BI 4242

Global Strategic Management

Term Project Case Writing: OISHI Group

Submitted to: A. Pattana Boonchoo

Group: Synergy
442-5178

Long

Pham Duy

451-0450
451-1930
451-8887
452-0088
452-5124
452-5189
452-5206
452-5222
452-5337

Patthamawadi
Krongkan
Yi Hao
Yu Ching
Yuwei
Sirinthorn
Shou
Ying
Ye

Sirirak
Boonkerd
Chiang
Chang
Mao
Konkaew
Feng
Qin
Wang

Section: 404
Semester: 2/2005

Copyright of Synergy group, Semester 2/2005.

Assumption University: School of Management

Oishi Group
Oishi Green TeaReady-To-Drink
The creator of the Oishi legend -- Tan Passakornnatee
When Oishi first launched its operations in Laos and Cambodia, Mr. Tan, the
CEO of the Oishi Group, went to create the promotional campaign
personally. The promotional campaigns were so successful there, that some
customers even asked for his signature! In Cambodia, when he first
launched his products, he decided to sell his products at a boat race, which
people around the country would attend. To increase awareness, he decided
to be a sponsor for 1 Million baht donation. The first promotion began on the
first day of the event, buy one bottle 500cc get free one box size 250 cc;
but no one bought Oishi. On the second day, he decided to use another
promotional strategy. He used, buy 2 Oishi bottles get one Oishi doll. In
Thailand, to get this doll the customers needed to buy 200 baht worth of
Oishi green tea. He found out later on that no one knew about green tea and
Oishi, as they do not have Thai Television channel. When he realized his
mistake, he immediately changed his strategy again and he sold 1 doll with
the price 40 baht and gave 2 bottle of Oishi for free. It was successful, as
kids liked to get the doll and parents could had the drinks. Moreover, the
long queue of customers attracted the other prospects to try their products
too. Four thousand of dolls were sold, which meant 8,000 bottles of Oishi
green tea were sold out too. On the third day of boat race, 8,000 people who
had tried the product intended to know Oishi more and later they bought
Oishi even when there was no premium.
Mr. Tan Passakornnatee is not only the founder of the Oishi Group, but is
also the spirit of the Oishi Group. Started with Oishi Buffet in 1999, the
modern Japanese style restaurant, he made the Oishi brand the most
preferred brand in Thai customers mind. Oishi started to produce the green
tea in 2003 and it became the market leader in the next year. Only 5 years
since the start up of the company, Oishi Group had become a public
company on March 3, 2004 and started trading in SET1. Oishis growth was
high; however, will the local customers remain satisfied with Oishis
products? What is the situation of the market demand? How could Oishi
remain the market leader position? Where should Oishi go?

Stock Exchange Thailand

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Oishi Group
Oishi Group aimed to become the leader in food and beverages in Japanese
style for better quality of life of the new generation. Tan Passakornnatee,
President and CEO of the Oishi Group, launched the first Oishi Japanese
Buffet restaurant branch in Bangkok's Soi Thonglor on September 9, 1999.
At the present, Oishi Group has 2 main businesses, which are 1) Japanese
restaurants and Bakery
2) Green Tea business.
When the restaurants were opened in the market, its innovative concept,
unique style and high quality selection of dishes, imprinted the brand name
of Oishi in the Thai customers minds. The company's buffet-style concept
became a historic movement and a stepping stone in the Thai restaurant
industry. With its initial success, the management seized the opportunity and
expanded rapidly with new branches opening across Bangkok.
The offerings in Oishi Buffet's noodle selections later evolved into a Japanese
noodle restaurant chain branded as Oishi Ramen. This brand was launched
on the fourth day of the fourth month of the year 2001. Oishi Ramen outlets
serve a variety of authentic Japanese noodle and rice dishes, promoting the
slogan Tasty Noodle, Tasty Soup. The company's Oishi Buffet Bakery
section was also expanded in May 2001 and was re-branded as In & Out
Bakery Cafe, with healthy baked products using 100 percent natural
ingredients.
During the next two years, the company introduced more new restaurant
concepts, including: Oishi Sushi Bar, with conveniently located outlets in
many department stores, supermarkets and BTS Sky train stations, offering
customers a wide range of pre-wrapped sushi items for takeaway; Shabushi
restaurants, featuring two types of Japanese food shabu shabu and sushi
on a kaiten-style moving conveyor belt; Log Home: The Dining Complex
restaurant containing a variety of Oishi's restaurant brands plus Cha For
Tea, all under on roof, complete with live music and entertainment in
Bangkok's Thonglor area; and the OK Suki and Barbecue, offering diners
two types of food at the same table. In 2003 Oishi also became Thailand's
first local bottled green tea manufacturer in response to the increasing
popularity of this healthy beverage.
The Oishi Group has also expanded into the catering business for all types of
occasions, under the Oishi Catering Service brand. Following all these new
establishments, Oishi Delivery was also established to offer speedy delivery
of Oishi food to homes, offices, parties, meetings and conferences. The
company aims to have every kind of products available for the customers.
In 2002, the company started running green tea business and outsourced to
a foreign company for the 350 cc. green tea production. During the last
quarter of 2003, the management saw immense market potential of this
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business and started running its own operations with the budget of 901
million baht investment, with 801 million was already invested on December
31, 2004. In October 2004, the production capacity of Oishi was at 23.8
million bottles per months and 12.96 million UHT boxes per month.
This business helped increase the revenue of the company to 3,272 million
baht, from 1,972 million baht in the year 2003. The green tea achieved 152
% growth of revenue for Oishi. The companys marginal revenue from green
tea business increased 1,106 percent and only 15 percent from food
business. Oishi Green Tea became the brand with the highest market share
in Thailands green tea business.
As the company was successful in all aspects of its operation, the Oishi
Group intended to expand its business and offer the Thai public an
opportunity to be part of this success, by being listed with the Stock
Exchange of Thailand on March 3, 2004. The fund generated was used for
various projects of the Oishi Group and the further expansion of production
and services.

