Thai health drink company, Sappe, announced it has invested 140 million bhat (US4 million) in exchange for a 40% stake in local coconut processor, Coconut Factory Co. Ltd (CCF).

Under terms of the agreement, Sappe, which is a functional beverage company that targets beauty conscious consumers, will increase its stake in CCF to 51% in 2018 and to 60% by 2020.

CCF entirely owns the All Coco Company and K Best Farm Company – both coconut-based food and beverage businesses operating under the All Coco trademark.

The deal, which is scheduled to be completed in October, has been developed with the goal of creating an expanded entity that is well positioned to meet the climbing demand for Thai coconut milk on global markets. Driven by this demand, the new business has the goal of reaching coconut juice export sales of 500 million bhat (US$14.4 million) by 2021.

“Demand for coconut products has been growing globally. After this acquisition is completed, we plan to launch new products continuously to raise our sales revenue from 100 million baht last year to 500 million baht in 2021 with the profit margin of eight percent,” said Sappe CEO, Ms. Piyajit Ruckariyapong.

All Coco has been in business for more than ten years forging solid relationships with its coconut growers. The Bangkok Post reports that the company’s plantations cover 6,000 rai (2,372 acres) in Nakhon Pathom, Samut Sakhon, Samut Songkram and Ratchaburi and the company processes 100,000 coconuts per day.
Through this deal, All Coco will shift into higher value processing along with marketing and retail. Company chief executive, Waraporn Manusrungsri, told the Bangkok Post that it will begin high pressure processing (HPP) of coconut juice for export in September. Along with coconut juice, All Coco also produces coconut-based ice cream and pudding.

Sappe expects that fruit juices will contribute 65% to its total revenue in the next five years with functional drinks and powders contributing the remaining 35%, and that its investment in CFF will break even within three to five years.

This deal comes little more than a year after Sappe announced a joint venture with local partners with the goal of expanding into China where it plans to target young, urban consumers.

“In Indonesia, we can hit our sales target of 500 million baht (US$15.34 million) within two years,” Chief executive Piyajit Ruckariyapong told Deal Street Asia at the time. “We plan to use the same strategy in China. Here the market has higher potential than Indonesia,” she said, adding, “Only the fruit juice market in China is worth more than 500 billion baht ($15.34 million) with an annual growth of 10 per cent each year. We believe that this will be our big step to grow in the global market.”