Suntory on high-growth Asia acquisition drive

PHOTO: Suntory on high-growth Asia acquisition drive

SINGAPORE - Armed with a huge war-chest, Japan's Suntory group has embarked on an acquisition drive through Asia, though its plans do not include any moves towards Singapore's Fraser & Neave - for now.

Suntory group director and CEO of Singapore- based Suntory Beverage & Food Asia Pte Ltd (SBFA) Henry Park, speaking to BT after taking a 51 per cent stake in the Hanoi-based joint venture Suntory PepsiCo Vietnam Beverage Co Ltd with US' Pepsi- Co, said the Japanese food and beverage giant would stick to its strategy of investing in high-growth businesses where it would have effective control.

PepsiCo, which now controls 15.1 per cent of the US$1.75 trillion Vietnam market carbonated soft drink (CSD) market, holds 49 per cent in the JV.

Yesterday's deal comes barely a year after Suntory's purchase of Suntory Garuda Beverages in Indonesia and Suntory Narang in India.

Mr Park said that, with Japan's population greying rapidly, Suntory started refocusing on the fast-growing markets of South and South-east Asia about two years ago.

"We have had a 30-year long relationship with PepsiCo and they have a very strong presence in the CSD market in Vietnam," said Mr Park.

"Meanwhile, we have a very strong portfolio of beverages like coffees and teas.

This joint venture gives us a platform to expand the market for our products while also growing the CSD market.

It is a complementary partnership."

No numbers were revealed, but BT estimates the investment is worth some US$200 million.

Existing PepsiCo Vietnam president Chandrashekar Mundlay will continue running the business with its 2,000 employees.

Mr Park, when asked whether F&N might be a suitable target, replied that the Singapore company had been on Suntory's radar, but that it was holding off on making a move now.

He said: "We've been watching the company for about a year. F&N has a very broad portfolio, which includes property and printing.

The kind of stake we could get at the moment would not give us the opportunity to exert very much influence."

He also noted that F&N operated in the already-saturated, competitive F&B markets of Singapore and Malaysia, and that Kirin Holdings, with a 15 per cent stake in F&N, "has gone nowhere with it".

"Our strategy has always been to get a platform to grow our business and products, and be actively involved in the company."

In short, the Suntory group - with US$23 billion in sales, a net income of more than US$805 million and total assets exceeding US$22 billion - will not go after F&N now, but will not rule out doing so later if an opportunity arises.

Rather, Mr Park's priority is to grow the Suntory- owned SBFA from a US$600 million business to a US$1 billion company by 2015, and to a US$2 billion one by 2020.

Suntory recently privatised its Singapore-listed unit Cerebos Pacific, and is now targeting high-growth companies in Myanmar, Laos, the Philippines and Malaysia.

In the meantime, it will leave Thai billionaire Charoen Sirivadhanabhakdi of Thai Beverage fame and Overseas Union Enterprise, backed by the Lippo group and possibly Kirin, to duke it out over F&N.