This story is part of Forbes’ coverage of Thailand’s Richest 2019. See the full coverage here.
Petch Osathanugrah is a walking, talking advertisement for M-150, the energy drink his family’s company Osotspa sells and that is No. 1 in Thailand by sales. At 64, there seems little Petch hasn’t already done: A once chart-topping rocker, occasional film actor and advertising executive, Petch remains a fixture in Bangkok’s live-music scene, a university president and—if that wasn’t enough—a major arts patron, with a collection so vast he claims to have lost count, but that includes works by Picasso and Damien Hirst. Oh, he’s building a museum, too.
As Osotspa’s dynamo CEO, however, Petch is tackling a different challenge: that few outside Thailand have ever heard of, much less tried, M-150 or Osotspa’s other products. Petch aims to change that by ramping up Osotspa’s footprint abroad, starting in neighboring markets such as Cambodia, Laos and Myanmar. In the process, he’s transforming one of Thailand’s oldest companies from a family-run pharmaceutical firm into a modern consumer-products multinational. “This is my vision,” says Petch, “to go from one of the oldest companies in Thailand and transform it into one of the most modern.”
Last October, Petch led 128-year-old Osotspa in the country’s biggest IPO of the year, raising a $464 million war chest for expansion by selling a roughly 20% stake that valued the company at $2.3 billion. Osotspa’s stock has since gained a quarter in value, boosting the Osathanugrah family’s 64% holding to roughly $1.9 billion, pushing its overall net worth up by 30% from the year before and vaulting it up four places to eighth on our annual list of Thailand’s richest.
The path to market was anything but easy. After taking the reins of Osotspa in 2015, Petch led a sweeping reorganization that trimmed Osotspa’s exceedingly diverse line of health items and pharmaceuticals, refocusing on energy drinks such as M-150. He also laid off a quarter of Osotspa’s employees and recruited experienced professional managers from international firms such as Unilever. “I didn’t want the company to be a family business,” Petch says during an interview in his high-rise office at Osotspa’s sprawling headquarters. Since the family bought the site in 1995 on what was then the city’s outskirts, bustling Bangkok has engulfed it. “I wanted it to be more professional, more organized.”
Petch’s great-grandparents started what would become Osotspa in 1891. Chinese immigrants, they opened the Teck Heng Yoo pharmacy in Bangkok’s Chinatown selling traditional herbal remedies. After one of their elixirs helped end an outbreak of dysentery among his army, Thailand’s King Vaijiravudh bestowed a new name on the family: Osathanugrah, or “provider of medicine” in Thai. Teck Heng Yoo was renamed Osotspa, or “medicine organization,” after World War II.
Osotspa expanded into an increasingly long list of healthcare and personal products. Today, Osotspa’s personal-care division, with baby-care and women’s beauty-care products, is a market leader, with 35% of the market for liquid baby soap and 24% of the market for infant talcum powder.
Energy drinks, though, became Osotspa’s mainstay. In 1965, Petch’s father Surat licensed an energy tonic, Lipovitan-D, from Japan’s Taisho Pharmaceutical and in 1985 launched his own version, M-150—the “M” for magnum revolver cartridges and the 150 for its 150ml bottle—labelled with a sheriff’s badge and chocked full of herbs, vitamins, sugar and caffeine.
While Red Bull (known in Thailand as Krating Daeng) was launched nine years before and has since become recognizable worldwide, M-150 dominates the Thai market with what Osotspa claims is a 39% share. M-150 is most popular among male blue-collar workers 30 and above. For younger men, Osotspa offers M-Storm, an energy drink enhanced with D-ribose, a sugar normally produced in the body and also used to enhance performance. Shark Bite is targeted at white-collar workers. Combined with its other brands of energy drinks—Chalarm, Lipovitan-D (Taisho’s original) and Som in Sum—Osotspa controls a roughly 54% share (by sales) of a $720 million market, according to research firm Frost & Sullivan. The average Thai drinks at least 11 liters of energy drinks a year, U.K. market research firm Zenith International estimates, four times the average per-capita consumption in North America.
Energy drinks account for 74% of Osotspa’s overall revenues, and while Thailand’s robust economic growth augurs well for energy-drink demand, Frost & Sullivan estimates the market is growing at only about 2% a year. So while Osotspa’s domestic sales are rising, growing competition from the likes of TC Pharma’s Red Bull and Carabao Tawandang has whittled its share of the overall market to roughly 55% in 2017 from 60% in 2013.
The real growth opportunity in energy drinks is outside Thailand, where the craze for tiny bottles of liquid energy has created what California-based Grand View Research estimates is a $50 billion global market that will grow to $84 billion by 2025. Asia-Pacific’s $12 billion energy drink market is growing 7.5% a year. Overseas sales still account for only a fifth of Osotspa’s total beverage sales. But Osotspa “also has a good strategy for growth outside Thailand,” says Theethanat Jindarat, an analyst at Yuanta Securities in Bangkok.