Oishi Brand
The brand is taken from the Japanese word oishi, which means delicious.
The Oishi Group brings to Thai consumers healthy and delicious Japanese
food and beverages. The company's Japanese roots are displayed throughout
its restaurants, menus and advertisements, and in its marketing and
branding activities.
Oishi is strongly consumer-focused and succeeded through closely
understanding customer needs and perceptions. The company's strong
consumer focus is clear in its highly successful launch of Thailand's first
locally-produced ready-to-drink bottled green tea. The new Oishi Green Tea
was introduced using the slogan The Real Sensation of Japanese Green
Tea, matching Thai consumers view that the best green tea comes from
Japan.
Oishi strives to ensure that the brand stands out from existing and new
competitors, and the company pays close attention to every detail to make
the company's product unique. In particular, Oishi takes special care in
ensuring that all their food and beverage offerings are made with healthy
and natural ingredients. This is also matching the rising health concerns of
the Thai customers.
Company Internal Control
An audit committee or independent committee is set up in the company. It
assesses the company and performs internal auditing by discussing with the
board of directors and checking the documents made by management.
(Organization chart see appendix) There are 5 aspects of management to be
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audited: Organization and environment, risk management, Information

management, communication, and follow up process.
In the annual reports of Oishi Group, it is found that the company has quite
a good internal audit system for good corporate governance. The company
also has a policy requiring the sub-companies to initiate their own internal
audit system that is compatible with that in the company. It also sends
internal auditor to check the sub-companies operation.
Employee development
In October 2003, the company set up Oishi Trading Center as a training
center for employees under Oishi Group from operation level to
management level. Not only general training is provided, there is also
specific training for each particular line of command.
Each training course takes 5 months to 1 year period, depending on the
participants readiness. The participants must work on the Oishi Workbook.
The time each participant spends on their workbook is around 3-6 months.
After finishing the course work, the participants must work on an action plan
related to content of each course. The workbook will be adjusted every 3
years.
For operation staff, on the job training had been used. Also, recommendation
is also provided from an expert in each line of command as a guideline.
Performance assessment has been employed to check on the progress of the
training. Team administration focuses on cooperation in problem solving and
building good attitude and morale towards organization. In the past 3 years,
the company always placed a budget of training investment in employee
expense. In 2004, training investment was 0.93 million baht.

Product and service feature

1. Japanese food restaurant and bakery outlet
1.1. Japanese buffet restaurant
Oishi Japanese Buffet Restaurant
The company introduced the first ever Japanese buffet restaurant in
Thailand with the concept All you can eat but pay what you have left. The
business is differentiated from other buffet restaurants with more menu
variety of 150 items including Japanese, Chinese and European food with the
proportion 70:20:10 respectively. During special occasions, the restaurant
will offer premium and rare food to add diversity and value to consumers
according to the policy to offer good food quality, service quality and value
for money to customers. Despite the concept of all you can eat, the
restaurant sets the rule to fine those who leave uneaten food. This is to

