Oishi Group

8/10/2019 Oishi Group

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BI 4242

Global Strategic Management

Term Project Case Writing: OISHI Group

Submitte to: !" Pattana Boonc#oo

Group: S$nerg$

442-5178 Long Pham Duy

451-0450 Patthamawadi Sirirak

451-1930 Krongkan Boonkrd451-8887 !i "ao #hiang

452-0088 !u #hing #hang

452-5124 !uwi $ao

452-5189 Sirinthorn Konkaw

452-520% Shou &ng

452-5222 !ing 'in

452-5337 ! (ang

Section: 4%4

Semester: 2&2%%'

#o)yright o* Synrgy grou)+ Sm,tr 22005. 1


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Assumption University: School of Management

Oishi Group

Oishi Green TeaReady-To-Drink

The creator of the Oishi legend -- Tan Passakornnatee

When Oishi frst launched its operations in Laos and Cambodia, Mr. Tan, theCEO o the Oishi Group, went to create the promotional campaignpersonall. The promotional campaigns were so successul there, that some

customers e!en as"ed or his signature# $n Cambodia, when he frstlaunched his products, he decided to sell his products at a boat race, whichpeople around the countr would attend. To increase awareness, he decidedto be a sponsor or % Million baht donation. The frst promotion began on thefrst da o the e!ent, &bu one bottle '((cc get ree one bo) si*e +'( cc-but no one bought Oishi. On the second da, he decided to use anotherpromotional strateg. e used, &bu + Oishi bottles get one Oishi doll. $nThailand, to get this doll the customers needed to bu +(( baht worth oOishi green tea. e ound out later on that no one "new about green tea andOishi, as the do not ha!e Thai Tele!ision channel. When he reali*ed hismista"e, he immediatel changed his strateg again and he sold % doll withthe price /( baht and ga!e + bottle o Oishi or ree. $t was successul, as

"ids li"ed to get the doll and parents could had the drin"s. Moreo!er, thelong 0ueue o customers attracted the other prospects to tr their productstoo. 1our thousand o dolls were sold, which meant 2,((( bottles o Oishigreen tea were sold out too. On the third da o boat race, 2,((( people whohad tried the product intended to "now Oishi more and later the boughtOishi e!en when there was no premium.

Mr. Tan 3assa"ornnatee is not onl the ounder o the Oishi Group, but isalso the spirit o the Oishi Group. 4tarted with Oishi 5u6et in %777, themodern 8apanese stle restaurant, he made the Oishi brand the mostpreerred brand in Thai customers9 mind. Oishi started to produce the greentea in +((: and it became the mar"et leader in the ne)t ear. Onl ' ears

since the start up o the compan, Oishi Group had become a publiccompan on March :, +((/ and started trading in 4ET%. Oishi9s growth washigh- howe!er, will the local customers remain satisfed with Oishi9sproducts; What is the situation o the mar"et demand; ow could Oishiremain the mar"et leader position; Where should Oishi go;

1Sto/k /hang haiand



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Oishi Group

Oishi Group aimed to become the leader in ood and be!erages in 8apanesestle or better 0ualit o lie o the new generation. Tan 3assa"ornnatee,3resident and CEO o the Oishi Group, launched the frst Oishi 8apanese

5u6et restaurant branch in 5ang"o" 8apaneserestaurants and 5a"er+> Green Tea business.

When the restaurants were opened in the mar"et, its inno!ati!e concept,uni0ue stle and high 0ualit selection o dishes, imprinted the brand nameo Oishi in the Thai customers9 minds. The compan


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business and started running its own operations with the budget o 7(%million baht in!estment, with 2(% million was alread in!ested on ecember:%, +((/.$n October +((/, the production capacit o Oishi was at +:.2million bottles per months and %+.7 million HT bo)es per month.

This business helped increase the re!enue o the compan to :,+I+ million

baht, rom %,7I+ million baht in the ear +((:. The green tea achie!ed %'+J growth o re!enue or Oishi. The compan9s marginal re!enue rom greentea business increased %,%( percent and onl %' percent rom oodbusiness. Oishi Green Tea became the brand with the highest mar"et sharein Thailand9s green tea business.

=s the compan was successul in all aspects o its operation, the OishiGroup intended to e)pand its business and o6er the Thai public anopportunit to be part o this success, b being listed with the 4toc"E)change o Thailand on March :, +((/. The und generated was used or

!arious proKects o the Oishi Group and the urther e)pansion o productionand ser!ices.

Oishi 5rand

The brand is ta"en rom the 8apanese word &oishi, which means &delicious.The Oishi Group brings to Thai consumers health and delicious 8apaneseood and be!erages. The compan


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auditedD Organi*ation and en!ironment, ris" management, $normationmanagement, communication, and ollow up process.

$n the annual reports o Oishi Group, it is ound that the compan has 0uitea good internal audit sstem or good corporate go!ernance. The companalso has a polic re0uiring the sub?companies to initiate their own internal

audit sstem that is compatible with that in the compan. $t also sendsinternal auditor to chec" the sub?companies9 operation.

Employee development

$n October +((:, the compan set up Oishi Trading Center as a trainingcenter or emploees under Oishi Group rom operation le!el tomanagement le!el. Aot onl general training is pro!ided, there is alsospecifc training or each particular line o command.

