Japanese exec aims to establish Calpis as Thai drink

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Japanese exec aims to establish Calpis as Thais' drink of choice

http://asia.nikkei.com/Business/Compani ... -of-choice
BANGKOK -- The Thai plant of Japanese beverage maker Calpis took a serious hit in the floods that inundated parts of the country in 2011. With local production knocked out, the company temporarily pulled out of Thailand, but a new plant was completed in June and Calpis resumed production after a hiatus of about three years.

Masaaki Yasui, the 46-year-old Japanese vice president of Calpis Osotspa, a joint venture between the Japanese company and a local company, was the driving force behind the opening of the new plant. He is determined to establish Calpis as Thais' soft drink of choice in an increasingly competitive market.

Calpis built the new plant at an industrial park in Ayutthaya Province, about 30 minutes' drive from the old plant. Yasui said it was a great relief when the plant began turning out its new product, a soft drink called Calpis Lacto Freshy, according to schedule.

Bent on early return

After the floods, the old plant suspended operations in October 2011. The following March, the company farmed out production to a contractor and resumed sales. The parent company of the plant was Ajinomoto, later replaced by Asahi Group Holdings. Calpis, which had operated the plant through a joint venture with Ajinomoto, decided to pull out of Thailand. Yasui, who had been working at the joint venture, also returned to Japan.

After returning to Calpis's head office in Tokyo, Yasui, now assigned to the overseas business department, decided the company should return to Thailand as soon as possible. He feared the Thai market would forget about a foreign brand if too many years went by.

The Thai soft drink market is worth about 600 billion yen ($4.9 billion), according to Asahi Group Holdings. It is growing at an average annual pace of 5% and competition is stiff. While Coca-Cola slugs it out with Pepsi-Cola, one new product after another emerges, including Est, made by Serm Suk. The market is also crowded with Japanese companies such as Otsuka Pharmaceutical and Yakult Honsha.

Calpis entered the Thai market in 1997. Although its market share is eclipsed by those of Western producers, Calpis is fairly well known. According to a survey, about 80% of Thai consumers know Calpis. When Calpis suddenly disappeared from store shelves, some Thai consumers contacted the company's customer support office in Japan, asking why they could not buy the soft drink any more.

New partner search

Meanwhile, skeptics at Calpis doubted the wisdom of investing again in Thailand because of the danger of facilities there being flooded again. Others, who advocated the resumption of business in Thailand, were divided on whether to form a joint venture or go it alone, even if this took more time.

Yasui lobbied his department and managers, arguing that the Thai market can serve as a springboard that would help Calpis secure a foothold in other Southeast Asian countries and that the production know-how the company acquired in Thailand should not go to waste. He also said that Calpis should quickly return to the Thai market by forming a joint venture while it still enjoys name recognition.

He also traveled to Thailand once a month in search of a partner and contractors.

After Calpis opened the new plant, some former Thai staff who had worked at the old plant resumed their work, playing a pivotal role at the new facility. "Some people began working at the new plant because they were impressed with Yasui's serious personality and dedication," said Yoshikazu Nammoto, president of Calpis Osotspa.

Freshy, the product made at the new plant, is targeted at elementary and middle school children. The company wants the demographic to learn to love the drink while they are still young so that it can establish itself nationwide.

The price, at 12 baht (37 cents), is three to eight baht cheaper than the product made at the old plant. It will be supplied to Seven-Eleven convenience stores in urban areas and thousands of mom-and-pop stores across the country, via Osotspa's sales network for its energy drinks.

Yasui wants to boost sales of the lactic acid drink amid the growing health consciousness in Thailand. "I hope our company will eventually enter Vietnam and other neighboring countries," Yasui said.