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initiate a good buffet courtesy, which is to prevent waste from buffet. This
good will benefits not only to the company, but also to consumers and for
natural resource in the economy.
The main target for Oishi Buffet is high income working people and high
income family including those customers who demand catering services.
Oishi Express
The brand also offers Japanese buffet like Oishi Buffet, but targets family
and working people in vicinity areas of Bangkok. The restaurants open to
service without session specified but each session is limited to only 1.45 hrs
at 299 Baht with comparable quality as Oishi Buffet. There are some
adjustments in the menus to serve customers demand.
Shabushi
The brand offers buffet on food conveyer at economy price. The focus is on
middle income group. Shabushi offers 2 Asian popular menus, which are
Shabu-Shabu and Sushi. Shabu-Shabu is a one person serving hot-pot
service. Currently, there are 9 locations in Bangkok with the pricing of 199
Baht for each person. The restaurants open daily with 1.15 hrs limited to
each session. Extra 20 Baht is charged for additional 10 minutes for each
person. This is to increase turnover rate due to seating limitation of food line
restaurants.
Oishi Grand
On November 26, 2004, Oishi Grand opened to service on the 2nd floor,
Siam Discovery with luxurious servicing style similar to 5 star hotels. Over
150 items on the menu are offered, including rare menus. Majority of raw
materials are imported. Oishi Grand opens to service for 2 rounds; at noon
from 11.00 hrs-15.00 hrs, with 650++ Baht each and evening from 17.00
hrs-22.00 hrs at 850++ Baht each.
1.2. A La Cart Japanese food
Oishi Sushi Bar
With the change in customer behavior becoming more concerned with
convenience due to limited meal times, the company launched Sushi Bar
offering take-away sushi in Kiosk format in department stores, supermarkets
and Oishi outlets. There are 3 types of products (Nikiri, Maki, and Sashimi)
with 75 menus at the prices starting from 5 baht. Apart from these products,
Sushi Bar also put some other products under Oishi on sale, including Oishi
Green Tea, Furikake, Moji and Moon Cake. Currently, there are 20 Oishi
Sushi Bar counters in Bangkok.
Oishi Ramen

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The brand operates Japanese noodle, called ramen, which the recipe has
been developed for its uniqueness of noodle and soup to fit with Thai taste.
Both Thai and Japanese style are offered with over 50 menus. Aside from
ramen, Japanese rice menus and other A La Carte menus, including desserts
are available. Raw materials are strictly controlled to produce soft noodles
and the right taste of the soup, as these two factors are the main
determinants of the quality of Ramen. Ramen production is done by
machines in every process to ensure food hygiene. The target group is
working people, teenagers, and students. Currently there are 19 branches in
department store in Bangkok and in Pattaya, Chiangmai and Phuket.
OK Suki and BBQ
In 2003, the company launched a new style restaurant combining Japanese
suki and BBQ, called OK
Suki and BBQ. This restaurant chain was created to add more product
variety to the market. Currently there are 2 branches opened to service in
Chonburi and on 6th floor of MBK.
Log Home
The dining complex called Log Home is opened to service at the Log Home
building in the middle of Soi Thonglor with 4,000 sq. meter area. The target
is middle to upper income group. The restaurant is divided into 6 styles with
party area to service 50-300 persons and Karaoke room for those who need
privacy.
1.3. Bakery outlet
IN&OUT The Bakery Caf
The bakery is set up as a healthy bakery caf for the new generation who
are health conscious. The bakery operates according to the concept of
making healthy bread from 100% natural ingredient. The brand focuses on
high quality product from natural ingredients and fine selected grains with
high nutrition. Fine production process is used, e.g. non-dairy whip cream is
used to lessen fat and calories in cakes by 50%. There are over 200 bakery
menus to provide a broad selection for customers. The bread items are
freshly produced on daily basis. Healthy beverages, with exclusive recipe in
house, are provided for over 30 menus including premium ground coffees,
daily products, and fruit juices. The outlets are in modern style, while some
branches have seating service. There are totally 23 branches in department
store and superstore in Bangkok.
1.4. Catering service
Oishi Catering

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Oishi Catering provides catering service for parties like wedding party,
engagement party and seminars. It offers full catering service with experts
and necessary facilities. The varieties of foods offered are from the various
restaurants in Oishi network. There is also a rental area on the 3rd floor at
Log Home building for 50-300 seats for any party.
Oishi Delivery
With concerns regarding convenience of customers, delivery service with the
hot line service is offered to consumers. Minimum order quantity is at 200
baht and 20 baht is charged for delivery service. Free of delivery service
charge is offered for any order over 300 baht. There are 5 types of food
offered in the delivery menu:
1.
2.
3.
4.
5.

