Spritzer allocates largest capital expenditure
13 Jun 2022
Bottled water producer Spritzer Bhd is spending RM100mil in 2022 to install a new production line and a water treatment plant, upgrade machinery and settle the balance for a Taiping land it acquired in 2021.
Group chief executive officer Kenny Lim Seng Lee told StarBiz that the capital expenditure is the group’s largest allocation to date.
“The additional line would increase the group’s production capacity to 900 million litres of water per annum from 850 million litres.
“We are also installing a new water treatment plant to replace the existing one. These two projects would cost RM25mil to RM30mil,” he said.
He said the remainder of the allocation is to settle the RM76.1mil balance for the 1,227-acre land it acquired in Bukit Gantang.
“The land is reserved for a future mineral water production facility, which we can see materialising five years from now,” Lim said.
The group is currently utilising about 70% of its existing plant in Taiping.
“In 2021, we also expanded the land bank of our mineral water plants in Taiping and Yong Peng by 7.4 acres and 6.1 acres, respectively, with the acquisition of five pieces of land for a total consideration of RM3.5mil.
“In January 2022, we acquired two pieces of land adjoining our mineral water plant in Taiping, measuring about 60 acres, for a total of RM6.2mil.
“These acquisitions will support our future expansion plans,” he said.
Spritzer’s primary concern is the escalating cost of raw materials. Resin price is now RM5,800 per tonne, up from RM3,200 per tonne in 2020.
The group uses polyethene terephthalate plastic as its packaging materials.
“The cost has squeezed our margins. We have already adjusted our selling price by about 5% last December. We will probably need to adjust again should the price of raw materials continue to rise.
“Due to competition and cost pressure, there’s only so much we can pass on to customers,” he said.
Lim added that the group would be using recycled plastic to package bottled drinks in the second half. “We will also redesign the labels to give Spritzer a new look,” he said.
Spritzer launched a new corporate logo on June 1.
According to Lim, Spritzer’s strategy is to strengthen its leading position in the Malaysian bottled water industry by constantly improving the processes across its value chain, market coverage and sales volume.
The group will invest in its core brands, further automate to enhance the production processes and capacity, explore business opportunities in the regional markets and focus on introducing sustainable packaging alternatives for its bottled water products.
It will also and strengthen the differentiation of Spritzer products by highlighting the benefits of its silica-rich mineral water and the absence of microplastics in Spritzer natural mineral water in laboratory tests conducted by Sirim Bhd, according to Lim.
“We are taking prudent measures to monitor and manage the higher input and operating costs and, simultaneously, actively taking steps to grow online channel and, as far as possible, expand the overseas market,” he added.
Spritzer, which has a 40% market share in the water industry, is a pioneer and leader in the Malaysian bottled water sector with more than 30 years of manufacturing, distribution and branding excellence.
It started the production and sale of bottled water products in 1989.
Listed in September 2000, Spritzer is the only bottled water company listed on Bursa Malaysia.
Source: The Star