Each training course ta"es ' months to % ear period, depending on theparticipants9 readiness. The participants must wor" on the Oishi Wor"boo".

The time each participant spends on their wor"boo" is around :? months.=ter fnishing the course wor", the participants must wor" on an action planrelated to content o each course. The wor"boo" will be adKusted e!er :

ears.

1or operation sta6, on the Kob training had been used. =lso, recommendationis also pro!ided rom an e)pert in each line o command as a guideline.3erormance assessment has been emploed to chec" on the progress o thetraining. Team administration ocuses on cooperation in problem sol!ing andbuilding good attitude and morale towards organi*ation. $n the past : ears,the compan alwas placed a budget o training in!estment in emploeee)pense. $n +((/, training in!estment was (.7: million baht.

Product and service feature

1. Japanese food restaurant and bakery outlet

%.%. 8apanese bu6et restaurant

Oishi 8apanese 5u6et @estaurant

The compan introduced the frst e!er 8apanese bu6et restaurant inThailand with the concept &=ll ou can eat but pa what ou ha!e let. Thebusiness is di6erentiated rom other bu6et restaurants with more menu

!ariet o %'( items including 8apanese, Chinese and European ood with theproportion I(D+(D%( respecti!el. uring special occasions, the restaurantwill o6er premium and rare ood to add di!ersit and !alue to consumersaccording to the polic to o6er good ood 0ualit, ser!ice 0ualit and !alueor mone to customers. espite the concept o all ou can eat, therestaurant sets the rule to fne those who lea!e uneaten ood. This is to



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initiate a good bu6et courtes, which is to pre!ent waste rom bu6et. Thisgood will benefts not onl to the compan, but also to consumers and ornatural resource in the econom.

The main target or Oishi 5u6et is high income wor"ing people and highincome amil including those customers who demand catering ser!ices.

Oishi E)press

The brand also o6ers 8apanese bu6et li"e Oishi 5u6et, but targets amiland wor"ing people in !icinit areas o 5ang"o". The restaurants open toser!ice without session specifed but each session is limited to onl %./' hrsat +77 5aht with comparable 0ualit as Oishi 5u6et. There are someadKustments in the menus to ser!e customers9 demand.

4habushi

The brand o6ers bu6et on ood con!eer at econom price. The ocus is on

middle income group. 4habushi o6ers + =sian popular menus, which are4habu?4habu and 4ushi. 4habu?4habu is a one person ser!ing hot?potser!ice. Currentl, there are 7 locations in 5ang"o" with the pricing o %775aht or each person. The restaurants open dail with %.%' hrs limited toeach session. E)tra +( 5aht is charged or additional %( minutes or eachperson. This is to increase turno!er rate due to seating limitation o ood linerestaurants.

Oishi Grand

On Ao!ember +, +((/, Oishi Grand opened to ser!ice on the +nd oor,4iam isco!er with lu)urious ser!icing stle similar to ' star hotels. O!er%'( items on the menu are o6ered, including rare menus. MaKorit o rawmaterials are imported. Oishi Grand opens to ser!ice or + rounds- at noonrom %%.(( hrs?%'.(( hrs, with '(NN 5aht each and e!ening rom %I.((hrs?++.(( hrs at 2'(NN 5aht each.

%.+. = La Cart 8apanese ood

Oishi 4ushi 5ar

With the change in customer beha!ior becoming more concerned withcon!enience due to limited meal times, the compan launched 4ushi 5aro6ering ta"e?awa sushi in Fios" ormat in department stores, supermar"etsand Oishi outlets. There are : tpes o products Ai"iri, Ma"i, and 4ashimi>with I' menus at the prices starting rom ' baht. =part rom these products,4ushi 5ar also put some other products under Oishi on sale, including OishiGreen Tea, 1uri"a"e, MoKi and Moon Ca"e. Currentl, there are +( Oishi4ushi 5ar counters in 5ang"o".

Oishi @amen

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The brand operates 8apanese noodle, called ramen, which the recipe hasbeen de!eloped or its uni0ueness o noodle and soup to ft with Thai taste.5oth Thai and 8apanese stle are o6ered with o!er '( menus. =side romramen, 8apanese rice menus and other = La Carte menus, including dessertsare a!ailable. @aw materials are strictl controlled to produce sot noodlesand the right taste o the soup, as these two actors are the main

determinants o the 0ualit o @amen. @amen production is done bmachines in e!er process to ensure ood hgiene. The target group iswor"ing people, teenagers, and students. Currentl there are %7 branches indepartment store in 5ang"o" and in 3attaa, Chiangmai and 3hu"et.

OF 4u"i and 55

$n +((:, the compan launched a new stle restaurant combining 8apanesesu"i and 55, called OF4u"i and 55. This restaurant chain was created to add more product

!ariet to the mar"et. Currentl there are + branches opened to ser!ice in

Chonburi and on th oor o M5F.

Log ome

The dining comple) called &Log ome is opened to ser!ice at the Log omebuilding in the middle o 4oi Thonglor with /,((( s0. meter area. The targetis middle to upper income group. The restaurant is di!ided into stles withpart area to ser!ice '(?:(( persons and Farao"e room or those who needpri!ac.

