CHINA Lifestyle is looking to sweeten its return on equity (ROE) this year by introducing new flavours and products under its Labixiaoxin brand.
Management expects higher ROE, net income and sales in FY08, says CEO Zheng Yu Long.
For the year ended Dec 31, 2007, China Lifestyle reported a 3.5 per cent rise in net income to 86.7 million yuan (S$17 million), as sales rose 23.5 per cent to 655.3 million yuan.
Jelly and beverages accounted for 80 per cent of turnover, and posted a 16.4 per cent growth last year.
Candy products, which are outsourced, made up 19.3 per cent. Other products made up the rest. Gross margin for jelly products is about 40 per cent.
On a geographical basis, China accounted for 88.9 per cent of sales. Overseas markets like the Americas, Korea and Middle East contributed the rest.
Mr Zheng told BT the company's house brand Labixiaoxin is already one of the strongest jelly products in China, with a market share of 10 per cent - up from 5 per cent in 2005.
The aim is to double that to 20 per cent - by raising product quality, more promotional campaigns and more support for social causes. For example, the firm supplied 200,000 beverages to people stranded in a snow storm in China last year.
Certifications it has won include the China Famous Trademark, China Top Brand Certificate and ISO 9001:2000.
China Lifestyle now has more than 100 distributors and more than 20,000 sales points including supermarkets and convenience stores.
The aim is to extend its distribution reach to untapped markets like China's northern and western provinces.
For this reason, the firm has set up a new 200 million yuan facility in Tianjin that will target consumers there.
'This year is the year where we expect to reap the returns from our investments,' Mr Zheng said. 'And justifiably so, since the Summer Olympics should drive consumer spending in 2008.' Other mega events are also in store, such as the World Expo in Shanghai in 2010.
To diversify its income stream, China Lifestyle will launch a new range of jelly products, as well as other product categories like potato chips and gummy candy.
The latter will be achieved by forging strategic partnerships with strong overseas players in those products.
'This is a win-win situation, since they have the capability while we have the market knowledge, brand capital and distribution network,' Mr Zheng said.
The potato chips will be made at the Tianjin plant and gummy candy at the Fujian facility.
China Lifestyle also hopes to achieve a 20 per cent rise in sales points every year.
A challenge it faces is growing raw material prices, 'which is now a problem worldwide', said Mr Zheng.
