Thursday, April 23, 2009

Is Yeo Hiap Seng getting Coca-cola franchise or otherwise?

By Biz Times

Yeo Hiap Seng plans to ride on the opportunity in the isotonic and carbonated drinks, while defending its strong lead in the non-carbonated Asian drinks segment

BEVERAGE maker Yeo Hiap Seng (Malaysia) Bhd (4642) said the "separation" next year between Coca-Cola and Fraser & Neave Holdings Bhd (F&N), a rival, will lead to a major industry shake-up.

"It will usher in a new paradigm, it's a wake-up call to many of us. There'll be new winners and losers," said Owen Ow, managing director of the homegrown company famous for its Yeo's brand of drinks and canned food.

He declined to say if it is eyeing the Coca-Cola franchise once the soft drink giant's distribution contract with F&N ends early next year, nor will he speculate if the deal is up for bid.

"This is extremely price sensitive information, we can't comment. It's hard to say if the franchise will be opened for bidding, the business models are changing everyday now," Ow told reporters after a shareholder meeting in Subang Jaya yesterday.
"We manage our own brands, our own destiny."

The company hopes to deliver better earnings this year, after it swung back to a net profit of RM2.2 million last year, from a net loss of RM13.6 million in 2007.

F&N announced in February that its contract with The Coca-Cola Company, which allows it to distribute Coke and Sprite here, will expire next January after a 74-year union. The development was a major surprise and has caused a stir among the industry.

To help make up the loss, F&N said it has 50 new ready-to-drink products that it can launch by next year, aiming straight at the Asian soft drinks and tea segments - a stronghold of Yeo's.

Yeo's plans to ride on the opportunity in the isotonic and carbonated drinks, while defending its strong lead in the non-carbonated Asian drinks segment. Yeo's is well ahead of competitors in soya drink, tea, and "cooling" beverage segments, Ow said.

"We have an isotonic drink in Singapore under the brand 'H2O', which has a 20 per cent market there. It's an opportunity to address this market once F&N can no longer leverage on a big brand like Coca-Cola," Ow said. F&N's 100PLUS is almost synonymous with isotonic drink.

Yeo's will also revive its carbonated drinks segment under little-known brand "Freedom", which has a range of cola and fruit-flavoured drinks like orange, sarsi and pomelo.

Apart from beverage, it wants to grab a bigger share of the RM200 million market for sauces, of which it has a negligible presence. There is also a plan to enter the halal food market in Indonesia, Ow said, after it successfully ventured into that country.

*With F&N no longer have the rights to distribute Coca cola and sprite, someone has to take up the franchise. If not, we wont have Coca cola drinks in Malaysia. So let's do some analysis on which company would be able to get the franchise? Yeo Hiap Seng is hinting something? Perhaps, you guys have to do some homework and buy the share of Yeo Hiap? hehe..