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Is Yeo Hap Seng going to bid for Coca Cola Franchise in Malaysia?

| 23/04/2009 | Reply

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.

Category: Asia, Food Manufacturing

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