The investment budget will come from the company’s cash on hand, and it may increase its registered capital and sell new shares to the Small and Medium Enterprise Development Bank (SME Bank), which has a venture-capital fund for such purposes, he said.

“We are negotiating how much the bank will hold in our company and may finalise the deal in the second half of this year,” said Worawit, 45.

He established Hokkaido Morimoto Co in 2010 when he decided to go into business for himself.

“I worked at a factory that produced leather for fashion, and as a result I had to travel overseas, especially to Japan. I was interested in Hokkaido milk products and why they were popular with tourists and also famous overseas.

“I learned with my friend who lives in Hokkaido, Japan, about how to take care of dairy cows and produce quality milk. Then I decided to cooperate with his friend from Japan to contract with four dairy farms in Ratchaburi province, Thailand, to follow Hokkaido [feeding practices] and technology to produce quality fresh milk like Hokkaido milk,” he said.

After spending 2008 and 2009 contracting and training Thai farmers to feed cows following Hokkaido standards, Worawit spent Bt15 million of his savings to build a plant to produce sterilised milk to distribute in Thailand through five outlets in Bangkok under the Hokkaido Milk brand.

Quality product

“We succeeded in achieving sales worth Bt20 million in the first year of operation thanks to the quality of our milk,” he said.

Six years after opening the first branch in Bangkok, the company now has 46 branches nationwide, 15 of which are managed by franchisees, while it operates the rest itself.

The company generates average revenue of Bt120 million a year.

Hokkaido Morimoto Co plans to open 10 new branches this year, investing about Bt1 million in half of them, with the rest opened for franchisees.

Worawit said its franchisees needed a budget of Bt1.5 million for investment, Bt450,000 for the franchise fee including equipment and training, and the rest to set up and furnish the branch. The franchisees have to pay a marketing fee of 2 per cent and a royalty fee of 6 per cent of their sales revenue.

“Normally, they break even in no more than three years, when they generate enough income to cover their cost of investment,” he said.

He said the key to the success of the business was the quality of the milk, and current market trends – people nowadays are concerned enough about their health that they are willing to pay more for quality food. Hokkaido Milk costs about 10 per cent more than normal milk.

“When you have a product that faces high competition in the market, you need quality that differentiates it from your competitors. The key to our success is the quality of our products and strong confidence in Hokkaido Milk, which is well known in the market for its high quality. This has resulted in our business’ strong growth averaging 10 per cent a year,” he said.