Following an analyst meeting, CGS International Securities (CGSI) remains skeptical of Osotspa Public Company Limited (SET: OSP). Despite reaffirming its premiumization strategy to promote higher-value products, OSP acknowledged a significant challenge: their core energy drink consumers are highly price-sensitive, casting doubt on the strategy’s viability.
In a bid to recover market share, OSP is reintroducing the M-150 Yellow Cap at THB10 per bottle, reverting to its original flavor before the 2022 recipe and price increase to THB12. By leveraging nostalgia, OSP aims for a 5 percentage point market share boost.
However, the analyst predicts that this move may backfire as, rather than gaining ground on competitors, M-150 Yellow Cap could cannibalize the M-150 Honey, also priced at THB10 with an existing 5% market share. Distribution hurdles may further impede success, as small traditional retailers lack the capacity to stock multiple M-150 variations, choosing instead to carry one.
This strategy might erode the sales of M-150 Honey, reducing economies of scale, while escalating marketing costs. Critically, it fails to address the decline in sales of the THB12 M-150 variant. As sales increasingly shift towards lower-priced offerings, OSP’s gross margin is projected to suffer, further weakening its competitive position.
Following this development, CGSI anticipates limited effects on Carabao Group Public Company Limited (SET: CBG). Despite OSP’s THB10 price offering, Carabao Dang retains a significant competitive edge with its higher sugar content and energy-boosting appeal among blue-collar workers.
The analyst continues to favor CBG over OSP, noting that Carabao Dang is strategically positioned to not only defend but also potentially extend its market dominance while OSP deals with internal challenges.