%.:. 5a"er outlet

$ABOHT The 5a"er Ca

The ba"er is set up as a health ba"er caP or the new generation whoare health conscious. The ba"er operates according to the concept oma"ing health bread rom %((J natural ingredient. The brand ocuses onhigh 0ualit product rom natural ingredients and fne selected grains withhigh nutrition. 1ine production process is used, e.g. non?dair whip cream isused to lessen at and calories in ca"es b '(J. There are o!er +(( ba"ermenus to pro!ide a broad selection or customers. The bread items arereshl produced on dail basis. ealth be!erages, with e)clusi!e recipe inhouse, are pro!ided or o!er :( menus including premium ground co6ees,dail products, and ruit Kuices. The outlets are in modern stle, while somebranches ha!e seating ser!ice. There are totall +: branches in departmentstore and superstore in 5ang"o".

%./. Catering ser!ice

Oishi Catering



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Oishi Catering pro!ides catering ser!ice or parties li"e wedding part,engagement part and seminars. $t o6ers ull catering ser!ice with e)pertsand necessar acilities. The !arieties o oods o6ered are rom the !ariousrestaurants in Oishi networ". There is also a rental area on the :rd oor atLog ome building or '(?:(( seats or an part.

Oishi eli!er

With concerns regarding con!enience o customers, deli!er ser!ice with thehot line ser!ice is o6ered to consumers. Minimum order 0uantit is at +((baht and +( baht is charged or deli!er ser!ice. 1ree o deli!er ser!icecharge is o6ered or an order o!er :(( baht. There are ' tpes o oodo6ered in the deli!er menuD

%. 5ento set+. 4ushi B 4ashimi set:. = La Carte/. essert

'. Green Tea

%.'. 1ranchised 5usiness

The compan sees an opportunit to e)pand the ser!ice to co!er highpotential area in maKor pro!ince b utili*ing the brand &Oishi, so ranchisebusiness has been started. The compan has set up standard ranchisesstem as the guide or business conduct or ranchisees.

2. Green tea business

4ince +((+, the compan has started the green tea business to ser!ecustomers who !isit Oishi restaurants and outlets. The compan hired ane)ternal !endor or :'( cc. green tea production. The green tea ismanuactured within a pasteuri*ed production process- the product must bepreser!ed at low temperature and has short shel lie. This became adistribution and sales limitation or the compan. $n +((: and +((/, salesrom this tpe o green tea are at :2J and +J o total green tea salesrespecti!el.

$n +((:, the compan saw mar"et potential or green tea business and itdecided to in!est into a green tea actor in 0uarter / o +((: under OishiTrading operation. The operation starts rom tea lea selection, then globalstandard production in sterili*ed processes, without preser!ati!es orcoloring. Currentl, Oishi Green Tea has ' a!ors i.e. Original, Lemon?one, 4ugar 1ree, Genmai, CG 4lim :(( with : pac" tpes.

?? :'(ml3ETCool flled>?? '((ml.3ETot flled>?? +'(ml. HTot flled>



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Oishi Green Tea is widel a!ailable across Thailand through distributor towholesalers, retailers, con!enient stores, supermar"ets, other leading shopsand Oishi outlets.

3. Longan juies and dried snak

Oishi Group launched a new product line o longan Kuices and a dried snac"that sold under the brand name &?Thai b Oishi in the Thai mar"et in 8ulI, +(('.

The Kuices come in two a!oursD original, and longan with hone and ging"o.The product is a!ailable in both 3ET and HT pac"aging, priced 5t%2 and5t2 respecti!el. The price o the snac" is 5t' per pac".

iethelm Thailand is the local distributor or ?Thai. The products arecurrentl a!ailable in all restaurants under the Oishi brand, I?Ele!encon!enience stores, 1amil Mart con!enience stores, Tesco Lotus, Carreour

and Tops 4upermar"et.

Oishi chie e)ecuti!e Tan 3assa"ornatee said man Thais belie!e that longancauses internal bod heat, leading to illnesses. Oishi is thereore tring tore?educate people about the high nutrient !alue o the longan Kuice andsnac", which both contain phosphorus, calcium and !itamin C.

The launch o the new product lin"ed Oishi Group with the go!ernment,which tried to address the o!ersuppl o longan on the mar"et. $t was alsoplanning to lin" sales o the products with the welare o longan armers andto suggest buing the products is a wa o helping the Fingdom.1urthermore, it will promote longan b adding the ruit to its menu at allnine restaurants operated b the Oishi Group.

Tan said Oishi might consider other similar opportunities to wor" with thego!ernment to produce other products that can help to sol!e the problem oe)cess agricultural products such as lchees, rice, and mangosteen.

Industry & Copetition !ituation

Japanese food market

8apanese ood consumption trend has risen since %777 due to an imagechange rom premium ood ser!ed onl in grand hotels targeted at highincome businessmen, to bu6et with one price polic with all ou can eatconcept. The new choice or customers is a!ailable. =s customers percei!ethat 8apanese ood does not ha!e to be as e)pensi!e as it used to be,re0uenc o consumption surges. =n incremental demand also deri!es roma nice ood displa and nutritious ood with low at, unli"e western ood ingeneral and ast ood. This is the reason wh 8apanese ood business growswith more !ariet on ramen and bu6et tpes, which mostl opened in



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department store.

