URC wants taste of soy milk market with Vitasoy partnership
UNIVERSAL Robina Corporation (URC) has entered into a joint venture with the Vitasoy Group of Hong Kong to unlock the market potential of plant-based beverages in the Philippines.
The Gokongwei-led beverage and snack food manufacturer on Thursday announced the partnership that will serve up beverages such as soy milk, coconut milk and almond milk, among others, in the country.
“We see a perfect fit in this joint venture, as both URC and Vitasoy are companies that strive to promote both consumer well-being and sustainable nutrition,” URC President and Chief Executive Officer Lance Y. Gokongwei said in a statement.
Established in 1940, the Hong Kong-based company manufactures and distributes food and beverage products focused on plant-based nutrition. Its portfolio includes soy and tofu under the brand VITASOY as well as teas, juices and distilled water under the brand VITA.
Vitasoy has manufacturing operations in Hong Kong, mainland China, Australia and Singapore. The company, whose market capitalization stood at $2 billion at end-January, distributes its products in more than 40 markets worldwide.
The company has registered a compounded annual growth rate (CAGR) of 11% over the past five years, as its revenues increased to HK$5.6 billion from HK$3.7 billion.
The joint venture will explore the potential of plant-based sustainable beverages in the Philippines, Vitasoy Chief Executive Officer Roberto Guidetti noted in the statement.
“Whilst confident that the long-term consumer trends are very favorable, we consider the Philippines a very developed, competitive and diversified market which will require diligent study and learning to ensure that the JV portfolio offering will best serve the needs and desires of the Filipino community.”
Vitasoy is banking on the distribution network of URC and the “strong leadership” of the Gokong-wei family’s business group in the local food and beverage industry.
ENEMIES TURNED PARTNERS
The joint-venture partners were at one time rivals in a trademark case. In 2007, URC filed before the Intellectual Property Office of the Philippines an application to register “Vitalife” for use in the marketing of beverages, including drinking water, mineral water and aerated water.
The following year, URC lost the intellectual property case in which Vitasoy opposed the former’s planned use of the trademark “Vitalife.”
Now URC and Vitasoy will be hoping their combined forces will be enough to grab Philippine market share from tycoon Lucio Tan’s Asia Brewery, Inc., which sells Vitamilk, and smaller players such as Hershey’s Soyfresh and Lactasoy. Asia Brewery boasts that Vitamilk is the leading soy milk drink in the Philippines, with at least an 80% share.
Asia Brewery is also building a P2-billion plant to manufacture Vitamilk in the country after imports surpassed those of other ASEAN markets. Asia Brewery markets Vitamilk under an exclusive distribution agreement with Thailand’s Green Spot Co. Ltd.
Vitasoy and Green Spot have previously clashed over Philippine trademark case in which the former won. In 2007, Green Spot lost an intellectual property case in which Vitasoy opposed the former’s planned use of the trademark “Vitamilk” for use in the marketing of soybean-based drinks. In 2010, Green Spot successfully registered “Vitamilk” as a trademark.
URC engages in a wide range of food-related businesses, including the production and distribution of branded consumer foods, sugar refining and flour milling. It has agro-industrial operations as well, particularly in hog farming and animal feed milling.
The beverage and snack food brands of URC include Jack n Jill, Great Taste and C2. Last year, the company folded Kettles, Thins, Cheezels, CC’s and other international names under its portfolio by acquiring Consolidated Snacks Pty Ltd (CSPL) of Australia for A$600 million or $460.81 million.
URC is expanding its presence in the Oceania region. Aside from CSPL, it also acquired NZ Snack Foods Holdings Limited -- the holding firm of New Zealand’s leading snack food maker Griffin’s -- in November 2014 for NZ$700 million or $609.46 million.
The company’s combined sales of branded products in the Philippines and abroad have grown to P92.5 billion in the 2016 fiscal year ending September from the P50.6 billion booked in 2011, posting a 13% compounded annual growth rate.
URC registered a 22.3% year-on-year increase in net income attributable to equity holders to P15.14 billion in fiscal 2016, faster than the 7.1% uptick to P12.38 billion a year earlier despite a slight bump in sales. Its consolidated sales of goods and services rose 2.4% to P111.63 billion, trailing the 18.1% expansion in fiscal 2015.
Shares in URC closed 50 centavos or 0.31% higher at P160.50 apiece on the Philippine Stock Exchange on Thursday, as investors took advantage of the recent plunge in prices across the market. -- with BusinessWorld Research