Core brand approach: Thailand boost brings Suntory’s health supplement business back to growth
Revenue for its health supplement business in APAC was up 4.5 per cent to JPY$8.9bn (US$56.9m) in Q1.
This is a reverse from the past six quarters, when revenue started declining in Q3 2022 due to high inflation rates dampening consumer demand.
For the whole of last year, revenue for its health supplement business shrunk 12.2 per cent yoy to JPY$35.1 bn (US$224.3m).
The decline last year was steepest in the first two quarters, where revenue was down 18 per cent and 20 per cent in Q1 and Q2 respectively.
Increased uptake of BRAND’S Essence of Chicken and BRAND’S Bird’s Nest especially in Thailand was cited a reason for the recovery.
In Thailand alone, sales volume of BRAND’S Essence of Chicken was up 103 per cent yoy.
The company believes this is due to increased promotional activities surrounding the cognitive health benefits of carnosine – one of the components present in the product.
“BRAND’S Essence of Chicken recovered from a downward trend and performed better than the same period last year by promoting the benefits of carnosine, which is said to be effective in stimulating the brain, and by conducting in-store sampling,” said chief financial officer Noriaki Otsuka, who presented the company’s Q1 results on May 13.
A meta-analysis published in Nutritional Neuroscience showed that consuming essence of chicken daily could improve working memory.
In the research funded by BRAND’S Suntory Asia, the authors suggested that the cognitive improvements could be due to the “unique composition of micronutrients and bioactive compounds including the vitamins, minerals, amino acids, and peptides.”
The unique composition consists of the amino acid histidine, carnosine, and anserine.
One of its latest marketing activities around BRAND’S Essence of Chicken is a tie-up with Thailand’s Digital Economy Promotion Agency (depa) housed within the Ministry of Digital Economy and Society.
The partnership led to the launch of the ‘BRAND’s Brain Camp’ – a campaign focused on providing comprehensive knowledge in AI and coding.
It was launched on May 9, with Omer Malik, CEO of Suntory Beverage and Food (Thailand), representing the company at the MOU signing ceremony with depa, represented by Assistant Professor Dr. Nuttapon Nimmanphatcharin.
On the other hand, sales volume of BRAND’S Bird’s nest also jumped 127 per cent yoy, said to be driven by gifting activities during the Songkran festival.
“BRAND’S Bird’s Nest sold well due to activities such as gift promotions and a rapid recovery in inbound demand.”
“We will continue to strengthen our core brand activities in order to return to the growth trend in the health supplement business,” said Otsuka.
Suntory’s APAC’s business was up 4.5 per cent in revenue to JPY$98.5bn (US$629.5m).
“In APAC, we continued focused activities for our core brands in the beverage and health supplement businesses.
“Revenue grew with a rebound in sales trends in Vietnam and the health supplement business as a result of continued marketing efforts, as well as steady performance in Thailand and Oceania.”
Including Europe and America, its total revenue was up 3.8 per cent to JPY$371.7bn (US$2.4bn). Profit was up 13 per cent to JPY$34.3bn (US$219m).
Net profit attributable to owners of the Company was JPY$20.3bn (US$129.7m), up 24.7 per cent.
“In the first quarter, revenue increased in all segments as a result of steadily capturing the demand situation in key markets and thorough focused activities for our core brands… The Company got off to a strong start, with both revenue and operating income exceeding our expectations,” said Otsuka.
Japan’s functional beverages performance
Elsewhere in Japan, Suntory, which is also known for its Foods with Function Claims (FFC) and Food for Specified Health Uses (FOSHU) drinks, said sales volume of these two categories were up 10 per cent to 11.8 million cases.
The FFC drink Lyemon Koi-Aji (a food with functional claims) was cited as a key sales contributor. The product claims to contain tea catechins which could aid in the reduction of visceral fat in people with a high body mass index (BMI).
Overall, its revenue in Japan was up 5.2 per cent to JPY$153.3bn (US$979.7m) and profit up 121.3 per cent to JPY$7.9bn (US$50.5m).