1rom the stud about 8apanese ood industr in 4iam 5usiness on ecember+%?+I, +((:, the mar"et !alue is around :,2(( million baht with %(?%'Jgrowth rate. owe!er this rate is lower than the +(?+'J seen in the coupleo ears beore. Ae!ertheless, mar"et potential o this "ind o business could

still be seen !i!idl, especiall in important pro!inces. These pro!inces areas the business center and tourist attraction. 1rom this sur!e, Oishicaptured up to /+.'J o 8apanese ood consumption among wor"ing people.

The main competitors o Oishi are 8apanese restaurants in hotels andgeneral 8apanese ood restaurants including the big two 8apaneseranchisesD 1uKi and Qen. espite a ferce competition, price war is not seenin this mar"et, but instead, product di6erentiation, !ariet o choice, andpromotional acti!ities li"e membership program and point collection becomethe maKor strateg used in this mar"et.

@amen industr has a !er high growth. The le!el o growth is e)pected to

continue in the ne)t :?' ears. @amen shops are popular, whether in stle omobile !endor or "ios". @amen business has ad!antage in that there areman tastes and prices rom /7 baht to %/7 baht, which is compatible withcurrent economic situation. =t the present, the compan9s competitors arethe three maKor ranchises, general ramen shops and general noodle shops.

Green tea market situation

One o the hottest mar"ets in Thailand right now is ob!iousl the green teamar"et. =lthough the competition is intensiing rapidl, the old and newplaers, both big and small, ha!e high e)pectations regarding the sales otheir green tea products. The plaers all e)pect their sales to s" roc"etsooner or later. The current green tea leader, the Oishi Group 3ublicCompan Limited, or e)ample, is e)pecting that the mar"et !alue will reachan impressi!e ten billion baht b the end o the ear +(('. The green teamar"et !alue is currentl at eight billion baht.

$n contrast to the stead but slow> sales growth o other be!erage productsin Thailand, the demand or green tea continues to soar abo!e the othertpes o be!erages. Thus, new in!estors are drawn to the green tea mar"et,and the are "een to enter into this battle mar"et as soon as possible.@ecentl, Coca Cola, one o the world9s largest and most renowned frms in

producing be!erage products, has introduced a new green tea productunder the brand name &4hi*en 3lus. $n addition to that, about ten morefrms are e)pected to enter this mar"et in the near uture, to capture theseemingl e!er?growing green tea mar"et share. espite an increasingnumber o plaers, onl about f!e o them are considered to be the &bigplaers.

=s or the new plaers, the T.=.C. 5e!erage Compan Limited in!ested about'( million baht to promote its brand name, 4hena, and its new '(( ml.



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green tea products. $n the initial stage o de!elopment, the companlaunched two a!ors o 4hena into the green tea mar"et, which includedpomegranate and traditional green tea a!ors. Li"e most o the other greentea plaers, their products are shel!ed in most con!enience stores, ma"ingsure that the trend tea drin"ers nationwide will "now their product. $nregards to the promotional strateg, the T.=.C. 5e!erage Compan Limited

plans to stimulate demand, and thus growth o consumption le!el, through aprice discount strateg, in which it will sell 4hena green tea products at %'baht per unit or a period o time. =s or most green tea manuacturers, theirprices are at +( baht per unit.

=nother green tea compan that is worth mentioning is the Hni?3residentThailand> Compan Limited. The compan frst launched green tea productsto Thailand in +((%, under the &Hni brand name. Hni used to be themar"et leader o green tea until Oishi too" o!er the throne in +((:.

=lthough the position o mar"et leader was ta"en awa, Hni put up a goodfght and the erocious and e)emplar competition between these twocompanies is noteworth.

O!er the past ears, Hni and Oishi ha!e been e)changing competiti!eattac"s to sta on top o the green tea mar"et. =s a proacti!e frm, thestance o Hni was to boost sales. $n order to boost sales, the compan triedto capture public attention b using emotional ad!ertisement campaigns,such as the &worm tele!ision ad!ertisement. =t the same time, Oishi wasin!esting in hi?technological ailsae anti?contamination e0uipment toconfrm its high 0ualit image to the public. =nother strateg emploed bOishi is regarding to customer relationship management. =s mentionedearlier, most green tea frms distribute their products through di6erentcon!enience stores. owe!er, in addition to con!enience stores, Oishi alsosells its green tea products in places where man people would gatheredtogether, such as during sporting or entertainment e!ents. With thispenetrable approach, Oishi was able to get in touch with di6erent tpes ocustomers more easil and with less ad!ertising e)penses.

=s or the promotional campaigns, Hni launched a '(?million baht campaignor Hni green tea drin"ers. The Hni tea drin"ers were to compete ornumerous prestigious pri*es. The campaign was 0uite successul until Oishicountered with another appealing campaign, namel the &:(?Caps :(?Million campaign. This campaign greatl stimulated the public acrossThailand, a lot o customers were oc"ing to bu Oishi green tea and it wasmuch more successul than the compan had originall e)pected.

