Aggressive marketing, Cost improvements help Suntory Food & Beverage lift sales

Suntory Holdings, the group company that owns Suntory Food and Beverage Limited, said that group revenue fell 0.23% to ¥1.97 trillion yen (approx. $18.7bn) in the first nine months of 2016. However, operating income rose 14.1% to ¥149bn yen ($1.4bn).

Suntory Food and Beverage segment boosted sales 4.4% to ¥1.06 trillion yen ($10bn) in the nine months to September, helped by a strengthening of its brands, creation of new demand for its products, bolstering profitability by reforming its cost structure and improving product quality based on insights from other group companies.

In its home market of Japan, Suntory introduced new products to spur demand, and at the same time bolstered its core brands. For instance, it promoted its flagship BOSS coffee brands and launched a premium BOSS brand in September.

In International markets, Suntory carried out proactive marketing for key brands in Europe such as Orangina, Oasis, Schweppes, Lucozade and Ribena.

France remained a difficult market for the soft drink maker, as sales of Orangina remained flat for the period under review. However, sales in the UK were more positive, with Lucozade showing a steady rise in sales, while Ribena remained flat. In Spain, the company continued to work with its joint-venture partner, PepsiCo and the result was strong sales in On-Premise market. The group launched a low-sugar premium iced tea “May tea” in France, bolstering its brand portfolio in Europe as consumers in the region become more health conscious.

Suntory acknowledged the purchase of Lucozade and Ribena brands from GlaxoSmithKline Consumer Nigeria Plc (“GSK Consumer Nigeria Plc”) in September in order to strengthen the brands.

As in other places, the company’s target in Asia was to strengthen its business base in each country by carrying out extensive marketing with particular focus on leading brands. The company worked in Vietnam to strengthen marketing of its core brands. It also launched a green tea (TEA + MATCHA) which was highly successful as sales surged.

In Oceania, Suntory launched V Pure, followed by a strong marketing push.

While in the US, the company bolstered sales of its North Carolina PepsiCo brands with improvements to operational efficiency in sales and distribution.

Suntory Beverage and Food reported a 6.56% increase in net income to ¥89.7bn ($841m), from ¥84.1bn ($789m) in the previous year.

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