Bento set
Sushi & Sashimi set
A La Carte
Dessert
Green Tea

1.5. Franchised Business

The company sees an opportunity to expand the service to cover high
potential area in major province by utilizing the brand Oishi, so franchise
business has been started. The company has set up standard franchise
system as the guide for business conduct for franchisees.
2. Green tea business
Since 2002, the company has started the green tea business to serve
customers who visit Oishi restaurants and outlets. The company hired an
external vendor for 350 cc. green tea production. The green tea is
manufactured within a pasteurized production process; the product must be
preserved at low temperature and has short shelf life. This became a
distribution and sales limitation for the company. In 2003 and 2004, sales
from this type of green tea are at 38% and 2% of total green tea sales
respectively.
In 2003, the company saw market potential for green tea business and it
decided to invest into a green tea factory in quarter 4 of 2003 under Oishi
Trading operation. The operation starts from tea leaf selection, then global
standard production in sterilized processes, without preservatives or
coloring. Currently, Oishi Green Tea has 5 flavors i.e. Original, LemonHoney, Sugar Free, Genmai, CG Slim 300 with 3 pack types.
-- 350mlPET(Cool filled)
-- 500ml.PET(Hot filled)
-- 250ml. UHT(Hot filled)

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Oishi Green Tea is widely available across Thailand through distributor to

wholesalers, retailers, convenient stores, supermarkets, other leading shops
and Oishi outlets.
3. Longan juices and dried snack
Oishi Group launched a new product line of longan juices and a dried snack
that sold under the brand name D-Thai by Oishi in the Thai market in July
7, 2005.
The juices come in two flavours: original, and longan with honey and gingko.
The product is available in both PET and UHT packaging, priced Bt18 and
Bt8 respectively. The price of the snack is Bt5 per pack.
Diethelm Thailand is the local distributor for D-Thai. The products are
currently available in all restaurants under the Oishi brand, 7-Eleven
convenience stores, Family Mart convenience stores, Tesco Lotus, Carrefour
and Tops Supermarket.
Oishi chief executive Tan Passakornatee said many Thais believe that longan
causes internal body heat, leading to illnesses. Oishi is therefore trying to
re-educate people about the high nutrient value of the longan juice and
snack, which both contain phosphorus, calcium and vitamin C.
The launch of the new product linked Oishi Group with the government,
which tried to address the oversupply of longan on the market. It was also
planning to link sales of the products with the welfare of longan farmers and
to suggest buying the products is a way of helping the Kingdom.
Furthermore, it will promote longan by adding the fruit to its menu at all
nine restaurants operated by the Oishi Group.
Tan said Oishi might consider other similar opportunities to work with the
government to produce other products that can help to solve the problem of
excess agricultural products such as lychees, rice, and mangosteen.
Industry & Competition Situation
Japanese food market
Japanese food consumption trend has risen since 1999 due to an image
change from premium food served only in grand hotels targeted at high
income businessmen, to buffet with one price policy with all you can eat
concept. The new choice for customers is available. As customers perceive
that Japanese food does not have to be as expensive as it used to be,
frequency of consumption surges. An incremental demand also derives from
a nice food display and nutritious food with low fat, unlike western food in
general and fast food. This is the reason why Japanese food business grows
with more variety on ramen and buffet types, which mostly opened in
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department store.
From the study about Japanese food industry in Siam Business on December
21-27, 2003, the market value is around 3,800 million baht with 10-15%
growth rate. However this rate is lower than the 20-25% seen in the couple
of years before. Nevertheless, market potential of this kind of business could
still be seen vividly, especially in important provinces. These provinces are
as the business center and tourist attraction. From this survey, Oishi
captured up to 42.5% of Japanese food consumption among working people.
The main competitors of Oishi are Japanese restaurants in hotels and
general Japanese food restaurants including the big two Japanese
franchises: Fuji and Zen. Despite a fierce competition, price war is not seen
in this market, but instead, product differentiation, variety of choice, and
promotional activities like membership program and point collection become
the major strategy used in this market.
Ramen industry has a very high growth. The level of growth is expected to
continue in the next 3-5 years. Ramen shops are popular, whether in style of
mobile vendor or kiosk. Ramen business has advantage in that there are
many tastes and prices from 49 baht to 149 baht, which is compatible with
current economic situation. At the present, the companys competitors are
the three major franchises, general ramen shops and general noodle shops.
Green tea market situation
One of the hottest markets in Thailand right now is obviously the green tea
market. Although the competition is intensifying rapidly, the old and new
players, both big and small, have high expectations regarding the sales of
their green tea products. The players all expect their sales to sky rocket
sooner or later. The current green tea leader, the Oishi Group Public
Company Limited, for example, is expecting that the market value will reach
an impressive ten billion baht by the end of the year 2005. The green tea
market value is currently at eight billion baht.
In contrast to the steady (but slow) sales growth of other beverage products
in Thailand, the demand for green tea continues to soar above the other
types of beverages. Thus, new investors are drawn to the green tea market,
and they are keen to enter into this battle market as soon as possible.
Recently, Coca Cola, one of the worlds largest and most renowned firms in
producing beverage products, has introduced a new green tea product
under the brand name Shizen Plus. In addition to that, about ten more
firms are expected to enter this market in the near future, to capture the
seemingly ever-growing green tea market share. Despite an increasing
number of players, only about five of them are considered to be the big
players.
As for the new players, the T.A.C. Beverage Company Limited invested about
50 million baht to promote its brand name, Shenya, and its new 500 ml.

