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Friday, July 27, 2018, 11:24
Deep nostalgia in that little glass bottle
By Edith Lu in Hong Kong
Friday, July 27, 2018, 11:24 By Edith Lu in Hong Kong

HK beverage giant Vitasoy has withstood the test of time some 80 years after its founding. Chief Executive Roberto Guidetti says his mission is to remain loyal to the roots of a global success story. He talks to Edith Lu. 

Roberto Guidetti, chief executive of Vitasoy International Holdings, says he wants to innovate on the basis of respecting history. (ROY LIU / CHINA DAILY)

If you were asked on the streets in your youth what’s your favorite drink in winter, your good ole response would probably be: a glass bottle of warm soy milk from Vitasoy.

It’s a home-grown story that promises to take one down memory lane and which continues to evoke a strong notion of nostalgia among Hong Kong people.

With its roots in Hong Kong for close to 80 years, the classic local brand — one of the city’s ubiquitous beverage giants — was the brainchild of entrepreneur Lo Kwee-seong that has come to represent the collective memory of local people and a part of their culture since its founding in 1940.

“Some of our products have been on the shelves for decades. The image Vitasoy represents among local people is very clear,” says Roberto Guidetti, chief executive of Vitasoy International Holdings — Hong Kong’s largest beverage maker.

Prices are always important, but it’s even more important to have high-quality and innovative products to ensure healthy and nutritional benefits

Roberto Guidetti, chief executive of Vitasoy International Holdings

The group’s youthful marketing campaigns have always been synonymous with the environment. When the beverage maker was still in its infancy in the 1950s and 1960s, its cheap but nutritious soy milk was deemed the replacement for dairy for the masses who could not afford milk.

“Makes You Taller, Stronger and Fitter” was its chief marketing slogan at that time, with strong emphasis on the products’ nutrition value. It then evolved into other hitting themes like “Not Just A Simple Soft Drink” in the 1970s, fully cashing in on the rising popularity of soft drinks, “You’ve Been A Beautiful Baby” and “Missing You All The Time” in the following decades as changes to the social landscape beset Hong Kong.

In the 2000s, mottos like “Stand By Me” and “Always Real” were the order of the day, reflecting Hong Kong people’s relentless pursuit of selfhood in the city’s rapid pace of life. The former’s commercial jingle has evoked empathy and has been covered by many young people on YouTube.

Italian-born Guidetti, who joined the Lo family business in 2013, says he wants to innovate on the basis of respecting history, having reviewed all the paths the group had taken during his first few months with the group.

“We need to stay loyal to the roots and the core of the brand,” he tells China Daily.

But, Vitasoy does not mean just nostalgia. It’s an envious global success tale without losing touch with its local identity.

Besides Hong Kong, the group has manufacturing operations on the Chinese mainland and in Australia and Singapore. Last year, it started breaking into the Philippine market through a joint venture with a local food-and-beverage maker to boost its market share.

Strong mainland footing

Vitasoy’s annual report reveals its revenue grew 20 percent for the 12 months to March 31 this year. A one-off gain from the divestiture of its North American business lifted the previous year’s earnings. The group disposed of its North American Mainstream business, including the San Sui business in 2016 after heavy losses. This apart, revenue was still up 21 percent, with net profit attributable to shareholders rising 14 percent year-on-year.

The divestment made the Chinese mainland the group’s biggest market, accounting for more than 60 percent of total revenue.

Over the years, the classic Hong Kong brand has been expanding steadily but solidly on the mainland. Starting off on a strong footing in Guangdong province in 1994, Vitasoy now owns four plants in Shenzhen, Foshan, Shanghai, and Wuhan, capital of Hubei province.

Guidetti says the new production facility in Dongguan is due to roll out by April 2021.

In fact, Vitasoy’s best seller — soy milk — isn’t as popular as it has been in Hong Kong. Most people on the mainland are used to drinking “real” milk, and see soy milk’s taste as too bland.

According to consulting firm ASKCI, per capita consumption of milk on the mainland reached 19.8 kilograms in 2016 — about 26 times larger than that of soy milk. But, with consumers in pursuit of healthier diets with low fat, the soy milk market is expected to see significant improvement.

