KUALA LUMPUR: Private equity firm Creador's strategic partnership with Loob Holding Sdn Bhd will help the owner of lifestyle tea brand Tealive accelerate its regional growth expansion.
Loob Holding founder and chief executive officer Bryan Loo said Creador's acquisition of a significant stake in the company was vital in expediting Tealive's regional expansion to become the leading bubble tea brand in Southeast Asia.
The acquisition was also vital for the company to improve its operational efficiency and business performance, Loo added.
"Creador has the resources and network as well as the talent pool to help us enhance our growth strategy, which in turn will improve the company's profitability," he told the New Straits Times and Berita Harian in a virtual interview on Thursday.
Creador, which focuses on long-term investments in growth-oriented businesses in Southeast Asia and India, recently acquired a 30 per cent stake in Loob Holding for an undisclosed amount, a move that would boost the latter's growth target of reaching its 1,000th stores by 2023.
Creador founder and CEO Brahmal Vasudevan reportedly said the firm chose Loob to be its first investment in the fast-growing food and beverage sector as Tealive had grown to be a regional company with over 650 stores in less than five years.
"We have signed a non-disclosure agreement with Creador and unable to disclose the transaction amount. We think the amount was fair figure given we had been around for 10 years with high-growth potential," Loo said.
He said there was no definite earnings target due to high uncertainty brought about by the Covid-19 pandemic but both entities were comfortable with the current company's performance to enhance its profitability through the opening of 1,000th stores in two to three years.
"We plan to open up between 120 and 150 outlets every year. We have a common vision to develop Tealive brand together," he said, adding that Tealive currently has about 10 per cent market share in the "made-to-order" beverages segment.
Of the total 650 stores, Tealive has 611 stores in Malaysia and the remaining outlets are available across seven countries namely Australia, Brunei, United Kingdom, the Philippines, Cambodia, Myanmar and Vietnam.
"We currently employ about 3,000 local workforces. With 1,000th outlets, we could potentially employ at least 5,000 local workforces by 2023," he said.
Loo said Loob Holding was adopting two options - franchise and direct corporate operation model - in embarking on its domestic expansion with the potential of opening up another 350 outlets.
The capital expenditure would be dependent on the format mix of the new stores and the investment strategy that best fit the company's interest, he added.
"We have a variety of outlet sizes ranging from 150 sq ft to 4,000 sq ft format that will cost about RM250,000 (kiosk), RM400,000 to RM600,000 (shop lots and malls) and up to RM800,000 to RM1 million for (drive-thru outlet)," he said.
Loob Holding expects about 80 per cent of the 350 new outlets to be opened through a direct corporate operation model, while the remaining 20 per cent to be via franchise format.
"We are currently in an active discussion with the potential partners in three to five new countries. We hope to penetrate two new countries in Southeast Asia and Europe by end of this year," he said.
Loo is upbeat about the wide acceptance of Tealive's products in the east coast of Malaysia, Johor, Sabah and Sarawak.
"We are still optimistic about Malaysia's development. We hope the vaccination can be expedited as it will save the market," he said.
Loo said the company had invested about RM10 million to build a new pearl manufacturing plant in Klang to cater for its consumption domestically and subsequently for regional market.
"The plant should be operational in two months. Supposedly, it was scheduled to operate last year but it got delayed due to the pandemic," he said.
Loo said Loob Holding had achieved stellar growth albeit during the pandemic, thanks to its diverse store's format from the kiosk, outlet in the petrol station, shop lot, drive-thru, shopping malls and LRT station.
"We can operate in any format (sizes) with strong delivery capability and contactless initiative - scan-to-order - that help us to stay relevant in the present time and get connected to our consumers," he said.
Tealive has also partnered with delivery services such as FoodPanda and GrabFood and DeliverEat to broaden its customers reach while introducing new products - bubble tea ice-cream, boba instant noodle, Tealive Eats including pop-corn chicken and pastry, as well as coffee.
On its long-term expansion plan, Loo said Loob Holding would open to all options including listing the company or other corporate exercises to unlock its potential growth in the future.
"We can leverage on our partner to turbocharge our growth. We also look at a different vertical including other beverage business in the likes of fruit juice, yoghurt drink and specialty coffee," he added.
Majority of Tealive's customers are aged between 15 and 35 years old, while its menu comprising about 60 types of drinks.
"We have strong research and development capability over the years, which has resulted in over 100 new drinks (products) in the pipeline to be launched in the coming years.
"Tealive's products are very localised and most are affordably priced at less than RM10," he added.
Loob said the emergence of new players in the market would motivate the company to innovating its products and services offering while making the lifestyle tea category more exciting.