GEORGE TOWN: Bottled water producer Spritzer Bhd will invest RM30mil for a warehouse and other fixed assets this year to cater for an increase in production output, says group chief executive officer Kenny Lim.

He told StarBiz that the group recently added a production line in the fourth quarter of 2022 to raise its output to one billion litres from 850,000 litres previously.

“Due to the increase (in production output), we need a new warehouse for storage and distribution purposes in the central region, where the demand is growing,” Lim explained.

He added the investment allocation will also include for renovation and upgrading the group’s corporate office, manufacturing systems and facilities.

According to Lim, the cost of plastic packaging materials which increased by about 30% compared with a year ago, is also affecting the group’s profitability.

On the back of the rising costs, Spritzer adjusted its pricing by 5% to 10% to mitigate the impact of higher plastic packaging material costs, Lim pointed out.

“For the first nine months of 2022, the Malaysian economy grew by about 9.3%.

“The economy is projected to grow by 4% to 5% in 2023 supported by domestic demand amid global slow down.

“However, uncertainties such as weaker global growth, geopolitical conflict, lingering Covid-19 pandemic, high inflation rate, interest rate hikes and monetary tightening could impact the demand and consumption of bottled water,” he added.

Lim noted the group is actively managing the supply chain challenges, labour shortages and the higher operating costs.

“We will continue to focus on our core brands and further automate and enhance our production processes and capacities,” he noted.

Meanwhile, the group is also gradually introducing sustainable packaging alternatives for its bottled water products.

“We recently launched Spritzer Icon with its new bottle made with recycled plastic and it has been well received.

“Hence, the group expect its revenue and earnings in 2023 to sustain and also, to be in line with the domestic demand and consumption of bottled water products in Malaysia,” he said.

Lim also admits that there were so many economic uncertainties and challenges in 2023 which will affect the group’s operating environment.

“We will closely monitor the market demand for our products before committing to installing more production lines.

“The group will work on offering a more comprehensive product range to enhance our market leadership position further.

“We also plan to strengthen the sales and distribution of our products in the Singapore market,” he added.

According to international research house Statista, Malaysia’s bottled water segment revenue is expected to increase annually at a 6.6% compounded annual growth rate for the 2022 to 2027 period.

In 2022, the Malaysian bottled water revenue stood at US$264.6mil (RM1.2bil), according to Statista.

“The bottled water volume is expected to total 733.9ml by 2027, showing volume growth of 4.2% in 2023.

“By 2027, 25% of spending and 10% of volume consumption in the bottled water segment will be attributable to out-of-home consumption,” said Statista.