Ichitan Group Public Company Limited (ICHI) reveals its fiscal year 2020 with 515.5 million baht profit, a 26.5% growth, and sales revenue of 5,099.3 million baht. COVID-19 situation prompted Ichitan to accelerate strategy for ready-to-drink tea focusing on traditional trade market expansion.
For the trending vitamin drinks the goal was set to become market leader with target sales of 1,000 million baht within the first year. This April, Ichitan is ready to launch “Ichitan Green Lab“, a terpene-infused beverage with distinctive features that help with relaxation and stress relief.
All strategies aim to support 2021 target revenue at 6,200 million baht, an increase of 22% from previous year. The company announced to pay dividends at 0.50 baht per share on May 21, 2021.
Mr. Tan Passakornnatee, President & CEO of ICHI disclosed the operating results for year 2020 (ending December 31, 2020) with a net profit of 515.5 million baht, 26.5% increase from the previous year at 407.5 million baht, gross profit margin of 19.7% which increased from the previous year at 18.6%, net profit margin of 10.1% which increased from the previous year by 7.6%, sales revenue of 5,099.3 million baht which decreased from 5,334.2 million baht in the previous year due to the impacts of the COVID-19 pandemic situation and the city lockdown.
The Board of Directors’ Meeting approved payment of dividends from net profit and retained earnings at the rate of 0.50 baht per share in cash. The list of eligible persons to receive dividends (Record Date) is set to be announced on May 7, 2021 and dividend payment on May 21, 2021
ICHI’s turnover in 2020 resulted from the success of market penetration in the alkaline and vitamin beverage market launched in April. Currently, there are three product lines: Ichitan PH Plus 8.5, Ichitan C200 and Ichitan VittCC which now rank top 5 in the industry.
First year target sales for alkaline and vitamin drinks category were set at 1,000 million baht with aim to become the market leader in response to the vitamin-infused beverage market trend resulting in a 106% growth or 2,195 million baht market size at the end of 2020 ranking the highest growth segment in the whole beverage market.
Despite slow sales of ready-to-drink tea segment in the past year resulted from COVID-19 pandemic situation there was a growth in sales volume of small-bottle sized drinks priced at 10 and 15 baht in line with purchasing power of consumers that supported utilization rate of production capacity and reflected on good profitability
While the premium tea market, targeting office workers as the main customer base, declined due to the Work from Home approach that limited consumers traveling. However, Shizuoka tea still ranks the number one in market share and is ready to expand its growth in order to maintain its champion position in the premium tea market.
Another key for success in dominating sales was the adjustment of distribution channel strategy to focus on traditional trade or small retail shops nationwide. The city lockdowns positively benefited small retail shops that provide consumers a more comfortable feeling to shop in open space than closed space, resulting in around 47% sales proportion compared to 41% in previous year.
Engagement marketing campaigns designed for each consumers’ segment and intensive domestic market penetration enabled ICHI to expand its customer base and have good control of marketing costs.
There is also beverage production manufacturing or OEM business, with distinctive modern machinery in the Aseptic Cold Filling system and expertise in production management under ICHI’s world-class manufacturing standards that can produce a variety of drinks.
At present, ICHI has signed an MOU with a new domestic customer to produce premium vitamin water products for sale throughout the country in April, and with a major customer from abroad, Asahi (Asahi Holding Southeast Asia SDN.BHD.) – a leading brand from Japan, to start production and create revenue recognition for ICHI in the second quarter as well.
In addition, an associated company, Ichitan Indonesia, continued its sales growth and was the only brand in Indonesia tea drink segment in 2020 that achieved 11.8% growth from Thai products such as Thai tea, Thai coffee and mango milk. The ability to expand distribution channels to traditional trade, covering more areas to reach local consumers, resulted in continuously recognized profit sharing in 2020 at 28 million baht.
For 2021 goals, ICHI stated that it will continue to launch new products to respond to consumer behaviors and trends, such as plans to commercialize use of hemp in beverage business. Currently ICHI has already applied for a production license (not for planting) and expected to receive a grant soon which will enable Icitan to be ready in all aspects to immediately enter the CBD beverage market as soon as legal support is complete.
ICHI asserted that it is ready to launch in April a new drink “Ichitan Green Lab“, a terpene-infused beverage with distinctive features that help with relaxation and relieve stress. With the growing trend of the vitamin beverage market and plans to launch new products in existing product categories the revenue target for this year is set at 6,200 million baht or 22% growth.