Tipco Foods CEO interview part II: Juice company diversifying into herbal supplements, plant-based protein amid shrinking fruit juice market
The company already has an herbal extract business arm known as Tipco Biotech. One of its specialty extracts is high grade curcuminoids.
“Because of our experience in the extraction business of active ingredients of herbs, we will also go into the herbs [supplement] business,” CEO Yongsit Rojsrikul said.
Especially with the current COVID-19 pandemic, the company has ramped up new product development and launches of herbal supplements.
One of the bestsellers is an Andrographis capsule product launched only this year, and has been proven popular with consumers who believe they are risk of contracting COVID-19.
On December 30 last year, Thailand’s health ministry announced the approval of Andrographis Paniculata, commonly known as green chiretta, as an alternative treatment to early stages of COVID-19 symptoms.
The authorities, including the Department of Thai Traditional and Alternative Medicine, are also studying the efficacy of the herb in treating COVID-19 patients and whether it would be safe to use on the patients alongside standard treatment methods.
This follows an earlier pilot study where the herb extract was used on six patients, which shows that COVID-19 symptoms such as cough, runny nose, and muscle pain had improved. No side effects were reported. However, products are not allowed to make claims related to COVID-19.
“It is a hot selling item right now for us, the demand is very high, and we are trying to catch up with the supplies.
“But it is not only a hot-selling item for us, but also for all the other companies producing Andrographis products in Thailand,” Rojsrikul said.
Apart from the domestic market, there are also plans to export the product, especially to countries with high infection rates.
Its turmeric capsule containing high-grade curcuminoids and its finger-root (boesenbergia rotunda) herbal supplements are the other popular herbal products for the company; mainly due to their anti-inflammatory function and immune health benefits.
While the supplements business is fast-growing, it is nonetheless still at a nascent stage and is much smaller than the company’s existing business.
Rojsrikul sees the herbal extract and supplement business as a lucrative market worldwide and hopes to develop ingredients for use in medicines in the long run.
“We expect each of the three products mentioned above to contribute about less than 100 million baht (US$3m) a year, whereas our existing business is contributing four to five billion baht per year.
“It will take time [to grow the herbal extract and supplement business], if we do it right, maybe it can grow much bigger. As a listed company, I don't want to claim too much, but we will do our best."
The company recorded a revenue of THB$2.58bn (US$82m) in FY2020. This follows a trend of yearly decline from THB$4.95bn (US$157m) in FY2017 to THB$4.36bn (US$138m) in FY2018, and THB$3.69bn (US$117m) in FY2019.
In the same vein, its net profit also dropped from THB$702m (US$22m) in FY2017 to THB$481m (US$15m) last year.
Fruit juice market stagnant
According to Rojsrikul, the fruit juice market in Thailand has been shrinking due to multiple factors, such as the perception that fruit juice is sugar loaded and a slow economy.
“Volume wise, [the volume of fruit juice sold] is not that bad. The impact is more pronounced on the sales value, which has dropped by more than 10 per cent.”
“The fruit juice category was at its peak about 30 years ago, and the generation supporting the category is growing old…We need to retain consumers from the older generation and also attract the younger generation.”
At the moment, its premium orange juice, pineapple juice, apple cider vinegar, and pomegranate juice are some of the bestsellers from this portfolio.
Other growth engines
Aside from herbal extracts and supplements, the company will also ride on the current wave of popularity for plant-based protein.
It plans to launch its first few plant-based protein products during the Thaifex exhibition. The products will consist of plant-based protein ingredient for B2B and later on for the B2C markets.
“It [plant-based foods] is a very good trend in Thailand right now. We want to make meat or fish analogue mainstream so that they are more convenient for the consumers.
“I think the benefit of plant-based products is a better health and environment. Also, it is a good corporate social responsibility for the company to promote healthy and environmentally friendly products. It is also an opportunity for us to innovate and differentiate ourselves from others.”
The third growth engine is selling air water appliance, in which drinking water is produced from filtered and condensed air.
The company conducted a soft launch in April.