Yeo Hiap Seng (Yeo’s) recently announced its FY2025 full-year financial results, reporting a -11% year-on-year decline in revenue to S$292.4m (US$230m) and a -15.5% year-on-year drop in gross profits to S$92.1m (US$72.4m).
This was attributed to weaker consumer spending and intensified competition across many of its key markets, as well as an uncertain macro environment.
That said, the firm managed to record strong net profit growth year-on-year due to factors not related to its core beverage business performance, namely a 50-year land lease extension for its Guangzhou property until 2075.
But in light of what are obviously challenging business conditions, the global beverage giant has announced that it will be revamping its strategic priorities in order to strengthen competitiveness in the market.
“A key part of this will be improving our adaptive portfolio, including the launch of smaller pack sizes to address affordability for lower-income consumers,” Yeo’s said in a statement to SGX submitted by Chief Financial Officer Lai Kah Shen.
“This will be done while also scaling premium, higher-margin products for the growing middle class. As it is, more than 80% of Yeo’s beverages are classified as healthier choice products.”
Yeo’s is best known for its soybean and chrysanthemum tea beverages across Asia, Europe and North America, with most Asian consumers seeing these as heritage drinks from their childhood.
The firm’s immense success in Asia means that it has successfully penetrated most markets in this region, and is now looking to make itself as much of a household name in other markets as it has here.
“The plan is to leverage external partnerships to speed up product development that targets both our home and international markets – particularly USA and Europe markets,” said Yeo’s.
“[This is in addition to] reconfiguring our supply chain to improve operational efficiency and gross margins amid persistent geopolitical uncertainty.”
Health and affordability
Yeo’s has made great strides in its homeground Singapore as well as neighbouring Malaysia over the past few years in terms of reformulating its beverage portfolio for sugar reduction.
In Singapore, all of Yeo’s beverages were successfully reformulated to contain less than 5% sugar as of 2024, in order to successfully meet local Nutri-Grade labelling requirements to get a B grade.
The firm has also done the same for its beverage portfolio in Malaysia, reformulating all products to contain less than 5g sugar per 100ml and receive permission to attach the local Healthier Choice Logo on-label.
Notably, a great deal of Yeo’s beverage innovation over the past decade has been focused on reformulation and premiumisation – case in point is its latest US launch, Yeo’s Soy fortified with protein, calcium, vitamin B6 and zinc.
As such, its plans to focus on smaller pack sizes to improve affordability is a strong reflection of how consumers are consciously spending less in light of current economic uncertainty, particularly in price-sensitive markets like Asia.
“Although easing inflation does offer cautious optimism, Yeo’s will exercise discipline and vigilance [in our innovation and operations],” said the firm.
