GEORGE TOWN: Spritzer Bhd’s recent RM76mil investment into an agricultural property in Perak is part of the group’s five-year business plan strategy to stay competitive in the country and to expand its market share overseas.
Group managing director Datuk Lim Kok Boon (pic below) told Starbiz that depending on the capacity and the availability of the water source, the property measuring over 1,200 acres could accommodate production facilities with a total capacity four to five times bigger than the one currently in operation in Taiping.
Spritzer’s plant in Taiping is 70% utilised, and the group needs to make expansion plans should it run out of water capacity one day.
Lim added that the group needed to achieve economies of scale before competing effectively in the overseas market.
“Because the domestic market is limited, expanding overseas is a strategy we have been thoughtfully exploring.
“Overseas expansion doesn’t necessarily mean we have to move into a new market.
“We already have some presence in Brunei, Singapore, China, the UK, Holland, Pakistan, and Korea.
“For us, the overseas expansion would mean strengthening our presence in these markets.
“With the economy of scale, we can explore launching new value-added products to grow stronger in countries where we have the distribution and marketing networks, ” Lim said.
Lim added that the acquisition was timely as the South-East Asia bottled water market would grow at a compounded annual growth rate (CAGR) of 11.39% over the next five to six years.
“Changing customer preferences and growing demand for clean and safe drinking water aids the bottled water market in South-East Asia to grow exponentially.
“Rising South-East Asian disposable income and rapid industrialisation is driving the bottled water market and is gaining a higher sales revenue for the market players.
“Countries such as Indonesia, Philippines, Thailand, and Malaysia in the South-East Asian region are categorised under newly industrialised countries globally, which leads to a rapid expansion for bottled water industries, providing high growth potential.
“Observing the difference in the quality of the product, consumers prefer global players over domestic players, resulting in the domestic players not commanding similar level of market pricing, ” he said.
On the group’s sales performance for the first quarter, Lim said the group expected a flat quarter against the fourth quarter that ended in Dec 2020.
“We sold about RM68mil worth of bottled water in the fourth quarter. Our current bottled water capacity is about 800 million litres per annum, ” he said.
Spritzer has net cash of RM100.8 million as of the end of 2020.
“In March this year, we paid RM76mil for 1,228 acres of land located near our existing mineral water plant in Taiping. Though the cash flow of our group is healthy, we are cautious of the uncertainties ahead. We will manage our resources and cash flow prudently to navigate through the choppy waters carefully.
“We will postpone the non-critical capital expenditure until the situation improves. A good cash flow and a healthy balance sheet will enable us to seize any growth opportunities that may emerge, ” Lim said.
Spritzer has three bottled water plants and one plastic packaging manufacturing plant in Malaysia. Its principal mineral water plant is located on a 330-acre site in Taiping, Perak, with the second mineral water plant in Yong Peng, Johor and the third drinking water plant in Shah Alam, Selangor.
The group’s plastic packaging manufacturing plant is located in Ipoh, Perak.
In 2020, Spritzer completed its integrated warehouse with automated storage and retrieval system (ASRS), which has a capacity of 15,000 pallets.
“The commissioning of the ASRS warehouse has improved the efficiency and effectiveness of our supply chain management and at the same time minimising the use of forklifts and thus reduces our carbon footprint, ” Lim added.