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In September 2017, Thailand joined a growing listof countries from around the world when it imple-mented its first-ever excise tax on sugar in bever-

ages, which the government hopes will coaxmanufacturers into making less sugary drinks – as wellas reduce consumption of such beverages among theThai population, whose sweet tooth is mirrored inrising rates of obesity.As a franchisee of one of the largest beverage

companies in the world, Haad Thip is certainly wellequipped to evolve – and provide the alternative prod-ucts that both the Thai government and health-con-scious Thai consumers are hoping to see on theshelves. Indeed, the company is one of Thailand’sleading beverage manufacturers today, and is preparingfor a major celebration to mark five decades of growthand success.

Coca-Cola made its first foray into Thailand inthe 1950s, starting out in Bangkok with a bottlingcompany called Thai Namthip Co. Ltd. “Back then,the south of Thailand was nothing like it is today,”Mr Rattakul comments. “Travelling south was diffi-cult, there were various security issues and so on,so Coca-Cola refrained from establishing a pres-ence in the region. That remained the case until1969, when a group of local people established abottling business in the south, although with limitedsuccess. In 1974 a group of investors led by myfather, Phairoch Rattakul, took over the company.At that time, we were producing one million casesof beverages per year – and the business has sincegrown to the extent that in 2018 we produced 53million cases, which shows just how much the busi-ness has grown over the decades.”

Haad Thip is one of the two franchise producers and distributors of Coca-Cola beveragesin Thailand, with exclusive coverage of the country’s 14 southern provinces. With thebottler celebrating its 50th anniversary in 2019, Patchara Rattakul, CEO, describes thecommunity-focused philosophy and readiness to respond to market trends that will surelyhelp Haad Thip achieve its long-term goal of becoming a total beverage company.

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Company Profile: Haad ThipWritten by GEMMA KENT

SPARKLINGLEADERSHIP

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Still opportunitiesRegarding products, around 90 per cent of the com-pany’s sales come from the sparkling beverage cate-gory, which includes carbonated soft drinks (CSDs)such as Coke, Fanta and Sprite, while Haad Thip alsoproduces much smaller volumes of still beverages suchas Minute Maid juices and Namthip water. “Altogetherwe produce, market and distribute 16 brands com-prising 134 SKUs,” states Mr Rattakul, “which are soldalmost equally through traditional trade outlets (55 percent) and modern trade channels (45 per cent), withthe latter composed of supermarkets, hypermarkets,convenience store chains such as 7-Eleven, and theHORECA segment.“Going forward, I believe we need to expand our

portfolio further into the non-sparkling beverage cate-gory, which may include milk, soy milk, enhancedwater, herbal drinks, or any other type of beverage forwhich we identify a market demand,” he reflects. “Wehave an 83–85 per cent market share in the CSDsector in our franchise area. However, if all other cat-egories are taken into account, our share of the non-alcoholic, ready-to-drink beverage market is 23 percent, meaning an enormous opportunity exists for usto venture into other beverage categories.”

This will, of course, require investment in newmachinery and equipment because the technologiesused are different – CSD production utilises a coldfilling process, whereas hot filling is used for non-car-bonated beverages such as juices, teas and milk – butHaad Thip is acting in accordance with the overallstrategy pursed by Coca-Cola. “Our long-term goal isto become a comprehensive beverage company,” MrRattakul asserts. “Coca-Cola has more than 500brands and thousands of SKUs from which we canchoose, depending on the readiness and demand of themarket, but I firmly believe that we cannot continueto rely wholly on the marketing of CSDs – particularlyas consumers become more health-conscious.”

Long-serving staffPeople are as vital as equipment at Haad Thip, whichemploys around 2,500 individuals and prides itself ona management style that seeks to blend the best ofWestern and Eastern techniques. Mr Rattakul elabo-rates: “When it comes to employee support and devel-opment, we believe that actions speak louder thanwords; many managers place a lot of importance onpeople in their rhetoric, but we focus on delivering onthe promises that we make. While a workforce of2,500 may seem large, we are a relatively small com-pany with a close-knit team, and our philosophy isaimed at combining Western work ethics with Asianfamily-style working relationships. Our staff turnoveris very low, for instance – people tend to work hereuntil they retire – and every year we set aside at leastthree per cent of our salary bill for training purposes. “Of course, we are cognisant of the fact that we may

have to change our approach as the business continuesto evolve, and any training that we carry out should bedictated by our future requirements as a company,” heremarks. “We try to customise our training to ensurethat we have the right people in key positions, while

