Siam City goes low-cost

Siam City goes low-cost
02 July 2004

Siam City Cement (SCCC) responded yesterday to its rivals’ constant price-cutting by introducing its first low-cost product (reports The Nation) Chantana Sukumanont, executive vice president of the country’s second-largest cement producer, said the new Insee Poon Kiew brand would prove a better price option than rival offerings.  ’However much of that ’M’ brand [TPI Polene’s M-series] is sold, we will sell as much,’ she said.

When asked whether her firm’s move would marked a return to the price war that hit cement-makers hard in early 2002, Chantana simply said: ’I don’t know.’  She admitted SCCC decided to join the low-cost segment because ’fighting brands’ had failed to disappear from the market as she expected. Low-cost brands have seen combined sales increase from 80,000 tonnes a month to 300,000 tonnes, she added.

Chantana said Insee Poon Kiew would only be sold in parts of the country where SCCC feels a price war is warranted - in a bidnot to hurt sales of its other brands.  ’We will set the volumes and specify locations where we can sell the product,’ she said, adding that SCCC expected to sell 300,000 tonnes of the brand per year - the same amount as its Insee Tong premium-price brand launched a year ago.

The product launch comes amid SCCC’s decision to revise downwards its growth forecast for the market this year from 10 per cent to 8 per cent, citing the National Economic and Social Development Board’s recent reduction of its economic-growth forecast for 2004 from 7-8 per cent to 6-7 per cent.  The Thailand Fellowship of Cement Manufacturers has projected the country’s cement exports will drop 17 per cent to 10 million tonnes this year. It cited higher freight charges and a lack of ships to export cement as the reason for the adjustment.

In another shift in business direction, SCCC yesterday announced it was eyeing the acquisition of independent ready-mixed concrete (RMC) operators as part of its ambitious goal to increase its market share in the segment from 9 per cent to 28 per cent. The RMC segment grew 30 per cent last year.

Chantana said SCCC had been selling its RMC through its subsidiary Siam City Concrete and independent operators, but had decided to sell more concrete through its own ’captive’ outlets. ’We have not set a timeframe [to reach the 28-per-cent market-share target] but through organic growth it may take sometime. However, if we have a chance to get a jump start [through acquisitions] we will consider it,’ said Siva Mahasandana, Siam City Concrete’s new chief executive.

SCCC also introduced its new management team yesterday. It is led by managing director Leo Mittelholzer, who comes from Swiss-based cement giant and joint SCCC owner Holcim. The Ratanarak family is the other joint owner. (Nation - Thailand)

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