Vitasoy recently announced its H1FY2022 (internally dubbed its ‘interim period’) financial results for the six months ending September 2022, reporting an overall revenue growth of about 1% year-on-year to HK$3,642mn (US$) and gross profit growth of 1% year-on-year to HK$1,738mn (US$). The firm also highlighted a strong 48% increase year-on-year in EBITDA to HK$473mn (US$).
“[This performance was] mainly driven by reduced operating expenses and an increase in COVID-19 related government subsidies from HK$4mn (US$) in [H2FY2021] to HK$59n (US$) this period,” Group CEO Robert Guidetti stated in the investors’ conference announcing these results.
“That said, all markets Vitasoy is present in is seeing growth with the exception of Singapore which is evolving its business model [and] we will be placing focus on on-trend innovation to complement this.”
One of the main areas that is part of Vitasoy’s on-trend innovation plans is that of oat milk, as although the company is traditionally best-known for its soy milk products, the trend across many of its markets in APAC appears to be shifting away from soy and towards oat.
“In China, one of the new products contributing to growth is VitaOat in various flavours whereas in Australia the growth of oat milk has been particularly strong, with Vitasoy Oat Milk emerging as market leader here,” he added.
“Revenue [in Australia and New Zealand] grew 8% by successfully leveraging consumers' growing interest in oat milk, and revenue [also] grew across all our key Plant Milk platforms of Soy, Almond and Oat.
“In the Philippines we launched the Vitasoy Plus Milky Oat product which has accelerated Vitasoy sales, [further backed by] a sustained in-home consumption drive to improve associations to key drinking moments.
“As the plant-based movement continues goes mainstream here [in the APAC region], we are confident in our long term growth trajectory [and] on-trend innovation plans to add extra scale on both our Vitasoy and Vita brands.”
Singapore sadness
Amidst its otherwise positive performance, Vitasoy did suffer a surprising significant setback in Singapore, made doubly as surprising as this market is considered one of the major hubs for plant-based innovation in the region.
When we previously spoke to Vitasoy earlier this year, the firm had expressed its hopes to push its plant-based barista milks range in the South East Asian region and especially in Singapore, but it appears that this has not yet yielded sufficient desired results to offset losses.
Describing the performance in this market as ‘disappointing’, the firm attributed its poor results in Singapore to challenges in the tofu sector which has been its main business in the country so far.
“Our performance in Singapore suffered a setback as a result of increased price competitiveness and the commoditisation of the tofu category where shoppers switched to more affordable offerings, which could not be offset by the growth of our new VITASOY Fresh Plant+ plant milk platform,” said the firm via official financial documents.
“The market saw a -16% drop in revenue in this period to HK$51mn (US$) [and a 225% drop in] operating profit to a loss of -HK$11mn (US$) due to underperforming sales, higher soybean prices, utility costs and operating expenses, and the higher advertising and promotion spending.
“Exports of tofu were also down due to similar buying patterns and high inflation caused by COVID-19 in Europe, Singapore’s main export market for tofu.”
In hopes of bouncing back, Vitasoy is looking to fully reorganise its business structure in Singapore to place a stronger focus on beverages and take a step back from the unprofitable tofu category.
“In Singapore we are resetting our business model to strip down costs on the tofu operation and accelerate the scale up of local beverages,” Guidetti said.
“Our Vitasoy Plant+ is seeing growth in the chilled segment [so] we will also be focusing on this.”