Tingyi, the Chinese company behind the leading Master Kong noodle brand, is investing in the latest processing technology from Europe to grow an efficient beverage business that is threatening the market share of its competitors.

Turnover from beverages reached US$918 million for the first nine months of 2006, up by 55.8 per cent on the prior year, and well past the $754 million from noodles.

Tingyi, which claims to have pioneered the ready-to-drink tea category in China, leads this market with a 50 per cent share, thanks to use of the Master Kong brand, already well-known by consumers of its noodles.

It plans to add a further 16 production lines for juices and tea next year. But its efficient production technology has also allowed it to create a profitable bottled water business.

In water, it is still behind beverage leader Wahaha but has increased its volume share from 6 per cent this time last year to 12.4 per cent to become the number two.

The company had previously entered the bottled water business in 1997 but high machinery costs meant it soon exited the business that came to be dominated by Wahaha. However experience with European machinery has now given it an edge in this low-margin product, which it started producing again last year.The firm's manufacturing model is unique in the Chinese beverage industry.

Chinese beverage makers have been hit by the rising cost for PET, the plastic increasingly preferred to bottle drinks. Tingyi says it was 10 per cent higher in this year's third quarter compared with the previous year's same period.

French firm Sidel says that an order for 20 complete PET bottling lines at Tingyi's Tianjin plant is its largest ever order. The firm has also placed an order with Swiss firm Netstal for 12 injection moulding machines to produce bottle closures. Netstal estimates that it will be the largest production system of its type in China.

Tingyi's profits have still been affected by sugar prices, which were up by 55 per cent in the third quarter this year, but it has launched several sugar-free variations of its teas to make higher costs a marketing opportunity. And it has still managed to report a 21 per cent increase in operating profit for the first nine months of the year to US$203.6 million, despite higher volumes of the relatively low margin bottled waters. Wahaha's share of bottled water volumes has dropped to 14.5 per cent from 18.7 per cent this time last year.

Source:佚名