GEORGE TOWN: Bottled water products maker Spritzer Bhd has allocated RM65mil to expand its warehousing facilities and production capacity.
This includes a plan to build an automated warehouse in Taiping, Perak, this year at a cost of RM45mil and a RM20mil budget to add new production lines at its Shah Alam plant.
“Both expansion projects are scheduled for completion in 2019,” group managing director Datuk Lim Kok Boon told StarBiz.
When completed, the group’s production capacity will increase by 30%, while its production lines will increase to 17 from 15 now.
The group’s current production capacity stands at 650 million litre per annum.
Spritzer estimated that it has more than 40% market share of the bottled water industry in Peninsular Malaysia.
The new investment is part of the group’s ongoing strategy to improve profit margins.
Spritzer posted a net profit of RM7.3mil on revenue of RM79.4mil in the three months ended Dec 31, 2017.
“We are striving to improve our operational efficiency by streamlining our processes with greater automation,” Lim said. “There will be continuous efforts to grow our sales volume and market share,” he added.
According to Lim, Spritzer will launch new products this year or early 2019.
He said the company had recently rebranded its Spritzer+Fibre to Spritzer BonRica, a healthy beverage that contains soluble dietary fibres.
Its new 300ml Cactus natural mineral water was recently introduced to the market.
“We will be adding a few more variants such as carbonated mineral water,” Lim said.
He said consumers are getting away from sugary drinks.
“Some are turning to carbonated mineral water as it quenches their thirst and enables them to stay healthy.
“In Europe and the United States, carbonated mineral water has been popular against the sugary drinks.
“We will continue to invest in new product innovations that focus on health and functional benefits and also catering to the more sophisticated taste preference of the consumers,” he said.
Lim added that the bottled water market is highly competitive and fragmented with numerous players in the industry.
“We are confident that the demand for our bottled water will remain firm due to our good distribution networks and strong brand equity.
“Our core brands of Spritzer, Cactus and Summer are also the leading brands in their respective market segments.
“We are optimistic that the Spritzer group will continue to do well in year 2018,” he added.
According to a Statista Consumer Market Outlook report, the revenue of the bottled water segment in Malaysia is about US$233mil (RM901.83mil) this year.
“The market is expected to grow at a compounded annual growth rate of 9% from 2018 to 2021,” Statista said.
Statista’s Consumer Market Outlook offers a detailed insight into the world’s consumer goods and provides trends and forecasts for experts in the consumer goods markets.
A Euromonitor International report in February 2018 said the bottled water in Malaysia continued to record volume growth in 2017, as players invested in their production processes to launch new premium bottled water products.
“With consumers looking for greater variety and sophistication, private label brands have taken the opportunity to enter modern grocery channels, leading to an increase in their volume sales in 2017.
“Given the hot climate and consumers’ growing health-consciousness, players have tapped into this trend to strengthen their brand presence and competitiveness.
“Domestic players continued to dominate bottled water in 2017, due to their wide price ranges, appealing to consumers with different income levels,” Euromonitor International added.
Euromonitor International is a leading independent provider of strategic market research.