Nippon Pack in talks on deals

Suraphong Triamchanchai, managing director of Nippon Pack (Thailand), a listed plastic-packaging company, yesterday said the company was expected to conclude the second deal within two months and it involved a Japanese restaurant chain with its own brand in Thailand.

“Since we will own the brand, we will be able to sell the franchise or expand it on our own, both in Thailand and in neighbouring countries,” he said.

Suraphong said Nippon Pack had sufficient capital to acquire other restaurant brands to the tune of a billion baht, provided it was a good deal.

These fast-food and restaurant chains will provide a synergy to the parent firm, which is a producer of food packaging, he said. Furthermore, Thai Luxe Food Products, its new subsidiary acquired last year, will produce food for these chains, he said.

The group has brought in Wichai Charoenthanmanon, the former president of CRG International, to spearhead its new restaurant business, NPP Food Inc.

Suraphong said Nippon Pack’s food business was expected to contribute 30-35 per cent of its total revenue this year.

“During the first nine months of last year, we grew by over 30 per cent, excluding the food business. This year with the food business, we should grow even more,” he said.

The food business will grow to 35-40 per cent of the group’s total revenue in the future, since it is also expanding its packaging business through acquisitions, Suraphong said. 

He said NPP took over the A&W franchise in Thailand from its previous Malaysian operator in January and had turned it into a profitable operation this month. It had annual revenue of more than Bt100 million and was making a loss of at least 5 per cent of its total sales last year, he said.

NPP yesterday unveiled a plan to spend an initial Bt160 million to renovate all 21 A&W outlets and open six additional branches in Bangkok and the vicinity, beginning from the second quarter. 

Wichai said the company had agreed with the parent firm A&W US to expand the number of A&W branches in Thailand to 100 within the next five years.

Nippon Pack has also received the franchise license to establish A&W restaurant networks in Laos and Myanmar, and is interested in acquiring the rights for the Cambodian market as well.

Suraphong said A&W would open its new branches at The Street and Fashion Island shopping malls in Bangkok, while Mall Group also wanted an A&W presence. 

“For the outlets at petrol stations, we have a permanent friendship with PTT and Bangchak,” he said.

Thailand’s food industry is worth Bt120 billion annually, with Bt60 billion coming from restaurant chains and Bt60 billion from quick-service restaurants.

Kevin Bazner, president and chief executive of A&W Restaurants Inc, said: “After we bought A&W from Yum! Brand Inc four years ago, we see a lot of potential for double growth in Southeast Asia. 

“A&W has been in this region since 1963, and we have more than 300 branches. We will focus on expanding in the markets where there already are A&W shops, such as Indonesia, Malaysia and Thailand, as well as Okinawa in Japan. 

“We are discussing our expansion into CLMV countries [Cambodia, Laos, Myanmar and Vietnam]. We plan to double the number of branches in this region within five to seven years.”

Wichai said that according to NPP’s market research, people aged 35 or over were most familiar with the A&W brand, so the challenge was to increase its brand awareness among the younger crowd.

“In the future, the plan is to introduce a new type of A&W shop that is being launched in the US,” he said. “The hip nostalgic concept will present stories that will make the menu more special. 

“There will be a retro decor, an old jukebox, or reminiscences about the World War II era when root beer [a famous A&W product] was a groundbreaking innovation.”