Mr Patchara Rattakul, CEO

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Serving the SouthHaad Thip was listed on the Stock Exchange ofThailand in 1988, and following that the emergence ofmodern trade channels provided ample growth oppor-tunities for the business, as Mr Rattakul reports: “Ouroriginal facility is located in Haad Yai, in the provinceof Songkhla, near the Malaysian border, and in 2012we opened our second plant in Poonpin, in SuratThani. We chose that particular location because itlies approximately halfway between Bangkok and thesouthernmost area of our franchise, and most of ourraw materials come from the central part of Thailand:sugarcane is grown in Kanchanaburi, for instance.Shipping all of these raw materials down to our plantin Songkhla and then distributing the end productsback up to the northernmost province we serve wasbecoming costly, so we have made substantial savingsby opening a second plant in Surat Thani. Today, thenew plant primarily serves the northern part of ourfranchise area, while the Songkhla plant caters forour customers further south.

“Between these two production facilities we main-tain two glass manufacturing lines, three PET lines,one can line, and two bag-in-box lines, while we alsohave three injection machines for producing our ownpreforms,” he informs us. “In addition, we have 20distribution centres throughout the region from whichwe serve the 14 southern provinces within our desig-nated franchise zone – a 70,000-square-kilometre areawith a population of around 10 million.”Continuous investment in technology and

equipment is vital for a bottling company, and it isprudent to invest ahead of demand. Haad Thip’sfacility investments therefore tend to be dictated bymarket trends, which, at present, are indicating anexponential growth in demand for plastic containers.“The contribution of glass bottles to our business isreducing due to consumer preference for conve-nience,” Mr Rattakul explains, “which remains amajor factor in purchasing decisions. As a result,most of our upcoming investment projects will begeared towards PET lines.”

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Congratulations to Haad Thip Public CompanyLimited on their 50 anniversary!It is truly an honor for Cornelius to be part of Haad Thip’s legacy in Thailand and for theopportunity afforded to Marmon Cornelius to be involved over the past 25 years as theirmain equipment supplier and innovation partner for fountain and dispense equipment.

On behalf of the staff and management at Marmon Cornelius, we would like to extend ourheartfelt appreciation and wish you every success in 2019!

Marmon Cornelius – The Preferred Dispense Innovation PartnerCornelius is relentlessly committed to providing an innovative platform for growth and transformation in thebeverage dispensing industry. We have worked closelywith the industry to develop trend-related innovationsthat fit the market demands. In 2019, we are launching technologies that will redefine the beveragedispensing landscape.

Prism ValveThis clever retrofitted solution will empower our existingcustomers to expand dispense varieties without newequipment. In the same footprint of a single standardvalve, 3 flavors can be added for each valve. This

improves the operations significantly; it also supportsstrategic expansion in a rapid and cost-effective manner.

Frozen Multi-flavor Valve (FMFV) Research has shown that customers are attracted tohaving variety in frozen carbonated beverages (FCB).Like the Prism Valve, this solution is also retrofittable onCornelius’ range of frozen equipment. Having the samebenefit, a single barrel can be converted into a whopping8-flavor offering. This innovation is at the very heart ofrevitalizing frozen beverage program across the globe.

Nitrogen infusedApart from the traditional carbonated beverages, Cornelius has a plethora of solutions for nitrogen and

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part of a continuous journey, including those relatedto water stewardship. “Being one of our vital naturalresources, water is an important focus area for us andwe are striving to be more responsible with how wemanage our water,” Mr Rattakul affirms. “Our aim withthese initiatives is to replenish in equal volumes thewater that we use in our operations, and we achievedthis target of water neutrality four years ago – six yearsearlier than we had originally intended. “In addition, we have various ongoing projects in

different areas aimed at facilitating knowledge transferand helping local communities. We have teams in theprovinces of Surat Thani, Chumphon and Songkhlathat provide the support and resources necessary toempower villages to manage their water from end toend, for instance, which we deliver together withindependent bodies.”In terms of energy, the company has replaced

numerous vehicles with those fuelled by ‘cleaner’ ener-gies, such as electricity or gas, and recently completeda project to install solar panels on the roof of its plantin Surat Thani – a project that will soon be replicatedat the Songkhla plant. “Once completed, both our pro-duction facilities will obtain 80 per cent of their energyneeds from these rooftop solar panels,” he assures us.

