Splash Group eyes Thai market

The Splash Group of Companies of the Hortaleza family – the largest Filipino-owned personal care products manufacturer in the country – is setting its sights on Thailand as new site for its overseas expansion in line with its goal to become a multinational firm.

Dr. Rolando Hortaleza, chairman and chief executive officer of the Splash Group of Companies, said they are keen on expanding in Thailand after the group’s planned initial public offering (IPO) in 2007 as they hope to further strengthen their presence in Asia.

The group has already penetrated 17 countries worldwide including a joint venture in Indonesia and distributorships in Malaysia, Vietnam, Singapore and the Middle East. It is also looking at penetrating North America to further boost its profitability.

Hortaleza said the group’s strategy for Thailand is to acquire a company there and use it as a springboard to launch its products, particularly its whitening astringents. "The idea there is to by-pass the start-up barriers. We will buy a company there to get rid of the entry barriers and then we will introduce our products," Hortaleza said.

Splash currently dominates the Philippines’ skin care business with its whitening products under the brandnames Extraderm, Maxipeel, Skin White and BioLink. Each generates about P1 billion in sales.

Together, the four account for 80 percent of the group’s total revenues.

To finance its overseas expansion and diversification into pharmaceuticals, the group is eyeing to raise between P3.5 billion and P4 billion from the maiden offering of its shares to the public.

A portion of the proceeds will be used for the construction of a manufacturing plant in Clark or Subic.

The group earlier formed a new subsidiary called Splash Pharmaceutical Corp. to tap into the growing market for natural food products or "nutraceuticals", which provide medical or health benefits and reduce the risk of chronic disease.

These products are expected to be the Spash Group’s gateway to the North American and European markets.

The group is targeting a market share of 21 percent and sales of P400 million in the pharmaceutical’s first year of operations. To promote the product, it has allotted P120 million for adspending this year.

The worldwide nutraceuticals market is valued at $80 billion, dominated by the United States, Canada, Japan and Europe. Demand for these products is fuelled by growing consumer awareness of diet-disease links, aging populations, rising health-care costs, and advances in food technology and nutrition.

In the Philippines alone, health supplements including herbals teas and botanically derived goods, churned in revenues of around $4.4 million from January to October in 2004 compared with only $2.7 million the previous level.

The Department of Trade and Industry targets local and foreign revenues of organic and natural health products, which includes nutraceuticals, to have hit $1 billion by 2010, and by 2020, $5 billion.

Splash Pharmaceuticals recently launched into the market Accuherb, a line of flavored virgin coconut oil (VCO) and Theraherb for its herbal tea products, and dietary supplement capsules.