The company’s total revenue was up 9.3 per cent year-on-year to JPY$603.8bn (US$5.5bn), with a gross profit of JPY$253.6bn (US$2.3bn), up 12.6 per cent year-on-year, according to its FY2021 half-year financial results.
The food and beverage giant runs a health supplement business in the domestic Japanese market as well as other parts of Asia.
In Japan, it is also a major player of Foods for Specified Health Uses (FOSHU) and Foods with Function Claims (FFC).
Its FOSHU products include the Suntory Green Tea lyemon Tokucha, which claims to help reduce body fat, as well as the Suntory Black Oolong Tea, which claims to help suppress fat absorption.
However, it reported a decline in the sales volume of its FOSHU and FFC beverages in its latest financial results. Interestingly, growth was led by PEPSI and lyemon – a green tea brand.
Sales volume of its Foods for Specified Health Uses (FOSHU) and Foods with Function Claims (FFC) between January and June 2021 was down four per cent yoy to 10.1 million cases.
In the same period, sales volume of PEPSI was up 16 per cent yoy to 9.1 million cases, while that of lyemon was up 12 per cent to 28 million cases.
The company attributed the slowdown in FOSHU and FFC sales in the reduction of human traffic in public places.
“Office workers are the largest market for FOSHU drinks. They buy FOSHU drinks often while they commute, or at the offices via the vending machines.
“However, people don’t go to the offices often because of continuous state of emergency. That is why FOSHU drinks have been in tough situation so far,” Naoko Kushima from the public relations department at Suntory Beverage and Food told NutraIngredients-Asia.
The company believes that the situation will improve when human traffic returns.
“It is taking time for our health-conscious products to recover from the impact of the major behavioral change due to COVID-19.
“Once the flow of people in public returns, the trend will gradually recover with more contribution from the new sales promotion and communication measures,” she said.
Overall, the company’s best-selling drinks were essential products such as its mineral water brand Suntory Tennensui and its coffee range under the brand BOSS. The former recorded a five per cent yoy growth to 55.4 million cases and the latter had one per cent growth to 50 million cases in the first half of this year.
In Japan, the company recorded a half year revenue of JPY$298bn (US$2.7bn), a slight drop of 0.2 per cent compared to the same period last year. However, the segment profit from Japan shot up by 58.7 per cent to JPY$17.6bn (US$160.6m).
The company also operates beverage business in other Asia Pacific markets, Europe, and America, and growth was seen in these markets.
Southeast Asia growth
Elsewhere, Suntory saw strong performance in both its beverage and supplement segments, especially in Vietnam and Thailand.
Its APAC business brought in revenues of JPY$148.7bn (US$ 1.4bn) in the first six months of this year, up 16.5 per cent yoy. Segment profit jumped 42.1 per cent to JPY$23.6bn (US$ 215.3m).
Its business in APAC includes the health supplement range under BRAND’S. Revenue from the health supplement business in the first six months of FY2021 was up 11.2 per cent to JPY$16bn (US$146m).
“In the health supplement business, we conducted concentrated activities for BRAND’S Essence of Chicken. As a result, the sales trend recovered significantly to post a cumulative revenue increase,” CFO Takayuki Sanno said.
In markets such as Vietnam and Thailand, energy drink brand Sting and tea brand TEA+ have led sales growth.
In Vietnam, energy drink brand Sting and tea brand TEA+ contributed to 17 per cent yoy growth to JPY$45.7bn (US$417m) to the firm’s beverage business in the country.
In Thailand, revenue from the beverage business was up six per cent yoy to JPY$35bn (US$319m), driven by the sales of Pepsi and low-sugar drinks.
“Asia was impacted by tighter regulations and restrictions due to the spread of the variant strains.
“The beverage business in Vietnam continued to lead the growth in the second quarter. The beverage business in Thailand and the health supplement business grew in revenue as well,”
Energy drinks in Oceania
In the Oceania, the firm’s energy drink brand V reported a growing market share in the first six months of FY2021.
The firm’s beverage revenue in the region has reached JPY$24.2bn (US$220m), up 37.8 per cent yoy.
“Although Oceania is affected by lockdowns most recently, V grew considerably through enhanced marketing activities, leading the energy drink category market. Both revenue and segment profit increased significantly,” Sanno said.