Academic journal article Journal of the International Academy for Case Studies

Ichitan Group and the Price War in Thailand's Ready-to-Drink Tea Market

Academic journal article Journal of the International Academy for Case Studies

Ichitan Group and the Price War in Thailand's Ready-to-Drink Tea Market

Article excerpt

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Sitting alone in his office while still donning his signature captain's hat, Tan Passakornnatee, the founder and CEO of Ichitan Group, the largest market share holder of the Thai ready-to-drink (RTD) tea market, was pondering what his next moves should be in this highly competitive market that appeared to be closer every minute to its saturation point. He had a very successful track record in the RTD tea business, and was best known for initiating the lucky draw campaigns that gave away prizes worth hundreds of millions of Thai baht. However, as it had recently been revealed, Ichitan's 2015 third-quarter performance did not meet expectation. It was conceivable that his company's largest market share could be lost to his former partner, but now major competitor, Oishi Group. Last year, the RTD tea market itself also had just experienced a negative growth for the first time in ten years. If I chitan's strategies did not play out well, the market could suffer another year of negative growth. As the 2015 year-end was approaching in less than two months, Tan had to craft out some solution plans and be ready to present them at the Ichitan's board meeting that would take place a week from now.

The Journey of Ichitan

Ichitan Group Public Company Limited was initially established under the name of "Mai Tan Company Limited" on September 3, 2010, with the registered capital of 500 million Thai baht (approximately 14 million USD). In November 2011, the company's name was changed to "Ichitan Group Company Limited," consistent with the major brand, "Ichitan," of its RTD beverages. The company's original business portfolio consisted of Japanese-styled restaurants, chocolate shops, and beverages. However, in January 2013, the company decided to divest its restaurant businesses to focus solely on its most profitable, largest volume beverage business. The company was publicly listed and traded on the Stock Exchange of Thailand beginning from April 21, 2014 - its stock was named the most heavilytraded stock of the day. As of December 2014, Ichitan's registered capital was worth 1,300 million Thai baht, and 99.5% of its 2014 net revenue from sales of 6,179.1 million Thai baht came from its RTD tea beverages (see Exhibit 1). Ichitan's current product lines for RTD tea beverages included green tea, black tea, herbal drink, and low-sugar green tea, under the brands of Ichitan Green Tea, Ichitan Dragon Black Tea, Yen Yen by Ichitan, and Ichitan Selected, respectively.

Although the company was relatively young, at a little over 4 years old, Ichitan had consistently been under a spotlight in the Thai and Asian business world for its unique, and somewhat controversial, business path as well as its corporate strategies.

The Founder, Leader, and Brand Ambassador

Despite its current status as a publicly listed company, Ichitan's image had always been very tightly tied to its founder, CEO, and largest shareholder (34.66%), Tan Passakornnatee. At the age of 56, Tan had been named the 38th richest person in Thailand for the year of 2015, with net worth of 640 million USD. But it was not only his assets that made him an iconic business tycoon. Tan was also recognized as a great entertainer. At certain events, including Ichitan's initial public offering debut, Tan showed up as "Tan Man," wearing his distinctive black-and-yellow superhero costumes with a captain's hat. For other more casual occasions, he could be seen wearing yellow, green, or red pants and a patterned shirt, or a T-shirt with an image of a pig (the zodiac animal for his birth year), but almost never without his captain's hat. To help stimulate Ichitan's brand recognition, Tan appeared frequently on the media to promote Ichitan products himself.

Before landing at the current position in his career, Tan actually had quite a rough roller-coaster ride. Growing up in a lower-income family with six siblings in Chonburi province, Tan had to quit school after finishing his 9th grade in order to find a job to assist his family financially. …

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