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green tea products. In the initial stage of development, the company

launched two flavors of Shenya into the green tea market, which included
pomegranate and traditional green tea flavors. Like most of the other green
tea players, their products are shelved in most convenience stores, making
sure that the trendy tea drinkers nationwide will know their product. In
regards to the promotional strategy, the T.A.C. Beverage Company Limited
plans to stimulate demand, and thus growth of consumption level, through a
price discount strategy, in which it will sell Shenya green tea products at 15
baht per unit for a period of time. As for most green tea manufacturers, their
prices are at 20 baht per unit.
Another green tea company that is worth mentioning is the Uni-President
(Thailand) Company Limited. The company first launched green tea products
to Thailand in 2001, under the Unif brand name. Unif used to be the
market leader of green tea until Oishi took over the throne in 2003.
Although the position of market leader was taken away, Unif put up a good
fight and the ferocious and exemplary competition between these two
companies is noteworthy.
Over the past years, Unif and Oishi have been exchanging competitive
attacks to stay on top of the green tea market. As a proactive firm, the
stance of Unif was to boost sales. In order to boost sales, the company tried
to capture public attention by using emotional advertisement campaigns,
such as the worm television advertisement. At the same time, Oishi was
investing in hi-technological failsafe anti-contamination equipment to
confirm its high quality image to the public. Another strategy employed by
Oishi is regarding to customer relationship management. As mentioned
earlier, most green tea firms distribute their products through different
convenience stores. However, in addition to convenience stores, Oishi also
sells its green tea products in places where many people would gathered
together, such as during sporting or entertainment events. With this
penetrable approach, Oishi was able to get in touch with different types of
customers more easily and with less advertising expenses.
As for the promotional campaigns, Unif launched a 50-million baht campaign
for Unif green tea drinkers. The Unif tea drinkers were to compete for
numerous prestigious prizes. The campaign was quite successful until Oishi
countered with another appealing campaign, namely the 30-Caps 30Million campaign. This campaign greatly stimulated the public across
Thailand, a lot of customers were flocking to buy Oishi green tea and it was
much more successful than the company had originally expected.
The latest campaign of Unif is Unif Seven Golden Lucky Days. The
company chose two popular Thai celebrities, Kalamae and Patcharasri
Benjamas to be the presenter for this campaign. The objective of the
campaign is to enhance the image and increase the values of Unif green tea
products. The company invested around 100 million baht to set up this
campaign. At the end of 2005, Unif captured about 20 percent of the green
tea market share in Thailand.

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The market leader, Oishi, is standing firmly in the number one spot at the
moment. The current amount of green tea brands in the Thai market is at
35 brands, with Oishi is capturing around 60 percent of the market share.
According to 2004s annual report, Oishi achieved 2,371% of net earnings
growth. Meanwhile, its shares in the Stock Exchange of Thailand (SET)
looking up too and are valued between 18.50 and 27 baht. Oishi also
planned to export its green tea products to foreign markets. The company is
particularly interested in exporting to Cambodia, Korea, Laos and the United
States.
As the year of 2005 goes by, Oishi made a lot of strategic decisions and the
overall position of Oishi is still strong, as it continues to grow and develop.
However, the number of green tea producers (and thus competitors)
continues to increase as well. Existing companies in the market have to
move faster and more accurately to maintain customers loyalty. Therefore,
the reign of Oishi in this market can be only for the short run and may not
be as steady as in the past.
The Green Tea Business
Product
Quality is the main focus of the companys policy. Thus strict control over
the raw materials and the production process are necessary. The main raw
materials used for green tea production are tea leaves, fructose, and
artificial fragrance.
Most the materials needed are domestically sourced. To ensure consistent
quality, even the water used for green tea production undergoes reverse
osmosis (RO) process to ensure 100% purification. Oishi Trading purchases
tea leaves from major vendors who provide consistent service and products.
Green tea leaves are year round available plant, so seasonal shortage is not
a problem. So far, the company never faced any problem about shortage,
price and quality of tea leaves. Fructose is domestically available; so there is
also no problem with shortage of supply. Oishi Trading makes purchasing
from diversified sources. Of the materials used in green tea, only artificial
fragrance is imported; however, it is used in small proportions compared to
other raw materials. Therefore it is not a big problem for the company,
besides; artificial fragrances usually have a long preservation period, so the
company can stock up on it.
PET bottle, UHT box and shrink film label are also important materials for
Oishi Green Tea. Oishi Trading purchases PET bottles from two major
domestic vendors. Currently, one vendor installed a PET bottle production
line inside the Oishi factory for the company to avoid bottle shortage risk.
The vendor supplies all the bottles that Oishi needs from it, only what is left
from Oishi green tea production could be sold to other buyers.
Oishi Trading purchases tea leaves from two major vendors and it makes tea

