The company will also start making a few new products.

"We're introducing new products to stir and maintain excitement and expanding the line of our products," said Somchai Bulsook, president and chief executive while in Ho Chi Minh City on a personal trip.

Somchai said the company has set a sales growth goal of 6 per cent. Serm Suk posted Bt16 billion in sales last year, up 8.8 per cent from 2004, Somchai said.

Despite higher sales, the company's 2005 net profit was Bt511 million, down 4.3 per cent from 2004. In the past two years,

Serm Suk's profitability has declined due to the spike in oil prices, which raised the costs of raw materials, transportation, and labour.

Besides petrol prices, the price of raw materials especially sugar - an important ingredient for carbonated drinks - and the minimum wage have also increased last year, he said.

"Moreover, soft drink prices have remained the same over the past seven or eight years," he said.

Its three main strategies this year are to be the country's best bottler, strengthen Serm Suk's brand and improve distribution through more efficient logistics services.

Meanwhile, the company will expand its successful Crystal drinking water brand into other products, inspired by a 40-per-cent sales increase, which placed it in the No 2 market-share position for bottled water.

To improve distribution, Serm Suk has incorporated new logistics operations to reduce fuel-related costs. Oishi and Carabao are among its customers.

Thailand's beverage industry last year continued to grow. Carbonated drinks remained the main income generators for Serm Suk. Last year, the Pepsi brand enjoyed 7 per cent growth and a remarkable 63.5-per-cent market share. Serm Suk reached a new milestone last year because it won over competitors for six months for the first time with the highest over?all carbonated drink market share.

To cut fuel costs, Serm Suk's salesmen will use motorcycles to pre-sell products to agents instead of using sales trucks to visit them. The introduction of motorcycles will save fuel consumption the company figures.

"The project is an important strategy to save on petrol costs," he said.

Sermsuk has 200,000 retail customers, 1,400 distribution trucks, 6,000 sales representatives and about 50 warehouses. Somchai said the company would spend Bt200 million this year to build another two warehouses in Bangkok's adjacent areas to short?en the distance for the distribution trucks, and another Bt220 million to increase the efficiency of the trucks to carry more weight and save costs per trip.

Chatrarat Kaewmorakot

The Nation

Vietnam