the Carabao energy drink brand, eyes China and Britain as strategic markets for global expansion under its “World-class Product, World-class Brand” vision.
Major shareholders of the group plan to privately invest up to Bt14 billion within the next four years to develop the business fundamentals for the Carabao drinks in China, including the possible establishment of the company’s own manufacturing facilities there.
Sathien Setthasit, chairman of Carabao Group Plc, said that group had spent more than Bt2 billion over the past six months to lay the foundations for Carabao’s entry into China.
This includes opening branch offices in 26 counties throughout the country, as well as appointing between 500 and 600 distributors for the company’s energy drink products. The group has about 1,000 employees in China alone.
Sathien said that the company aimed to sell 300 million cans of Carabao in China this year and up to one billion cans next year. The brand comes with a range of flavours.
“We will this year appoint a local manufacturer in China to produce the Carabao energy drinks for distribution in the China market under an original equipment manufacturing (OEM) contract. We, however, plan to set up our own factory in China when total sales volume reaches 500 million cans a year,” he said.
“We believe in the great quality and taste of our Carabao energy drink products. What we have been doing is to make Chinese consumers aware of the drink and try our products. They then will have a real experience with our energy drinks.”
Sathien said that between Bt3 billion and Bt4 billion would be allocated for the establishment of the group's own factory in China, which would have a production capacity of about one billion cans a year.
On the UK market, Sathien said that the group was on the right track in having penetrated that market and, by 2020, the business performance in the country would turn a profit.
He said that in the UK, more than 80 per cent of the distribution of fast-moving consumer goods is in the hands of the major chain stores, which have more than 20,000 points of sales outlets throughout the country.
“We have spent 30 million pounds for the three-year sponsorship of the Chelsea football club, and 18 million pounds for three-year sponsorship of the English Football League (EFL),” said Sathien. “What we are doing is to convince all retail store operators as well as individual consumers that we are serious about penetrating the UK market, and to be there for the long term.”
He said the company is negotiating with Tesco, the largest grocery store chain in the UK, for it to sell Carabao. The negotiations are expected to be concluded by the end of this year. Meanwhile, the company will start selling its energy drinks in the Sainbury's chain in April. Sainbury's operates about 1,500 stores in the UK.
Sathien said the Thai market alone was no longer sufficient and that the company needed to open up opportunities abroad for the brand.
“We saw a drop in the overall energy drink market in Thailand last year, while the Carabao energy drinks witnessed a slight growth of only 0.3 per cent,” he said.
Sathien said that for this year, the group expected sales growth for the Carabao drink in Thailand at about 10 per cent, adding that growth in international sales would be no less than 30 per cent.
The Carabao drinks range is now exported to more than 20 markets.
The group has a local manufacturer in the Netherlands, which produces the product under an OEM contract, for supply to the UK and other potential markets in Europe.
“We will start selling the Carabao energy drinks in France in June this year. We plan to launch the product in other potential markets in Europe, including Germany and Scandinavia,” said Sathien.
He said the contribution from exports had increased significantly over the past three years, from only 20 per cent to about 45 per cent currently. Exports would increase to 55 per cent of the company’s total sales by the end of this year.
Carabao Group expected its total sales revenue to reach about Bt15 billion this year, up from the Bt12 billion earned last year.