Thailand’s Sappe Accelerates Efforts To Establish Itself As Global Lifestyle Brand

In a nondescript, chalk-white office building on a traffic-choked road on the outskirts of Bangkok, a scrappy beverage company is hatching big plans to build itself into a globally recognized lifestyle label. Sappe makes a range of products that tap ingredients aimed in particular at the health- and beauty-conscious Generation Z. But while it already has a toehold on five continents, its expansion efforts thus far have been low-key.

Now it’s accelerating its bid to build a worldwide brand as part of a five-year plan to more than double its annual revenue to 10 billion baht ($287 million) by 2026. Overseeing this vision is CEO and founding family member Piyajit Ruckariyapong. Over the past decade the former banker, 48, has grown Sappe’s brand portfolio, moved aggressively into new markets, and pushed up profit and revenue, sending shares soaring 115% in the past year.

“In Thailand, we have so many natural resources and [our] products are good quality,” says Piyajit in an exclusive interview at Sappe’s head office in Bangkok in July. There’s “no reason Thai people can’t build a brand that competes in the international arena. ” Sappe already exports to almost 100 countries, in Asia, Europe, the Americas and the Middle East.

Its net profit climbed 59% to 653 million baht in 2022 from the year before while revenue gained 32% to 4. 6 billion baht, more than three-quarters of which came from overseas. The results earned the company a place on our latest Best Under A Billion list and catapulted the family into the ranks of Thailand’s 50 Richest list for the first time with an estimated fortune of $590 million.

Piyajit predicts 2023 will be even better, with sales growing at a double-digit pace. In the first half, net profit and revenue jumped 83% and 31%, respectively. Sappe makes some two dozen products, including a coffee powder it says helps with weight loss, vitamin water, collagen-enriched edible gels and green-tea extract as well as drinks infused with CBD, a non-psychoactive compound in cannabis.

But its plans for the future rest on three key beverages that it exports and that account for 90% of total revenue: juice drinks Mogu Mogu and Aloe Vera, both mixed with jelly-like chewy bits, and a third beverage called Beauti Drink. The key ingredient in Mogu Mogu is nata de coco, a fiber-rich gel made from the fermentation of coconut water, while Aloe Vera contains nutrient-rich cubes of aloe vera gel. Beauti Drink boasts zinc and collagen, said to promote healthy skin and bones.

The market for such so-called beauty beverages is projected to grow to $2. 8 billion in 2027 from $1. 5 billion in 2021 with a CAGR of 11%, according to Dublin-based research firm Research & Markets.

The pandemic boosted interest in functional consumables (food and drink with added vitamins and minerals, among other ingredients), according to Nathanael Lim, a Singapore-based analyst for market research firm Euromonitor. “There’s a new health paradigm emerging, focusing on prevention rather than treatment,” he says by email. Adds Krittinee Nuttavuthisit, associate professor of marketing at Chulalongkorn University in Bangkok, it’s no coincidence that Sappe’s top Asian markets are Indonesia and the Philippines.

Young consumers there share a common interest in beauty and “looking good is an important way to present yourself to gain success,” she says. The company says its revenue must grow at least 20% annually if it is to reach its 2026 goal, and for that it is looking overseas. Asia accounts for the largest share of Sappe’s sales, about 45%, while Europe is the second-largest and fastest-growing region, making up 20%.

Thailand will remain a testing ground for new offerings, and domestic revenue is expected to grow about 10% a year, according to Piyajit. Sappe’s aspirations to become a global brand face challenges, however, including the risk of lower margins due to rising sugar prices and the need to increase production, not to mention a highly competitive market. Analysts say Sappe so far has managed to maintain its roughly 40% gross margin, partly by cutting costs in other areas, such as packaging.

But capacity is being pushed to the limit, says Yuwanee Prommaporn, an analyst with Bangkok-based Krungsri Securities. “Any hiccup could derail sales and profit growth,” she says. A ll of Sappe’s goods come from its factory in a Bangkok suburb.