The latest campaign o Hni is &Hni 4e!en Golden Luc" as. Thecompan chose two popular Thai celebrities, Falamae and 3atcharasri5enKamas to be the presenter or this campaign. The obKecti!e o thecampaign is to enhance the image and increase the !alues o Hni green teaproducts. The compan in!ested around %(( million baht to set up thiscampaign. =t the end o +((', Hni captured about +( percent o the greentea mar"et share in Thailand.



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The mar"et leader, Oishi, is standing frml in the number one spot at themoment. The current amount o green tea brands in the Thai mar"et is at:' brands, with Oishi is capturing around ( percent o the mar"et share.

=ccording to +((/9s annual report, Oishi achie!ed +,:I%J o net earningsgrowth. Meanwhile, its shares in the 4toc" E)change o Thailand 4ET>loo"ing up too and are !alued between %2.'( and +I baht. Oishi also

planned to e)port its green tea products to oreign mar"ets. The compan isparticularl interested in e)porting to Cambodia, Forea, Laos and the Hnited4tates.

=s the ear o +((' goes b, Oishi made a lot o strategic decisions and theo!erall position o Oishi is still strong, as it continues to grow and de!elop.owe!er, the number o green tea producers and thus competitors>continues to increase as well. E)isting companies in the mar"et ha!e tomo!e aster and more accuratel to maintain customer9s loalt. Thereore,the reign o Oishi in this mar"et can be onl or the short run and ma notbe as stead as in the past.

The Green Tea "usiness

!rodut

ualit is the main ocus o the compan9s polic. Thus strict control o!erthe raw materials and the production process are necessar. The main rawmaterials used or green tea production are tea lea!es, ructose, andartifcial ragrance.

Most the materials needed are domesticall sourced. To ensure consistent0ualit, e!en the water used or green tea production undergoes re!erseosmosis @O> process to ensure %((J purifcation. Oishi Trading purchasestea lea!es rom maKor !endors who pro!ide consistent ser!ice and products.Green tea lea!es are ear round a!ailable plant, so seasonal shortage is nota problem. 4o ar, the compan ne!er aced an problem about shortage,price and 0ualit o tea lea!es. 1ructose is domesticall a!ailable- so there isalso no problem with shortage o suppl. Oishi Trading ma"es purchasingrom di!ersifed sources. O the materials used in green tea, onl artifcialragrance is imported- howe!er, it is used in small proportions compared toother raw materials. Thereore it is not a big problem or the compan,besides- artifcial ragrances usuall ha!e a long preser!ation period, so thecompan can stoc" up on it.

3ET bottle, HT bo) and shrin" flm label are also important materials orOishi Green Tea. Oishi Trading purchases 3ET bottles rom two maKordomestic !endors. Currentl, one !endor installed a 3ET bottle productionline inside the Oishi actor or the compan to a!oid bottle shortage ris".The !endor supplies all the bottles that Oishi needs rom it, onl what is letrom Oishi9 green tea production could be sold to other buers.

Oishi Trading purchases tea lea!es rom two maKor !endors and it ma"es tea



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lea 0ualit easier to control. Aot onl does the compan control where thetea lea!es are rom, the compan also has 0ualit control department to testthe tea lea 0ualit beore it goes into the production process.

$n order to be a well rounded compan, Oishi also has to be en!ironmentallconcerned. The compan controlled the le!el o en!ironmental impact rom

production process b setting waste purifcation process. Waste materialssuch as at and ood let o!er are e)tracted beore the waste water isemitted into the public pipe. The compan also recei!ed GM3 GoodManuacturing 3ractice> in +((/ and $4O 7((( in +(('. These practicesmade Oishi Green Tea di6erent rom other green teas and to be the realnatural B health product.

Rariet became another ocus as it encouraged consumer demand andconsumption consistenc. The compan launched : a!ors o green teaunder di6erent pac"ages with uni0ue stle to suit consumers9 need. 5esidesthe usual a!ors and pac"aging, the compan has pac"aging adKustment andnew a!or launch in special occasions li"e Christmas, Ralentine, and Aew

Sear. These special products are sold in a limited time range.

!riing

The compan has + di6erent prices o @T green tea. Oishi has two prices inorder to attract di6erent target groups and or customer base e)pansion.3ET is set at +( bath per bottle and :' baht per bottle or CG :(( orhousewi!es and wor"ing people, while HT is priced at %( baht per bottleor teenagers and students.

!romotion

The compan perorms special promotions continuousl e.g. radio and TRsponsorship, promotion poster and sale promotion. These promotionalacti!ities are initiated throughout the ear. =side rom the promotions, thecompan also attends Koint e)hibitions or e!ent booths to create brand andproduct awareness among consumers. 3roduct sampling and sou!enirredemption also ha!e been used to penetrate the mar"et.

"istribution

The compan uses di6erent distribution channels to access to di6erenttarget groups. The di6erent distribution channels are listed as ollowingD

%. The compan distributes !ia maKor distributors who ha!e accessiblechannels to retailers.+. The compan9s uses its own outlets to reach customers o each Oishibrand:. ealers and trade partners help to ain access to small retailers. 3oint opurchase distribution in some e!ents such as Saowarach ood esti!al and@ed Cross e!ent are also used to get closer to consumers and o6er themmore con!enience.