Guidetti expects Vitasoy to benefit from this trend most. “The market for soy milk in packaged form is developing, and it’ll grow bigger, we believe.”

The mainland market has grown the most, recording a 39-percent increase in revenue and 71-percent improvement in profit from operations last year. Sensing the high-end demand for soy milk, the group has launched new products labeled “Health Plus” — the same series as that started in Australia and New Zealand.

Huge beverage market

The strong performance is also driven by the group’s instant hit, lemon tea. It’s hard to explain the specific reason for this, but Guidetti reckons the larger tea beverage market is a key factor.

“The tea (beverage) market is almost 10 times the size of soy milk on the mainland. Therefore, you’ll see a better response to our expansion in tea products,” he says.

Online exposure and e-commerce also play crucial roles. “Online portals have been a relatively big factor in arousing awareness of these products on the Chinese mainland. Even in places where we don’t have our own physical infrastructure, consumer demands can be satisfied,” says Guidetti.

“It also gives us an idea of where people like the products the most.”

The group’s close collaboration with e-commerce companies began two to three years ago. The sales volume for 24-carton lemon tea sets surpassed 89,000 on Alibaba Group’s e-commerce platform Tmall Supermarket within last 30 days, topping the tea beverage category.

However, business is not always as sweet as a bottle of soy milk or a carton of lemon tea. Prices of raw materials are tipped to go up in an uncertain global business and trade environment, which may put pressure on the group’s gross profit margins. Faced with a likely rise in soybean and sugar prices, Vitasoy will adjust its product portfolio to offset that.

Guidetti cites sugar as an example. To support a healthy lifestyle, the group is committed to raising beverage offerings with moderate-to-zero sugar levels. Currently, 68 percent of its products are within this low-sugar level. If sugar prices see a relatively limited increase, Vitasoy will continue to launch more low-sugar products.

On the other hand, its strong sales of lemon tea on the mainland can also reduce the impact from surging soybean prices. Guidetti says the group is not planning to raise prices, but if raw-material prices continue to climb, they would consider it.

“Prices are always important, but it’s even more important to have high-quality and innovative products to ensure healthy and nutritional benefits,” vows Guidetti.

That’s the mission the group continues to adhere to today.

It all started with that light white liquid on the tables

On a street dotted with eateries and watering holes in Guangzhou, Roberto Guidetti walked into a restaurant looking for a meal with his colleagues while on a business trip.

He subconsciously began observing what everyone had been drinking and noticed glass bottles filled with a light white liquid on many tables.

It intrigued Guidetti a bit. “Maybe I should try it,” he told himself.

Born in Bologna, the Italian entrepreneur had never been aware of the popularity of soy milk as plain milk wasn’t that developed at that time in Western countries. Surprisingly, he found the drink in the glass bottle tasted similar to dairy and “quite nice” too.

That was how Guidetti’s story with Vitasoy began. Years later, the group behind the glass-bottled soy milk invited him to its fold as chief executive of Hong Kong-based Vitasoy International Holdings.

Soy milk and malt soy milk in glass bottles are still available in Hong Kong and on the Chinese mainland today. But more than two thirds of the products are packaged in Tetra Pak cartons.

The carton packaging technology was introduced in 1975, using ultra-high temperature sterilization to give products a shelf life of one year without adding additives. In this way, beverages can be stored without refrigeration and easily shipped abroad.

“You cannot do it in a glass bottle. Glass bottles are only normally used in either restaurants or in general trade, like small shops,” Guidetti explains. “This is why packaging for most products has become cartons over time, although we started from glass bottles.”

Green activists found fault with the group for using too much Tetra Pak paper, but Guidetti says that, last year, about 91 percent of the paper Vitasoy uses comes from forests that are tracked to be managed in a sustainable manner by the Forest Stewardship Council.

The group is more focused on wastage of carbons currently and is engaged in building a waste management system with the government.

“We’re thinking more about what is the right balance (of different packages) not only from a business point of view, but also from a sustainability point of view,” says Guidetti.

However, glass-bottle packages will not disappear in the market overnight. People can still find their taste of childhood in the city.

Contact the writer at edithlu@chinadailyhk.com

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