Following your gift: Dietary coffee producer shakes off slum upbringing to rake it in. NatureGift claims a 50% market share in dietary coffee in Thailand

Following your gift

Dietary coffee producer shakes off slum upbringing to rake it in.

Published: 26 Mar 2013 at 00.00

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Life was a slog for Kritsada Jangchaimonta, growing up in a slum for 23 years. But the 3-by-4 metre room he lived in together with seven others in Bangkok failed to discourage him from dreaming of becoming a millionaire one day.

Mr Kritsada claims white bean supplements are the key to losing weight because they offer an energy boost.

With an engineering degree from Chulalongkorn University, he started work at the Metropolitan Electricity Authority before joining a private company. Then in 1976, Mr Kritsada set up a company selling electrical appliances, before experimenting with other products ranging from shrimp feed to hydroponic vegetables.

In 2002, his company NatureGift launched food supplement capsules. But it wasn’t an immediate success so he thought of trying other products such as coffee, soap and toothpaste.

“At that time, I had debts of 20 million baht. While it took 30,000 baht to produce toothpaste, coffee required around 50,000 baht,” recalled the 66-year-old.

During that time, 3-in-1 coffee sold for 2.5 baht per packet.

“We had expertise in food supplements. And we knew a lot of people that drank coffee, plus there was high demand for losing weight,” said Mr Kritsada.

The company came up with a recipe for coffee at the end of 2003 and sold the products the following year for 12.5 baht per packet. Packets now sell for 11 baht at 7-Eleven, 9.50 baht at Tesco Lotus and nine baht at mom-and-pop stores.

A dirty little secret is he actually made the products in his garage at that time.

Sales channels included trade fairs and direct sales, and while this resulted in some losses, one customer purchased 80 boxes to sell in Chiang Rai at a pork shop.

“The idea was the merchant told her customers that eating pork might result in obesity, so why not also try some coffee to lose weight? The products sold out in two days,” said Mr Kritsada with a smile.

At the end of 2004, the company started to advertise its products in magazines, with customers sending in pictures of themselves losing weight after using the products.

Three months later, NatureGift signed up 300-400 distributors nationwide, then revenue increased by 500% the following year.

In 2006, the company invested 200 million baht to set up a factory in Nakhon Pathom, which opened two years later. Then competition started to rise, so he imported machinery from Japan, Spain and the US for a new factory costing 500 million in 2009.

Now the company has 70 employees with a production capacity of 200,000 packets per hour. Maximum capacity is 100 million packets per month.

Finally Mr Kritsada had realised his dream, working as the managing director of a well-known dietary supplement brand. NatureGift products include cocoa and ginger drinks, as well as collagen capsules, but coffee still makes up 80% of total sales.

Its vitamins are imported from Switzerland and amino acid from the US.

Exports, which account for 5% of production, are shipped to Australia, the Middle East, Africa, Europe and the US.

“Sellers need to describe the products’ properties, and we do not yet have enough personnel to help us with that. Most overseas customers are Thais living abroad,” said Mr Kritsada.

He is also looking to export to Laos and Myanmar, as he projects obesity as a growing problem.

Mr Kritsada estimated the market for dietary supplements at 10 billion baht. Of the total, 3-4 billion is dietary coffee, of which NatureGift claims a 50% market share.

There are over 100 brands of dietary coffee, with 10 major players.

“Thailand has been promoted as ‘Kitchen of the World’. But the focus is on quantity not quality, as the country targets maximising export volume,” he said.

He estimates 20% of Thais are obese and the number will reach 30% within 10 years.

“Losing weight is difficult. When people become obese, their first impulse is to eat less, which is very painful for them because they can’t do it. The frustration drives them to clinics that give them weight loss pills, which make them hungry but cause a lack of energy,” he said.

Mr Kritsada said the right way to lose weight is to consume NatureGift products three times a day after meals in addition to exercise.

Thousands of people have sent letters detailing their success stories to the company.

Now in its 10th year of operation, NatureGift hosts weight loss competitions each year, with the biggest loser receiving a 100,000 baht prize. Over 60 days, the average weight loss is 13-14 kilogrammes.

“The first three years, all the contestants were women. But now more male contestants are joining the competition,” said Mr Kritsada.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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