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  • Monday, 25 Jan 2016

Soft drink industry faces health challenges

According to Euromonitor International, the global soft drink industry saw marginal growth from 2014 to 2015. Growth reached 5.5% in value terms, with energy drinks being the fastest growing category, followed by bottled water and sports drinks.

Total volume in the overall soft drinks category grew by 3%.

The soft drinks industry would face multiple headwinds in 2016, it predicted, with emerging markets continuing to struggle as health concerns grew and shifted.

“Traditional low-calorie options may not be enough for carbonates. Consumers are increasingly skeptical of added ingredients, particularly artificial sweeteners,” said head of Soft Drinks and Hot Drinks Research, Michael Schaefer.

Reduced-sugar carbonates underperformed regular, full-calorie carbonates in both North America and Asia Pacific. A large-scale shift to lighter, often naturally less-sweet beverages and bottled water, above all, will continue to drive innovation globally, the reseachers suggested.

Meanwhile, the global hot drinks industry performed well, achieving slight improvement over growth in 2014. Hot drinks growth reached 7% in off-trade current value terms, with tea being the fastest growing industry category, followed by other hot drinks and coffee.

Total volumes in hot drinks grew by 2%.

Some 90% of MSC firms still at startup level

About 90% of 3,000 Multimedia Super Corridor (MSC) status companies are still trapped at the startup level after two decades of existence, the Multimedia Development Corporation (MDeC) revealed.

“They have not been able to break away from there,” MDeC CEO Datuk Yasmin Mahmood said.

MSC Malaysia status is a recognition by the government, through the MDeC, for ICT and ICT-facilitated businesses that develop or use multimedia technologies to produce and enhance their products and services.

MDeC started a new initiative called Global Acceleration and Innovation Network (GAIN) last November to help grow high-potential MSC-status companies become regional and global players, aiming to boost annual revenue to RM100mil.

Yasmin said about 88% of IT companies in Malaysia, or 1,413 firms, currently earn an average annual revenue of about RM1.4mil, while 10% or 170 companies, earn about RM26mil a year.

“Only about 24 companies or 2% manage to surpass RM100mil in earnings and average revenue of RM267mil,” she said.

Yasmin said MDeC had identified about 100 companies so far to be further accelerated through the Immerse, Connect and Excel-erate (ICE) intervention strategy under GAIN by identifying areas where they need help like market access, capability development, risk capital and technology and business disruption.

Tailor financial system to local needs

Malaysia’s financial system should be tailored according to the needs of users here, instead of following what was being done in advanced economies, advised a British economist.

Prof John Kay, visiting professor of economics from the London School of Economics, said the financial system must develop a model suited to customers.

“A lot of what has happened in terms of increased complexity and the detailed regulation in the West for the last 30 years has resulted in something undesirable. That is a route to not follow,” he said last week.

Prof Kay said the 2003-2008 credit expansion, followed by the credit crunch, in the US, was caused by regulations that were too complex. The financial sector grew too large, became detached from ordinary business and everyday life, becoming an industry that mostly trades with itself.

He said a financial system needed a regulatory philosophy that focused on the structure of the industry and the people in it.

“As for the structure, it must be simple, have direct chains of intermediations and focuses on the particular needs of users of financial services. Perhaps we (the West) did not get it quite right.”


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