Yakult Honsha Co Ltd (2267)

Image credits Yakult website

I grew up with Yakult as did most kids and visiting the Yakult factory was one of my favorite memories of all time. Needless to say, we drink Yakult whenever we are overseas on holiday and have problems digesting our food. I didn't know until ACCICB told me that Vitagen is only sold in Singapore and Malaysia whereas Yakult is sold in 33 countries and regions. Strangely though, we drink Vitagen at home for many years but have recently switched to Yakult as it tastes better despite it being of a lesser amount. I've also tested Yakult Ace Light which has 30% lesser calories, a lighter taste and costs about 80 cents more and concluded that we'll stick to the original Yakult. 

Yakult operations in Japan though include a pharmaceuticals business as well as a cosmetics business, which represent a small % of their business and is loss making at the moment. The interesting thing about Japanese companies is that they have a business plan for a few years. It gives you an idea of what they aim to achieve, the reason for this strategy, the steps that have been or are being taken as well as the results. 

Yakult Vision 2020 started since 2011 and is now in its Phase II (Fiscal 2014 - Fiscal 2016). They surpassed all their objectives of Phase I which ended in Fiscal 2013. Currently they are targeting to reach the global target for bottle sales which was originally planned for Fiscal 2020, which means they are accelerating their plans and are confident that they will reach it. 

Overall, the financials look good and distribution of their products is via home delivery sales by Yakult Ladies and direct sales via retailers, vending machines and other points of sales. Interestingly, Yakult Lady System has started since 1963 with the aim of introducing and educating consumers the value of drinking Yakult, one bottle a day. It is not only implemented in Japan but in other overseas markets as well. This reminds me of Avon lady and how direct selling can work wonders for everybody involved. 

Danone currently owns 20.02% of Yakult and is by far the largest shareholder thus there was market talk in 2013 about Danone potentially buying over Yakult. That rumour was squashed when they end their strategic alliance and replaced with a looser co-operation framework. Other financial institutions also have holdings in Yakult and the overall view I have is that this is definitely going to be added onto our portfolio as it is a steady company with plans and have achieved results under the helm of an experienced management team.


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