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leaf quality easier to control. Not only does the company control where the
tea leaves are from, the company also has quality control department to test
the tea leaf quality before it goes into the production process.
In order to be a well rounded company, Oishi also has to be environmentally
concerned. The company controlled the level of environmental impact from
production process by setting waste purification process. Waste materials
such as fat and food left over are extracted before the waste water is
emitted into the public pipe. The company also received GMP (Good
Manufacturing Practice) in 2004 and ISO 9000 in 2005. These practices
made Oishi Green Tea different from other green teas and to be the real
natural & healthy product.
Variety became another focus as it encouraged consumer demand and
consumption consistency. The company launched 3 flavors of green tea
under different packages with unique style to suit consumers need. Besides
the usual flavors and packaging, the company has packaging adjustment and
new flavor launch in special occasions like Christmas, Valentine, and New
Year. These special products are sold in a limited time range.
Pricing
The company has 2 different prices of RTD green tea. Oishi has two prices in
order to attract different target groups and for customer base expansion.
PET is set at 20 bath per bottle and 35 baht per bottle for CG 300 for
housewives and working people, while UHT is priced at 10 baht per bottle
for teenagers and students.
Promotion
The company performs special promotions continuously e.g. radio and TV
sponsorship, promotion poster and sale promotion. These promotional
activities are initiated throughout the year. Aside from the promotions, the
company also attends joint exhibitions or event booths to create brand and
product awareness among consumers. Product sampling and souvenir
redemption also have been used to penetrate the market.
Distribution
The company uses different distribution channels to access to different
target groups. The different distribution channels are listed as following:
1. The company distributes via major distributors who have accessible
channels to retailers.
2. The companys uses its own outlets to reach customers of each Oishi
brand
3. Dealers and trade partners help to fain access to small retailers. Point of
purchase distribution in some events such as Yaowarach food festival and
Red Cross event are also used to get closer to consumers and offer them
more convenience.

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4. The company cooperates with Diethelm, which is the main distributor

getting access to modern trade (both wholesalers and retailers). Their area
of trade includes convenient stores, supermarkets, discount stores and
convenient stores in gas stations such as 7-Eleven, Tops, Tesco Lotus,
Makro, and Jiffy. Oishi signed a contract with Diethelm that lasts for 5 years
and leaves room for another 3 years for renewal.
Expanding the Market
In order to accommodate the market growth, the company has increased
production capacity to correspond to future market demands. The CEO of
Oishi expected to lift sales of Oishi green tea products from Bt3.5 billion in
2004 to between Bt4 billion and Bt5 billion in 2005. The firm is also highly
interested in foreign markets and would like to increase exports of Oishi
green tea from about 3 per cent of total sales to more than 10 per cent in
the next three years.
The CEO of Oishi said that he would like to maintain Oishi green teas
leading position in the domestic market (60% market share) for the next
three to five years. The total market for bottled green-tea drinks last year
was lower than my expectations, said Tan. There were many negative
factors hurting sales, including higher oil prices, bird flu and the aftermath
of the tsunami. Plus the government order to all green-tea beverage
manufacturers to reduce retail prices led to confusion among consumers
about the price of the products, said Tan.
In the markets around the world, consumers are becoming more health
conscious. That leads to the increase in consumption of fruit juices and teas.
These healthy drinks are getting popular and replacing soft drinks. In
addition to the current capacity to serve market demand, the company plans
to launch the new flavors and sizes of their green tea products to satisfy
more customers. However, the company does realize that there is a risk from
consumer behavior change. The customers are always unpredictable; it
therefore plans to add more product lines of healthy beverages, and also
fully utilizing its current capacity.
Strategic issues in 2005
January
The first and foremost strategic issue that Oishi Group faced was the
issue of setting up their objectives for the year. The forecasted demand for
green tea in 2005 is about 10,000 million baht, and the group is aiming for
3.5 billion in sales. The sales revenue for 2004 was 2 billion, so the company
is looking to achieve a 175% growth in their sales 2. The company is also
establishing their export market further. They have begun to export to the
US, South Korea, Laos, Burma, Indonesia and Japan. The exports to these
2

The sales revenues and forecasts are denominated in Thai Baht.