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/. The compan cooperates with iethelm, which is the main distributorgetting access to modern trade both wholesalers and retailers>. Their areao trade includes con!enient stores, supermar"ets, discount stores andcon!enient stores in gas stations such as I?Ele!en, Tops, Tesco Lotus,Ma"ro, and 8i6. Oishi signed a contract with iethelm that lasts or ' earsand lea!es room or another : ears or renewal.

E#panding t$e %arket

$n order to accommodate the mar"et growth, the compan has increasedproduction capacit to correspond to uture mar"et demands. The CEO oOishi e)pected to lit sales o Oishi green tea products rom 5t:.' billion in+((/ to between 5t/ billion and 5t' billion in +(('. The frm is also highlinterested in oreign mar"ets and would li"e to increase e)ports o Oishigreen tea rom about : per cent o total sales to more than %( per cent inthe ne)t three ears.

The CEO o Oishi said that he would li"e to maintain Oishi green tea9sleading position in the domestic mar"et (J mar"et share> or the ne)tthree to f!e ears. &The total mar"et or bottled green?tea drin"s last earwas lower than m e)pectations, said Tan. &There were man negati!eactors hurting sales, including higher oil prices, bird u and the atermatho the tsunami. 3lus the go!ernment order to all green?tea be!eragemanuacturers to reduce retail prices led to conusion among consumersabout the price o the products, said Tan.

$n the mar"ets around the world, consumers are becoming more healthconscious. That leads to the increase in consumption o ruit Kuices and teas.These health drin"s are getting popular and replacing sot drin"s. $n

addition to the current capacit to ser!e mar"et demand, the compan plansto launch the new a!ors and si*es o their green tea products to satismore customers. owe!er, the compan does reali*e that there is a ris" romconsumer beha!ior change. The customers are alwas unpredictable- itthereore plans to add more product lines o health be!erages, and alsoull utili*ing its current capacit.

&trategi issues in 2''(

8anuar

The frst and oremost strategic issue that Oishi Group aced was the

issue o setting up their obKecti!es or the ear. The orecasted demand orgreen tea in +((' is about %(,((( million baht, and the group is aiming or:.' billion in sales. The sales re!enue or +((/ was + billion, so the companis loo"ing to achie!e a %I'J growth in their sales+. The compan is alsoestablishing their e)port mar"et urther. The ha!e begun to e)port to theH4, 4outh Forea, Laos, 5urma, $ndonesia and 8apan. The e)ports to these

2h ,a, rnu, and *or/a,t, ar dnominatd in hai Baht.



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countries increase the total sales and push the manuacturing plants toachie!e ull capacit, and thus econom o scale.

The Oishi Group was also !er "een in de!eloping new a!ors ogreen tea. 1or e)ample, the compan is introducing a rose?a!ored greentea or Ralentines da, and is e)pecting to sell + million bottles nationwide:.

The basic line o green tea includes the original a!or, lemon, and 8apaneserice. Oishi uses its restaurants as a test mar"et. Each new a!or de!elopedis frst tested in their restaurants. With an a!erage o ((,((( customers

!isiting their restaurants per month, the can fgure out which a!ors thatthe mar"et will accept and which that the customers will preer. This lowersthe cost o perorming mar"et testing and gi!es more accurate demandpredictions because the customers at the restaurants are li"el consumers oOishi green tea too.

1ebruar

The ear did not start o6 as smooth as the management o Oishi

Group wished or it to be, though. 5ad news bro"e out on 1ebruar %%,+(('. 3raipat @ung?Wimolrat, /I, dran" Oishi9s sugar?ree green tea and elta burning sensation in his stomach, throat and mouth. The man wasimmediatel hospitali*ed and the bottle o tea was sent or inspection.owe!er, ater inspecting the tea, the ealth Minister 4udarat Feu?@aphandeclared that hdrochloric acid was not used in the production process othe green tea and the ingredients which Oishi used would not transorm intohdrochloric acid during the production. The suspicion is then, that the acidwas inKected into the bottle.

E!en though it is not at ault, the compan management still madeast decisions and too" complete e6ort to gain the trust o their customersagain. Aot onl did Mr. Tan propose to pa or all the medical e)penses oMr. 3raipat, the compan also decided to crstalli*e all its productionprocesses or their customers. Mr. Tan frst in!ested in %(( million bahtworth o machiner to enhance and secure saet in the production process.Then he also set up trips to tour the production acilit, so that thecustomers can see or themsel!es. Mr. Tan9s 0uic" action and eagerness toimpro!e shielded the compan rom urther brand deterioration. owe!er,some damage had alread been done and Oishi9s stoc" price decreased b%.I percent during mid 1ebruar.

March?Ma

$n order to stimulate demand again and to reco!er rom the damagein the brand image, the management launched a promotion during March toMa, +(('. The campaign name is Thunder @ich :(. Customers wereencouraged to loo" at the cap o the green tea bottles beore throwing themawa. There were :( caps, on which 5aht % million were printed on and eachperson who gets the cap would recei!e their % million baht within +/ hours.4timulated b the campaign, Oishi9s proft surged b %I(J and helped the

35ottles are pro!ided in two si*es, '(( ml and +'( ml.



