Company aiming for market share in China

Tingyi (Cayman Islands) Holdings, China's biggest packaged-food maker, is aiming for a 30 percent market share in the mineralized water segment in the next three years in an effort to grab a bigger slice of the mainland's beverage market.

At present, Tingyi has a 12.4 percent share of the mineralized water market.

"We aim to become the leader in bottled water next year and boost our market share to 30 percent between 2008 and 2009," chief financial officer Frank Lin said.

Tingyi, which sells products under the Master Kong brand, ranks second behind Wahaha.

Tingyi has a 12.4 percent share in terms of value, while Wahaha has a 15.9 percent share in the mineralized water business.

Driven by rising sales of bottled water in the mainland, Tingyi's beverage business, which accounted for 51 percent of total sales in the first nine months, grew significantly this year, surpassing instant noodles, which made up 42 percent of revenue.

Tingyi entered the bottled water market in 1997, but gave up a year later, citing low margin.

"We failed because our costs were higher than that of our competitors at the time," Lin said.

In 1998, Tingyi started to focus on the tea segment and emerged to overshadow its competitors. As of end September, Tingyi was the leader in the ready-to-drink tea segment in the mainland, cornering 50 percent of the market in terms of sales value.

"We reentered the bottled water market in the beginning of last year, because we saw an opportunity," Lin said.

Lin said water pollution in the mainland is serious, boosting demand for bottled water. According to the World Bank, China ranked No 1 in water pollution, emitting 6.09 kilograms of organic pollutants per one million units of water per day, ahead of the United States, where the rate is 1.9 kilograms.

"If we do well in the bottled water market, it could solidify our beverage market leader position in China," Lin said.

Bottled water is the largest segment of the mainland's beverages market, accounting for about 52 percent, followed by carbonated drinks making up 21 percent, and ready-to-drink teas adding up to 12.7 percent.

To capitalize on the opportunity it has identified, Tingyi plans to add 27 production lines for mineralized water next year, after having added 18 lines this year.

With more advanced equipment, Tingyi's gross margin in mineralized water has improved to 30 percent, compared with between 15 percent and 18 percent among competitors.

However, compared with the 40 to 45 percent gross margin for tea and juice products, increasing sales of mineralized water is dragging down total gross margin in Tingyi's beverage business. In the first nine months, total gross margin in the beverage business slipped 3 percentage points to 38.01 percent.

Tingyi also plans to further explore opportunities for noodles that cost less than 1 yuan (99 HK cents), which accounted for 18 percent of noodle sales.

The strategy of expanding sales in this segment has been to set up small factories in the countryside. Eight such facilities have been built in Sichuan, Hunan and Hebei.

"We need two years to bring the low-end noodles business into break even," Lin said "We won't give up this market."

Noodles costing less than 1 yuan, accounted for 65 percent of the total instant noodles market in the mainland. The gross margin for low-end noodles is about 10 percent.

Lin said Tingyi will build eight factories in the countryside in the next two years. This could help improve the gross margin, because of lower production and transport costs.

Jennifer Strange, 28, was found dead Friday in her suburban Rancho Cordova home hours after taking part in the "Hold Your Wee for a Wii" contest in which KDND 107.9 promised a Nintendo Wii video game system for the winner.

"She said to one of our supervisors that she was on her way home and her head was hurting her real bad," said Laura Rios, one of Strange's co-workers at Radiological Associates of Sacramento. "She was crying, and that was the last that anyone had heard from her."

It was not immediately known how much water Strange consumed.

A preliminary investigation found evidence "consistent with a water intoxication death," said assistant Coroner Ed Smith.

John Geary, vice president and marketing manager for Entercom Sacramento, the station's owner, said station personnel were stunned when they heard of Strange's death.

"We are awaiting information that will help explain how this tragic event occurred," he said.

Initially, contestants were handed 8-ounce bottles of water to drink every 15 minutes.

"They were small little half-pint bottles, so we thought it was going to be easy," said fellow contestant James Ybarra of Woodland. "They told us if you don't feel like you can do this, don't put your health at risk."

Ybarra said he quit after drinking five bottles. "My bladder couldn't handle it anymore," he added.

After he quit, he said, the remaining contestants, including Strange, were given even bigger bottles to drink.

"I was talking to her and she was a nice lady," Ybarra said. "She was telling me about her family and her three kids and how she was doing it for her kids."

Resource: http://www.thestandard.com.hk