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countries increase the total sales and push the manufacturing plants to
achieve full capacity, and thus economy of scale.
The Oishi Group was also very keen in developing new flavors of
green tea. For example, the company is introducing a rose-flavored green
tea for Valentines day, and is expecting to sell 2 million bottles nationwide 3.
The basic line of green tea includes the original flavor, lemon, and Japanese
rice. Oishi uses its restaurants as a test market. Each new flavor developed
is first tested in their restaurants. With an average of 600,000 customers
visiting their restaurants per month, they can figure out which flavors that
the market will accept and which that the customers will prefer. This lowers
the cost of performing market testing and gives more accurate demand
predictions because the customers at the restaurants are likely consumers of
Oishi green tea too.
February
The year did not start off as smooth as the management of Oishi
Group wished for it to be, though. Bad news broke out on February 11,
2005. Praipat Rung-Wimolrat, 47, drank Oishis sugar-free green tea and felt
a burning sensation in his stomach, throat and mouth. The man was
immediately hospitalized and the bottle of tea was sent for inspection.
However, after inspecting the tea, the Health Minister Sudarat Keyu-Raphan
declared that hydrochloric acid was not used in the production process of
the green tea and the ingredients which Oishi used would not transform into
hydrochloric acid during the production. The suspicion is then, that the acid
was injected into the bottle.
Even though it is not at fault, the company management still made
fast decisions and took complete effort to gain the trust of their customers
again. Not only did Mr. Tan propose to pay for all the medical expenses of
Mr. Praipat, the company also decided to crystallize all its production
processes for their customers. Mr. Tan first invested in 100 million baht
worth of machinery to enhance and secure safety in the production process.
Then he also set up trips to tour the production facility, so that the
customers can see for themselves. Mr. Tans quick action and eagerness to
improve shielded the company from further brand deterioration. However,
some damage had already been done and Oishis stock price decreased by
1.7 percent during mid February.
March-May
In order to stimulate demand again and to recover from the damage
in the brand image, the management launched a promotion during March to
May, 2005. The campaign name is Thunder Rich 30. Customers were
encouraged to look at the cap of the green tea bottles before throwing them
away. There were 30 caps, on which Baht 1 million were printed on and each
person who gets the cap would receive their 1 million baht within 24 hours.
Stimulated by the campaign, Oishis profit surged by 170% and helped the
3

Bottles are provided in two sizes, 500 ml and 250 ml.

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company become the market leader in the green tea market. Although this
campaign is very exciting, the management also realized that once the
campaign ends, sales will be declined and customers might be indifferent to
the different brands of green tea again.
June
During March to May, the promotional campaign led to a 170% of
green tea. Thus the management decided to expand their manufacturing
capabilities to match the demand. The profits generated from the Thunder
Rich 30 campaign, Oishi decided to build a 250 million factory to increase its
plastic bottle manufacturing capabilities. The new factory allowed the
manufacturing capacity of Oishi to increase by 15 million per month, which
is equivalent to increasing the capacity from 30 million to 45 million bottles
per month. The addition in capacity is not increased all at once, though, the
company will purchase new machinery step by step and the capacity will
reach 45 million by the end of 2005. In addition to plastic bottles, Oishi
factories also manufacture UHT cartons to hold its green tea. The company
makes 20 million UHT cartons per month for its drinks.
July
In July, two new juices are introduced into the market, the original
longan juice and longan with honey and gingko. The company is keen to reeducate the Thai consumers regarding longan. Usually, Thai people have the
misconception that longan causes internal body heat and might lead to
diseases. However, according to the companys studies, they found that
longan is actually a very nutritious fruit. It contains phosphorus, calcium and
vitamin C. Therefore, the company launched the longan juices in hopes to
penetrate into the Japanese and Chinese markets by the end of 2005. The
juices are available in two packages, the ones in the plastic bottles are sold
for Bt18 and the ones in UHT cartons are sold for Bt8. Longan snack is also
introduced at Bt5 per pack.
In order to support this new line of longan juices and snack, the
company set aside a budget of 20 million for the marketing of this new line.
Television advertisements were made and the distributors, Diethelm
Thailand (or known as D-Thai), placed the product in all restaurants under
the Oishi brand, 7-Eleven convenience store, Family Mart convenience store,
Tesco Lotus, Carrefour and Tops supermarket. The company intends to gain
full coverage of the market in order to strengthen their foothold as the
market leader.
September
As the green tea market expands, the government felt the need to
enforce some new regulations to protect the customers. The Internal Trade
Department announced that the retail price of a bottle of ready-to-drink
green tea should not be more than Bt15. Customers are beginning to