The company is in the process of expanding capacity by 30%, and expects to further lift production by 30% a year from 2024-2025. In addition, it is building an automated warehouse to cut distribution costs. In all, it plans to spend 1.

6 billion baht on improvements. In March capacity constraints forced the company to outsource 10% of production to a local partner, but Piyajit says this is a temporary solution and Sappe is closely monitoring quality. Sappe might eventually consider producing abroad and is also open to mergers and acquisitions, she says, but “the problem with expanding in different countries is finding the right partners … it’s not that easy.

” Sappe has teamed up with other companies both to enter new markets and to expand its product offerings. It recently tapped Power Root, a Kuala Lumpur-based maker of canned coffee and premixed coffee powders, to sell Mogu Mogu in Malaysia. In return, Sappe will make and distribute one of Power Root’s products in Thailand.

It also has a joint venture with Danone whereby Sappe makes and sells the French food giant’s B’lue vitamin water in Thailand. In the past, the beverage maker has edged its way into markets overseas with little fanfare. Its strategy was first to place its products in small Asian and Hispanic grocery stores to test the waters, then widen distribution to convenience stores, supermarkets and hypermarkets.

Piyajit says this was intentional: “We didn’t want to tell everyone that we are here … to prevent ourselves from having too much competition. ” That competition is heating up, with heavy hitters such as Coca-Cola and Nestle getting into the market for health and beauty drinks. But Piyajit isn’t overly concerned, saying her company’s products are priced competitively.

She also points to an innovative approach and constant testing of new flavors to tempt Gen Z. They “tend to get bored very easily,” she explains. For example, Sappe launched two limited-edition flavors of Beauti Drink earlier this year, one called Summer of First Love, and the other, Lucky in Love.

“[Sappe drinks] are connected with love,” says Chulalongkorn University’s Krittinee. “Summer love, love for the first time, these are things that capture the interests of the young. ” Sappe also now leans more heavily on marketing, in particular on social media, e-commerce platforms and apps as it targets young consumers, many of whom are passionate about Korean culture.

Among its efforts to leverage K-pop fever, Sappe last year opened a shop on Zepeto, the popular metaverse platform of Korean tech giant Naver, to sell Mogu Mogu-branded items that users can buy for their avatars. It also has a product-placement deal for Mogu Mogu in the 2023 K-drama Crash Course in Romance , now streaming on Netflix. Piyajit was exposed to entrepreneurialism at an early age.

Her parents founded a company called Sapanan General Food (later shortened to Sappe) in 1973 to sell Thai-style savory snacks and candied peanuts under the label Piyajit, named after their daughter. She earned a bachelor’s degree in liberal arts from the University of Sheffield in the U. K.

before returning to Asia to work in banking for 15 years, mostly in Bangkok, with stints at Barclays Capital Securities and French banking giant BNP Paribas. In 2012 Piyajit joined Sappe as chief financial officer. Three years later she was named CEO after her brother, Adisak, 50, stepped aside.

Her father, Anan , 80, remains president while her mother, Somnuk Isoonpisansiri, is vice president for safety and health. Adisak is vice chairman and two other brothers, Arnupap, 45, and Tanarat, 42, are chief operating officer and vice president of procurement, respectively. Anan, his wife and their four children own roughly three-quarters of the company.

Transitioning from the hierarchical world of banking to the freewheeling atmosphere at Sappe (the company office resembles that of a startup, with swings and a ping-pong table) was not easy. Its employees, with an average age of 32, ask a lot of questions, sometimes even questioning how things are done, says Piyajit. “I had to change my whole way of working,” she explains.

“You can’t afford to fight people all the time … it’s not good for the culture of the company. ” That flexibility has drawn attention: “Piyajit is a very, very inspiring boss,” says Krittinee, who got an up-close view when she was advising a company working with Sappe. “Her staff were not shy about participating,” she says.

“That’s not typical of Thai companies. ”.