Petch, who took over in 2015 as CEO from younger brother Ratch, may seem an unlikely candidate to lead a corporate overhaul. Though he has been involved in the company most of his life, his first calling was the arts. He started playing the guitar at 12; piano at 14. He released his first album, Tammada Mun Pen Raung Tammada (It’s Ordinary), in 1987. His song “I’m Not a Magical Guy” has been called one of the most romantic in the Thai language. “I’m a creative person, not a businessman,” Petch concedes.
He reluctantly returned to the family business at his mother’s insistence, putting his degree in marketing from Southern Illinois University to use as head of the family’s SPA Advertising. But his roots as a rocker run deep: in 2007, he released a second album, Let’s Talk About Love, which rose to No. 1 on the Thai pop charts. His success translated into a brief turn in film: in 2008, Petch starred alongside French actress Emmanuelle Béart in the thriller Vinyan.
Petch still sits in occasionally with local bands, as when in 2017 he joined a house band led by New Zealand’s celebrity chef Bobby Chinn during the closing party for Bangkok’s World Gourmet Summit to perform a rendition of “I Can’t Get No Satisfaction.” In April, he took time off from running Osotspa to perform with the Bangkok Beatlenuts, a local Beatles cover band.
His career as a rock star may be behind him, but his iconoclastic fashion sense endures. Petch’s style is more Bowie than boardroom, and he’s created what he calls a collaborative, open-plan workspace that looks more like an art gallery than an office. His own desk sits enclosed in floor-to-ceiling windows and a large, colorful mural by UK-born painter and filmmaker Sarah Morris. “This is a company from 120 years ago,” he says. “Now, it looks young, like me. I dress young, I feel young.”
Petch also divides his time between Osotspa and Bangkok University, which the Osathanugrah family founded in the 1960s and, with 26,000 students, is Thailand’s largest private university. Petch is president, a job that keeps him there two days a week handling the administration.
Some in Bangkok’s business community say Petch’s stardom and unconventional style overshadow his leadership abilities. But Vararatana Jutimitta, managing director of Bualuang Securities, which helped underwrite Osotspa’s IPO, warns not to be fooled by Petch’s style. “He’s a smart guy, and has adapted to his role pretty well,” says Vararatana. “He’s been transforming the company. The key thing: He knows how to use personnel. He puts the right people in the right place.”
When Petch started running Osotspa, he supplemented a boardroom heavy on relatives (uncle Surin is chairman, brother Ratch is vice-chairman, cousin Tasharin sits on the executive committee with two other cousins, as does cousin Niti, who also heads the remuneration and corporate governance committees) by enlisting industry veterans such as former Siam Commercial Bank president Kannikar Chalitaporn. In 2017, Osotspa recruited as its president Wannipa Bhakdibutr, a 30-year veteran of consumer-products goliath Unilever. She was followed by fellow Unilever alums Suthipa Panyamahasup as chief marketing officer, Sarayut Jitcharungporn in sales, and Apiwan Chatrapongporn in charge of trade marketing.
Petch sees his role as CEO largely as a strategist. “My staff is great. They know much more than me about the business,” he says. “So we talk to each other. I consult with them and listen to them a lot. I’m good at strategy.” With his new team in place, Petch began talking to bankers about taking his family firm public. “We were preparing for the listing for a long time,” says Petch. “It takes time. There was a lot to do, in transforming this old family company to become a modern, public one. We were doing a lot of restructuring, which is still going on.”
Petch launched an overhaul plan dubbed “Fitness First:” Osotspa dropped more than 1,000 products, including more than four-fifths of its personal care line, and laid off 1,000 employees, a quarter of its workforce. Slimming down has been costly: revenues tumbled by nearly a quarter in 2017 and another 1.5% last year. But Osotspa also slashed expenses by more than a quarter in those two years, which helped boost net profit margins to 12% from 8.5%. “We expect profit margins to expand much more than last year,” said Theethanat at Yuanta. “I expect strong growth this year.”
Investors appear to agree. Osotspa’s new shares ended up pricing at the top of their offer range and surged 20% on their first day of trading in Bangkok. Since the listing, they have climbed 25%. Petch plans to use the money raised to fund further expansion, especially in neighboring countries such as Cambodia, Laos and Myanmar, where many of its energy drinks and health products are already market leaders. Osotspa exports its products to these and nine other countries from 10 plants in Thailand. It’s also exploring expansion into China and Vietnam.
About 20% of the IPO funds are earmarked to build its first overseas factory, in Yangon, which is scheduled to start producing M-150 and other Osotspa drinks for Myanmar’s market by the end of the year. Osotspa’s Shark energy drink already dominates that market, with a 38% share. But, notes Petch, “we have plenty of room to grow there. It’s like the size of Thailand and experiencing great growth.” Myanmar’s population of 53 million is roughly three-quarters the size of Thailand’s, but incomes are still where Thailand’s were in the late-1980s and growing fast as the nation opens. The energy drinks market there is growing 60% a year, according to Frost & Sullivan.
As for his music career, Petch says no more records are likely. Instead, he plans to release a collection of short stories this year, he says, “stuff I’ve written for a while, some quite erotic.”