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complain that they are paying Bt20 for a 500cc bottle when the cost of
producing that green tea is only Bt4-Bt5. Therefore, in order to voice the
complaints of the customers, the department has ordered for the green tea
manufacturers to reduce the price starting from October, 2005. Facing this
new regulation, the CEO of Oishi, Mr. Tan., argues that the cost of the green
tea is not only on the product itself. The costs included marketing,
transportation, and advertising as well. Therefore he thinks that Bt20 is a
fair price for both the consumer and manufacturer. According to Mr. Tan, the
company only makes Bt2 of profit for each bottle sold.
Another occurrence in September is that the government planned to
impose excise tax on the sales of green tea. The reason to the excise tax was
not the same as the reason for the price cap imposed earlier in the year. The
green tea drinks have been very popular in the market, and it is creating
pressure for other drinks like carbonated soft drinks and beverages. This
creates an imbalanced competitive market and the government wants to
regain the fair market. The Finance Minister, Thanong Bidaya, said, The
health benefit from the consumption of green tea drinks is still a question
because most of them contain caffeine. Due to this new regulation by the
government, investors have held back on their investment on the Oishi
Group. Shares of Oishi fell 20 percent from July to September, which is a
large decline compared to the SET index, which declined by 4 percent only.
December
After going exporting to other countries and going public, Oishi had
also made a step in going international in its equity holdings. News has it
that Mr. Tan made a deal to sell his shares to a Hong Kong registered fund,
which was incorporated by Mr. Charoen. Newspaper reporters looked into
the rumor and interviewed the spokes person of Thai Beverage, Kasemsant
Weerakunvice. Mr. Weerakunvice said, At this point, Thai Beverage has no
interest in diversifying into the non-alcoholic business. We still focus on
whisky and beer, which are the companys core beverages. If rumors are
true, Mr. Tan would be selling 18.4 percent of the shares, which is
equivalent to 34.5 million. The second largest shareholder of Oishi Group is
Mr. Tans wife, Sunisa Sukphanthavorn, who owns 14.86 percent of the
shares (equivalent to 27.87 million).
Challenges
As Oishi Group marks its way within the Thai market, it faces many
challenges in how to mark an even higher achievement. Should the
President of the company sell his shares to gain more capital and more
control in the distribution channels? Should the company consider
establishing a stronger foothold in the international market? What should
the company do in reaction to the slowing demand of local customers?

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These are all questions that Mr. Tan has to figure out, before the legend is
lost.

References
Benjaprut, A. (2004, May 19). Oishi pumps Bt700m into green-tea
production. The Nation.
Kwanchai, R. (2004, November 16). OISHI GROUP: Green tea drives huge
profit rise. The
Nation.
Nitida, A. (2005, June 7). GREEN TEA: Oishi to build new plastic bottle
plant.
The Nation.
Petchanet, P. (2005, September 26). Price cap for green tea.
The Nation.
Sasithorn, O. (2004, December 2). Oishi buffets get upgrade. The Nation.
Sasithorn, O. (2005, January 20). Oishi selling 20m bottles of green tea a
month. The Nation.
Siriporn, C. (2005, February 11). Acid found in bottle of green tea. The
Nation.
Siriporn, C. (2005, December 12). Oishi bidding to sell green tea back to its
birthplace.
The Nation.
Siriporn, C. (2005, December 25). Oishi banks on image revamp for the
lowly longan. The
Nation.
South Koreans. (2005, October 13). Late News. The Nation.
Business Reporters. (2005, December 15). THAI BEVERAGE PLC: Rumors
fly over Oishi

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takeover. The Nation.

Business Thai. (2004). Oishi double production capacity expanding green tea
product line to serve that market. Retrieved on January 8, 2005, from the
World Wide Web:
http://www.businessthai.co.th/content.php?data=408469_VIP%20Varieties

Oishi Buy Build Sell. Retrieved on January 5, 2005, from the World Wide
Web:
http://www.nidambe11.net/ekonomiz/2005q4/article2005dec22p11.htm
(found on Jan 5 2005)

Positioning. (2004). Green Tea: The Never Ending War. Retrieved on

January 15, 2005, from the World Wide Web:
http://www.positioningmag.com/magazine/Details.aspx?
id=31025&menu=magazine,insight

SME media. (2005) OISHII DESU KA Brand age magazine. Retrieved on

January 5, 2005, from the World Wide Web:
http://www.smemedia.com/index.php?
lay=show&ac=article&Id=69805&Ntype=5

Tan leave Oishi step forward or backward. Retrieved on January 10, 2005,
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Teenee News. (2005). Green tea wins soft drink, next 3 year the market size
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2005, from the World Wide Web: http://tnews.teenee.com/tnews/487.html

Wright Reports. (2005). Business Description. Retrieved on January 5, 2005,

from the World Wide Web:

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http://wrightreports.ecnext.com/coms2/reportdesc_COMPANY_C764D3600
(found on Jan 5 2005)

Unknown Author. (2005) Annual Report of Oishi Group, 2004. Paper

presented at the annual
stockholders meeting of Oishi Group.

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