Malaysia's Nonalcoholic Beverage Market

Source: CIMB Research

It is exciting to know that Coca Cola company want to invest and expand their production in Malaysia. Well, it is a good sign that the local F&B industry has a bright future due to growing population, rising middle class income, a lot of untapped 'territory' looking at low beverage consumption per capita in comparison with regional market. So, theres a tremendous growth opportunity for local F&B players.

KO think that ..

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Growth in Malaysia's nonalcoholic beverage market has been relatively slow at between 4 and 6 percent over the last five years, compared to double-digit growth in some other regional markets. He attributed this to a lack of aggressive competition and insufficient diversity in the product range."

I couldn't agree more. I'm not sure regional market but in Japan, there are a lot of product variates in the market. The leader of course KO, Suntory, Kirin and Sapporo..just to name a few.

I do hope Permanis will launch more new products in the market. Since they have good relationship with PepsiCo and Suntory, i think there a lot of new brand product opportunities that could be explore for Malaysian taste.

I really like the new Permanis management compare to many years ago as now they have more clearer guideline in which market they want to be in. The management already mentioned that CIH want to see contribution from non-soda market, like juices and healthy drink by more than 50%.

Looking at PepsiCo and Suntory product lines, i think it is possible to achieve that vision in next few years. Since production line and warehouse is expanding, i hope they will introduce more products from suntory like DAKARA (protien water, vitamin water etc) and C.C. Lemon. Being a health conscious, I really enjoys Dakara..and Boss of course when i was in Japan....Oh, and starbuck too. :p

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Coca-Cola Investing $302M In Malaysia

By Eileen Ng, Associated Press Writer
Manufacturing.Net - March 16, 2010

NILAI, Malaysia (AP) -- Coca-Cola said Tuesday it will build a new bottling plant in Malaysia and invest 1 billion ringgit ($302 million) over the next five years to boost growth in the Southeast Asian market.

The investment comes as the world's largest soft drink maker gets ready to end its franchise with a local bottler after sales remained stagnant over the years.

Coca-Cola Co. is expected to let its decades-long contract with a unit of Singapore's Fraser and Neave expire in September 2011. The contract, which covers mainly the bottling and distribution of Coca-Cola and Sprite brands, was worth 421 million ringgit ($127 million) a year.

Glenn Jordan, president of the company's Pacific Group, said in an interview with The Associated Press that a third of the 1 billion ringgit will be invested in an eco-friendly plant on a 30 acre (12 hectare) site in the southern state of Negeri Sembilan.

The rest will be plowed into sales and merchandising assets, product innovation and marketing to beef up the company's presence in Malaysia, where the annual per capita consumption of Coca-Cola is well below that of many countries in the region, he said.

The plant is expected to be operational by mid-2011, he said.

"This investment will enable us to support our core brands, Coca-Cola and Sprite, enhance our competitive edge and increase our geographic coverage," he said.

Jordan said Malaysian investors have 15 percent stake in the new bottling facility, with the Armed Forces Fund Board holding a 10 percent stake and private firm AAD Equity, led by former finance minister Daim Zainuddin, 5 percent.

The investment will directly create 600 to 800 new jobs at the bottling plant, and is expected to create between 6,000 and 8,000 jobs with local suppliers, he said.

Jordan said Coca-Cola's move to end its franchise with Fraser and Neave was an "amicable separation" as both companies have different growth strategies.

He said growth in Malaysia's nonalcoholic beverage market has been relatively slow at between 4 and 6 percent over the last five years, compared to double-digit growth in some other regional markets. He attributed this to a lack of aggressive competition and insufficient diversity in the product range.

"We are here to revolutionize the way we sell our products. We see a lot of opportunities here," Jordan said. He declined to give growth targets but said the company aims to achieve "healthy growth" and be more competitive in Malaysia.

At the groundbreaking ceremony of the plant earlier, Prime Minister Najib Razak welcomed Coca-Cola's long-term commitment to Malaysia.

"I take it as a strong signal that the world's most recognized brand is expanding in this important market and enhancing its contribution to the Malaysian market," he said.