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compan become the mar"et leader in the green tea mar"et. =lthough thiscampaign is !er e)citing, the management also reali*ed that once thecampaign ends, sales will be declined and customers might be indi6erent tothe di6erent brands o green tea again.

8une

uring March to Ma, the promotional campaign led to a %I(J ogreen tea. Thus the management decided to e)pand their manuacturingcapabilities to match the demand. The profts generated rom the Thunder@ich :( campaign, Oishi decided to build a +'( million actor to increase itsplastic bottle manuacturing capabilities. The new actor allowed themanuacturing capacit o Oishi to increase b %' million per month, whichis e0ui!alent to increasing the capacit rom :( million to /' million bottlesper month. The addition in capacit is not increased all at once, though, thecompan will purchase new machiner step b step and the capacit willreach /' million b the end o +(('. $n addition to plastic bottles, Oishiactories also manuacture HT cartons to hold its green tea. The compan

ma"es +( million HT cartons per month or its drin"s.

8ul

$n 8ul, two new Kuices are introduced into the mar"et, the originallongan Kuice and longan with hone and ging"o. The compan is "een to re?educate the Thai consumers regarding longan. Hsuall, Thai people ha!e themisconception that longan causes internal bod heat and might lead todiseases. owe!er, according to the compan9s studies, the ound thatlongan is actuall a !er nutritious ruit. $t contains phosphorus, calcium and

!itamin C. Thereore, the compan launched the longan Kuices in hopes topenetrate into the 8apanese and Chinese mar"ets b the end o +(('. The

Kuices are a!ailable in two pac"ages, the ones in the plastic bottles are soldor 5t%2 and the ones in HT cartons are sold or 5t2. Longan snac" is alsointroduced at 5t' per pac".

$n order to support this new line o longan Kuices and snac", thecompan set aside a budget o +( million or the mar"eting o this new line.Tele!ision ad!ertisements were made and the distributors, iethelmThailand or "nown as ?Thai>, placed the product in all restaurants underthe Oishi brand, I?Ele!en con!enience store, 1amil Mart con!enience store,Tesco Lotus, Carreour and Tops supermar"et. The compan intends to gainull co!erage o the mar"et in order to strengthen their oothold as themar"et leader.

4eptember

=s the green tea mar"et e)pands, the go!ernment elt the need toenorce some new regulations to protect the customers. The $nternal Tradeepartment announced that the retail price o a bottle o read?to?drin"green tea should not be more than 5t%'. Customers are beginning to

#o)yright o* Synrgy grou)+ Sm,tr 22005. 1%


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complain that the are paing 5t+( or a '((cc bottle when the cost oproducing that green tea is onl 5t/?5t'. Thereore, in order to !oice thecomplaints o the customers, the department has ordered or the green teamanuacturers to reduce the price starting rom October, +(('. 1acing thisnew regulation, the CEO o Oishi, Mr. Tan., argues that the cost o the greentea is not onl on the product itsel. The costs included mar"eting,

transportation, and ad!ertising as well. Thereore he thin"s that 5t+( is aair price or both the consumer and manuacturer. =ccording to Mr. Tan, thecompan onl ma"es 5t+ o proft or each bottle sold.

=nother occurrence in 4eptember is that the go!ernment planned toimpose e)cise ta) on the sales o green tea. The reason to the e)cise ta) wasnot the same as the reason or the price cap imposed earlier in the ear. Thegreen tea drin"s ha!e been !er popular in the mar"et, and it is creatingpressure or other drin"s li"e carbonated sot drin"s and be!erages. Thiscreates an imbalanced competiti!e mar"et and the go!ernment wants toregain the air mar"et. The 1inance Minister, Thanong 5idaa, said, &Thehealth beneft rom the consumption o green tea drin"s is still a 0uestion

because most o them contain ca6eine. ue to this new regulation b thego!ernment, in!estors ha!e held bac" on their in!estment on the OishiGroup. 4hares o Oishi ell +( percent rom 8ul to 4eptember, which is alarge decline compared to the 4ET inde), which declined b / percent onl.

ecember

=ter going e)porting to other countries and going public, Oishi hadalso made a step in going international in its e0uit holdings. Aews has itthat Mr. Tan made a deal to sell his shares to a ong Fong registered und,which was incorporated b Mr. Charoen. Aewspaper reporters loo"ed intothe rumor and inter!iewed the spo"es person o Thai 5e!erage, FasemsantWeera"un!ice. Mr. Weera"un!ice said, &=t this point, Thai 5e!erage has nointerest in di!ersiing into the non?alcoholic business. We still ocus onwhis" and beer, which are the compan9s core be!erages. $ rumors aretrue, Mr. Tan would be selling %2./ percent o the shares, which ise0ui!alent to :/.' million. The second largest shareholder o Oishi Group isMr. Tan9s wie, 4unisa 4u"phantha!orn, who owns %/.2 percent o theshares e0ui!alent to +I.2I million>.

