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Strong consumer demand seen despite slower economy [30-04-2012]  
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The local consumer goods sector expects a comfortable 2012, backed by product launches and new market penetration.

Consumer goods companies such as Zhulian Corp Bhd, Public Packages Holdings Bhd (PPH), Spritzer Holdings Bhd and Courts (M) Sdn Bhd are expecting growth despite a lower Bank Negara forecast of 4% to 5% GDP expansion this year compared with a projected 5% to 6% in 2011.

Zhulian managing director Danny Teoh said the group was releasing for the first time coloured cosmetic products such as lipstick, mascara and cookware in the second half of 2012 to gain new market share and penetration.

“These new products will be targeted at the domestic market initially, where we have 88,000 members. We are projecting a 10% increase in our membership in Malaysia by the end of the year.

“In South-East Asia, the membership is around 584,000 presently compared with 574,000 in 2011, which is also expected to grow by about 10% by the end of 2012,” he said.

This year, Zhulian would focus on export markets in Indonesia, Thailand and Singapore, which contributed about 45% of its revenue, Teoh added.

“Thailand is our strongest market in the region. Overall, this year should be a comfortable year for us,” he said.

PPH director Michael Koay said although demand in the second quarter was expected to be soft, the group projected a recovery in the third quarter due to the recent launch of new packaging products such as lunch trays, storage and archive boxes, and food and gift packagings.

“These products are targeted at the home and office business segments in the country and can be purchased through our online e-commerce site,” he said.

Koay said the group planned to venture into the hospitality industry in the first quarter of 2013.

For the first quarter of 2012, the group expects sales to decline by about 9% compared with the previous year's corresponding period.

“Overall, we expect 2012 to be better than last year but this very much depends on the actual demand trend. We foresee the intensifying of price competition in the market,” Koay said.

Spritzer Holdings managing director Lim Kok Boon said the group would release a new range of carbonated drinks under the brand Spritzer POP in the next few months.

“We are targeting the youth market in the country. We are also aggressively marketing our newly launched 6-litre and 9.5-litre distilled bottled water, which comes in non-spill cap and easy-tear handle, making the products dispenser friendly and suitable for outdoor use,” he said.

Spritzer production capacity will remain at 360 million litres this year, produced from 15 bottling line facilities in Taiping (nine lines), Shah Alam (two lines) and Johor (four lines).

Courts country director Chris Yong said the expansion in 2011, which saw the company launching 14 stores in the country and added another 103,000 sq ft of retail space, would help Courts gain new market penetration this year.

“We have also launched our new furniture product range and FlexiCredit installment payment scheme. “The new products, wider market penetration and a better Hari Raya sales projection should help Courts to achieve a double-digit growth in sales over 2011. The best-selling items of Courts include tablets and smartphones,” Yong said.

Last year, Courts opened six new stores in Sungei Buloh, Kota Damansara, Ukay Boulevard, and Menara Sentul in the Klang Valley; Tanah Merah in Kelantan; and Kip Homemart in Johor. It also refurbished six stores in Kota Baru and Kuantan, and relocated two stores in Rawang and Kangar.

Meanwhile, OCBC Bank (M) Bhd emerging business head Wong Chee Seng said the bank had so far approved over RM500mil in loans for the small and medium enterprise (SME) market.

“In 2011, OCBC Bank granted more than RM6bil in loans to the SME, mainly dominated by the domestic businesses of the wholesale and retail sector.

“Comparing the results with that of the first two months in 2012, we believe that we will continue to grow a strong double-digit percentage in loan approval numbers,” Wong said.

Meanwhile, the latest Business Monitor International report forecast that total retail sales in the country would increase from US$57bil in 2012 to RM70.5bil in 2016, fuelled by low unemployment rate, rising disposable income and a strong tourism industry.

Consumer electronic product sales are predicted to rise from US$11.47bil in 2012 to US$14.44bil in 2016, an increase of 25.8%, boosted by demand from the tech-literate urban middle class and by a growing interest in electronic products from under-penetrated areas outside the Klang Valley.

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