TEA FOR TWO

Back for more

Flamboyant founder of Oishi and the man who succeeded him battle it out in Thailand's B9-billion green tea market.

Tan Passakornnatee almost single-handedly created the green-tea craze in Thailand a decade ago, and now he's building a new empire on green tea again.

After cashing out from Oishi Plc, the company he founded and turned into a profit machine, Mr Tan established Mai Tan Co to pursue new opportunities. He had high hopes for his first product, Double Drink, a beverage mixed with Thai herbs. But response was lower than his expectations, so Mr Tan decided to return to green tea again and introduced his Ichitan brand a few months later.

"I didn't have any agreement with Thai Beverage (Oishi's major shareholder) to bar me from doing green tea after I sold my shares in Oishi," he says in response to some critics who say he's biting the hand that fed him.

"What should I do? I made green tea for a decade and I think I've been away long enough for me to return to this industry."

The 9-billion-baht green-tea market is still small when compared to the soft drink market worth 35 billion baht, and green-tea producers have to grab some share from soft drinks, he believes.

For Mr Tan, the green-tea market is still challenging and he aims at taking the leading position away from Oishi.

Mai Tan has used a pricing strategy to draw attention from consumers. Ichitan green tea comes in smaller 420-millilitre bottles compared to the 500ml Oishi bottles and is priced four baht lower at 16 baht.

To remind his many fans who's behind the brand, Mr Tan put his picture on Ichitan bottles and appears in TV commercials himself as the brand presenter. He used a similar strategy with Oishi to build the brand's identity. Even the name of Ichitan comes from his name. Ichitan means "number one" in Japanese while Oishi means "delicious".

For distribution channels, Mr Tan pursues his individual style by participating in the hotel, restaurant and catering (Horeca) fairs arranged by the Makro cash-and-carry store chain, as family-run shops, hotels and restaurant operators join the events. DKSH, a leading trading firm, distributes the products for him.

He hopes this approach will help Ichitan compete with Oishi, which has a strong network of traditional trade outlets loyal to ThaiBev, which has a long-time relationship with whisky sales agents.

Oishi has been fighting back and cutting its tea prices to match those of Ichitan. There have even been rumours that ThaiBev executives have tried to block Mr Tan by ordering grocery shop owners not to sell Ichitan.

"I don't know about this but finally consumers will be the ones who decide," says Mr Tan.

When he's not selling tea, Mr Tan spends half of his time these days as a lecturer, aiming to reach more teenagers and university students. He also joined forces with the comedian and talk show star Udom "Nose" Taepanich to expand his fan base.

Mai Tan has a Double Drink, Ichitan and Ramen champion complex in Soi Thong Lor. The company's sales are expected to reach 1.5 billion baht this year.

Innovating to lead

Matthew Kichodhan may not be as famous as Oishi founder Tan Passakornnatee but he's confident he can help the green tea pioneer maintain its leadership with a strong focus on marketing innovation.

The president of Oishi holds a master's in management from the University of London and spent nearly two decades years working for big firms in Thailand including Lever Brothers, Pepsi-Cola International, Gillette and Minor Corp.

From day one at Oishi, he vowed to keep the spirit of entrepreneurship, the key strength of Oishi, and expand the brand to reach international markets.

He's launched some innovative offerings such as Oishi Fruito, green tea mixed with fruit flavours, and Chakuza, a carbonated green tea in a can, to strengthen the brand.

"We've had more than 200 million baht in sales of Chakuza within less than two months through modern trade stores alone," he said.

Oishi Fruito and Chakuza are intended to help the company widen its customer base to appeal to more teenagers. They also allows Oishi to explore opportunities in fruit drinks and carbonated beverages _ and stay ahead of Mai Tan.

"Our competitor may introduce the same variants as Oishi's original products and copy our portfolio." says Mr Matthew. "But we have switched gears to a path of innovative products to meet the needs of our consumers through cross-category launches such as Fruito and Chakuza to reinforce our market leadership."

Oishi is playing with the pricing as well. After Mai Tan launched Ichitan green tea at 16 baht for a 420ml bottle, Oishi fought back by slashing the retail prices of Oishi in a 500ml bottle by four baht to 16 baht.

Oishi is still the best-selling green tea in Thailand with more than a 65% market share. It positions it as a Japanese-style green tea, targeting young and health-conscious consumers. Oishi also has close ties with Japan through J-Rock and will soon expand sponsorships for X-Japan and CrossPlay.

Oishi is also actively using social media such as Facebook to communicate with consumers. It has 520,000 Facebook followers, compared with 160,000 when Mr Tan left the company last year.

Mr Matthew also said he was doubtful about Ichitan's tie-up with comedian Udom "Nose" Taepanich.

"I think consumers may be confused about this as Oishi had signed Nose for two years before Mr Tan's departure. But now both brands use him," he said.

Oishi's sales in the first half of 2011 grew more than 14% year-on-year.

Mr Matthew insisted that his focus to transform Oishi into a global brand was still on track, and professional teamwork would be very important to help the company accomplish the goal.

"We're moving in the right direction to professionalise Oishi with higher delegations of responsibility and accountability to the management team, so they have parts to play in building Oishi together," he said.