C$allenges

=s Oishi Group mar"s its wa within the Thai mar"et, it aces manchallenges in how to mar" an e!en higher achie!ement. 4hould the3resident o the compan sell his shares to gain more capital and morecontrol in the distribution channels; 4hould the compan considerestablishing a stronger oothold in the international mar"et; What shouldthe compan do in reaction to the slowing demand o local customers;



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These are all 0uestions that Mr. Tan has to fgure out, beore the legend islost.

)eferenes

5enKaprut, =. +((/, Ma %7>. Oishi pumps 5tI((m into green?teaproduction. The Aation.

Fwanchai, @. +((/, Ao!ember %>.O$4$ G@OH3D Green tea dri!es hugeproft rise. The

Aation.

Aitida, =. +((', 8une I>.G@EEA TE=D Oishi to build new plastic bottleplant.

The Aation.

3etchanet, 3. +((', 4eptember +>.3rice cap or green tea.

The Aation.

4asithorn, O. +((/, ecember +>. Oishi bu6ets get upgrade. The Aation.

4asithorn, O. +((', 8anuar +(>.Oishi selling +(m bottles o green tea amonth. The Aation.

4iriporn, C. +((', 1ebruar %%>.=cid ound in bottle o green tea. TheAation.

4iriporn, C. +((', ecember %+>.Oishi bidding to sell green tea bac" to itsbirthplace.

The Aation.

4iriporn, C. +((', ecember +'>.Oishi ban"s on image re!amp or the

lowl longan. The

Aation.

4outh Foreans. +((', October %:>. Late Aews. The Aation.

5usiness @eporters. +((', ecember %'>. T=$ 5ERE@=GE 3LCD @umors o!er Oishi



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ta"eo!er. The Aation.

5usiness Thai. +((/>. Oishi double production capacit e)panding green teaproduct line to ser!e that mar"et. @etrie!ed on 8anuar 2, +((', rom theWorld Wide WebD

httpDwww.businessthai.co.thcontent.php;dataU/(2/7VR$3J+(Rarieties

Oishi 5u 5uild 4ell. @etrie!ed on 8anuar ', +((', rom the World WideWebD

httpDwww.nidambe%%.nete"onomi*+(('0/article+(('dec++p%%.htmound on 8an ' +(('>

3ositioning. +((/>. Green TeaD The Ae!er Ending War. @etrie!ed on8anuar %', +((', rom the World Wide WebD

httpDwww.positioningmag.commaga*ineetails.asp);idU:%(+'BmenuUmaga*ine,insight

4ME media. +(('> O$4$$ E4H F= 5rand age maga*ine. @etrie!ed on8anuar ', +((', rom the World Wide WebDhttpDwww.smemedia.cominde).php;

laUshowBacUarticleB$dU72('BAtpeU'

Tan lea!e Oishi step orward or bac"ward. @etrie!ed on 8anuar %(, +((',rom the World Wide WebD

httpDwww.thannews.th.comdetialAews.php;idUT(2+(I%%BissueU

Teenee Aews. +(('>. Green tea wins sot drin", ne)t : ear the mar"et si*ewill be met rom both sector at +((((million baht.. @etrie!ed on 8anuar ',+((', rom the World Wide WebD httpDtnews.teenee.comtnews/2I.html

Wright @eports. +(('>. 5usiness escription. @etrie!ed on 8anuar ', +((',rom the World Wide WebD

http://www.businessthai.co.th/content.php?data=408469_VIP%20Varietieshttp://www.nidambe11.net/ekonomiz/2005q4/article2005dec22p11.htmhttp://www.positioningmag.com/magazine/Details.aspx?id=31025&menu=magazine,insighthttp://www.positioningmag.com/magazine/Details.aspx?id=31025&menu=magazine,insighthttp://www.smemedia.com/index.php?lay=show&ac=article&Id=69805&Ntype=5http://www.smemedia.com/index.php?lay=show&ac=article&Id=69805&Ntype=5http://www.thannews.th.com/detialNews.php?id=T0820711&issuehttp://tnews.teenee.com/tnews/487.htmlhttp://www.businessthai.co.th/content.php?data=408469_VIP%20Varietieshttp://www.nidambe11.net/ekonomiz/2005q4/article2005dec22p11.htmhttp://www.positioningmag.com/magazine/Details.aspx?id=31025&menu=magazine,insighthttp://www.positioningmag.com/magazine/Details.aspx?id=31025&menu=magazine,insighthttp://www.smemedia.com/index.php?lay=show&ac=article&Id=69805&Ntype=5http://www.smemedia.com/index.php?lay=show&ac=article&Id=69805&Ntype=5http://www.thannews.th.com/detialNews.php?id=T0820711&issuehttp://tnews.teenee.com/tnews/487.html


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httpDwrightreports.ecne)t.comcoms+reportdescVCOM3=ASVCI/:((ound on 8an ' +(('>

Hn"nown =uthor. +(('> =nnual @eport o Oishi Group, +((/. 3aperpresented at the annual

stoc"holder9s meeting o Oishi Group.
http://wrightreports.ecnext.com/coms2/reportdesc_COMPANY_C764D3600http://wrightreports.ecnext.com/coms2/reportdesc_COMPANY_C764D3600

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