February 21, 2017

Hong Kong-based leading manufacturer and distributor of plant-based foods and beverages, Vitasoy, and Universal Robina Corp., the largest listed food company in the Philippines, announced that they are launching Vitasoy-URC Inc. – a 50/50 joint venture to explore the potential of sustainable plant-based beverages on the Philippine market.

Founded in 1940 by Dr. Kwee-seong Lo, Viatasoy has grown to have manufacturing operations in Hong Kong, Mainland China, Australia, and Singapore. The group is a leading international manufacturer and distributor of sustainable plant-based foods and beverages including soy milk, coconut milk and almond milk, as well as tofu, teas, juices, distilled water and other beverages.

Made with non-GMO soybeans, Vitasoy’s soymilk is sold under a range of formulations that are free of cholesterol, low in saturated fat, are lactose-free, and offer a good source of protein. As consumer demand increasingly shifts toward plant-based dairy alternatives, Vitasoy now sells to more than 40 global markets, and had a market capitalization exceeding $2 billion as of January 31, 2017.

“We see a perfect fit in this joint venture, as both URC and Vitasoy are companies that strive to promote both consumer well-being and sustainable nutrition,” said URC’s President and CEO, Lance Y. Gokongwei. “Vitasoy is an innovative company, a reliable employer, and a responsible corporate citizen dedicated to providing food and beverage that are compatible with a healthy lifestyle to communities and to creating value for its shareholders.”

Universal Robina is the largest listed consumer food and beverage company in the Philippines with an established, widespread presence across the ASEAN market. The group also has recently expanded its reach across Oceania with the acquisition of New Zealand’s largest snack maker, Griffin’s Foods from Pacific Equity Partners in 2015 for NZ$700 million, and the announcement in August 2016 that it had agreed to acquire Snack Brands Australia (SBA), Australia’s second largest savory snack manufacturer behind Frito-Lay, for A$600 million.

“The addition of Snack Brands into the URC organization will also further enhance the innovation capability of the total organization and reinforce our thrust on premiumization [sic] given emerging global consumer trends on indulgence, health, wellness, and nutrition,” said Gokongwei upon the announcement of the SBA acquisition.

This push by the group to tie into global consumption trends and premiumization is a theme being repeated through Vitasoy-URC Inc.

“URC is a sizable company within a successful group with strong leadership in the food and beverage industry,” said Robeto Guidetti, CEO of Vitasoy Group. “Vitasoy is excited about the partnership of two successful Asian family companies to bring high quality sustainable plant-based beverages to the Filipino community.”

Asia-Pacific Potential

Growth drivers for dairy alternatives are expected to be particularly pronounced in the Asia-Pacific region according to Grand View Research, which forecasted in August 2016 that global leaders in the segment, including Danone, Vitasoy, Sunopta, Earth’s Own Food, and Blue Diamond Growers, will likely target the Asia-Pacific market to either establish or expand their businesses due to growing population bases, increasing wealth, and the high rate of lactose intolerance in consumers in China, Japan, Korea, India, Australia, and New Zealand.

The market potential is significant. The Asia-Pacific dairy alternative market accounts for 40.9 percent of the total global market. Within Asia-Pacific, the market was valued at $3.2 billion in 2013, and is expected to grow at a compounded annual growth rate (CAGR) of 20.1 percent to reach a value of $7.9 billion by 2018, according to Micro Market Monitor.

Vitasoy and URC are already coming together from positions of strength. Vitasoy Group has a five-year CAGR of 11 percent, climbing from US$478 in fiscal year 2011/2012 to US$714 million in fiscal year 2015/2016. Over that same five-year period, the group’s Hong Kong operations saw a CAGR of six percent, while its international operations saw a CAGR of 14 percent.

Besides consumer branded foods, URC controls a range of food-related businesses, including sugar refining, flour milling, animal feed milling, hog farming, and other agro-industrial operations. The group saw sales of its branded products – both in the Philippines and abroad – post a five-year CAGR of 13 percent, rising from US$1.2 billion in fiscal year 2011 to US$2 billion in fiscal year 2016. Over the same five-year period, the group’s International Branded Foods saw a CAGR of 10 percent, and its Domestic Branded Foods saw a CAGR of 14 percent.

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at lkiernan@globalaginvesting.com