“Limiting our carbon footprint is an important com-ponent of our commitment to sustainability, and ourpriority in that respect is creating awareness – withinour own organisation, first and foremost. In fact, wewere the first company in Thailand to put the carbonfootprint of individual products on the label. We arein the process of collecting all information necessaryto reduce our carbon emissions, which is a longjourney that requires significant co-operation fromall parties involved. “We are also continuously striving to reduce the

weight of our PET containers by using less plastic;most water bottles in the market weigh more than 13grams, but we have managed to reduce our bottle toonly 10.7 grams.” Moreover, Haad Thip is one of anumber of companies lobbying the Thai governmentto change the law, which currently prohibits the useof recycled plastic to make new water bottles due toobsolete health and safety stipulations. “Another moresustainable option for bottles would be to producethem using plant-based pellets – an initiative that is inthe pipeline,” reveals Mr Rattakul. “We are very awareof the fact that we distribute a lot of plastic, and it isour responsibility to do as much as we can to retrieveand recycle that material.” ‡

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making sure our employees are provided with every-thing they need to map out a clear career develop-ment path.”While acknowledging that selling soft drinks is “not

rocket science”, Mr Rattakul points out that rapidtechnological advancement can make things morecomplicated. “The proliferation of online sales andmarketing has blurred the distinction between variouschannels, for example – and we need to be preparedfor disruptions,” he tells us.“We are currently developing a B2B application to

support our customers throughout the ordering pro-cess; we are also automating our sales system – fromreceiving orders to managing our warehousing anddistribution, and getting our products onto the shelves.

Last year we upgraded our SAP sales and distribution,for example, in order to increase our efficiency, whichhas a direct impact on customer and consumer satis-faction in the form of order accuracy, items being instock, and sales execution. The latter is very importantin this industry because if our sales reps have moretime available to spend on-site with customers,helping them merchandise the products, making surethey are sufficiently chilled and so on, uptake is likelyto be higher.”

Forging a sustainable pathAs would be expected of a Coca-Cola bottler, HaadThip treats sustainability as a top priority, and the com-pany maintains a number of major projects that form

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A total beverage companyIt is certainly the case that there are few independentbottlers like Haad Thip left around the world, andMr Rattakul firmly believes the company’s ability tosurvive and fight off the competition is down to itsphilosophy, which has remained the same since dayone. “We are committed to growing our business sus-tainably by being a responsible, caring entity in all thecommunities in which we operate – whatever we cando to help the community, whether it involves culture,education, health or sport, we go out of our way to doit,” he proclaims. “The south of Thailand has unfortu-nately been affected by a number of natural disasters,including the 2004 Boxing Day tsunami, and in theaftermath of such events we have halted productionof all products except water, and sent teams of peopleout to distribute vital goods. We strive to make a differ-ence wherever possible, and as well as being a pointof pride for our staff, our role within the communityis appreciated by consumers and is reflected in thechoices they make at points of sale.”The company’s role in the community going forward

will likely revolve around the choices it offers to con-sumers, and Mr Rattakul is well aware of the changesthat need to be made. “The biggest consumer trendshaping our business at present is the growing demandfor healthier beverages containing less sugar, and wehave to ensure we can offer plenty of choices in that

respect. As well as expanding our product range toinclude non-sparkling beverages, we have also beenreformulating some of our existing products with aview to reducing sugar content without compromisingon taste, which has been very successful.“We must also carve out a role for our business in an

environment where consumers can get almost any-thing with a simple click,” he observes. “We are seeingdemand from a B2B perspective for the ability to ordera few cases of Coke, for example – in the fastest timeat the cheapest price – and we are addressing that.Meanwhile, in the consumer sphere we’re linking upwith a few foodservice delivery firms, which may notgenerate large volumes but is another way of servingcustomers by adhering to the current trend.”Generally speaking, Haad Thip is a conservative

company that is determined to continue doing what itdoes best: offering high-quality products and remainingat the forefront of customers’ and consumers’ minds.“Of course, we must also consider where we want tobe in the next decade, and part of that is our targetof reaching annual sales of 100 million cases,” MrRattakul advises. “With regard to diversification, ourstrength lies in our distribution network and marketknowledge, so there are opportunities for us to expandinto other FMCG products besides beverages,although our overall aim is to become a total non-alco-holic beverage company,” he concludes. o

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