Company wants to beef up food business; targeting sizeable firms in Asean

KUALA LUMPUR: Fraser and Neave Holdings Bhd (F&N) is aggressively looking for sizeable snack food companies in the Asean region to acquire in order to build up its business in the food segment, said chief executive officer Datuk Ng Jui Sia.

"Our acquisition of a stake in Cocoaland Holdings Bhd is just the start of a journey to build up the food business which we see as the third pillar of business for the group.

"However, the domestic market is small. Asean offers better growth opportunities for the food business," he told StarBiz.

As at Sept 30, the group had net cash of RM639mil.

F&N's other two pillars are the soft drinks and dairy businesses.

The group announced in August that it would acquire a 23.08% stake in Cocoaland for RM54.6mil, its first in a food manufacturer, to gain a foothold in the food business.

Ng said F&N wanted to spread its base wider by building a food pillar.

"That was why we invested in a snack food company. From a product perspective, snack food goes with soft drinks as well as coffee and tea. There is synergy of selling snack food with our existing business.

"We see a lot of synergies in the areas of marketing, distribution and export that our current businesses have with the food business," he said.

In addition, Ng said there was vast opportunity in the food business as consumption of snack food rose in tandem with an increase in income.

"Demand will go up especially for the high value snacks," he added.

F&N is also looking to expand its dairy business in the region as well.

Ng said the group was intensifying dairy exports out of Thailand into Indochina - Laos, Myanmar, Cambodia and Vietnam.

"Part one is to build enough sales to call for a manufacturing presence in these countries. This will lead to part two which is to have an investment presence there.

"Once sales build up to a critical stage, then we can put in the machinery. We hope to get to such a stage within three to four years provided we can continue the current sales momentum and barring any unforeseen circumstances," he said.

He added that F&N had marketing execution teams at the borders to build franchise and to market and stimulate demand for the products.

The group acquired Nestle's canned milk business in Thailand in 2006 and has dairy manufacturing facilities in Rojana that commenced commercial production early this year.

"The strategy is to go regional for all our businesses. Besides Asean, the Middle East is a good market to get into for the dairy and soft drinks business," Ng said.

On how F&N planned to fill the vacumn left by the expiry of The Coca-Cola Co's bottling and distribution agreement on Sept 30, 2011, Ng said the group would continue to launch more new products and variants as well as strengthen the distribution infrastructure of its remaining core products in the country.

"In addition, there are also a lot of global brands in the market that can use our extensive marketing and distribution infrastruture to gain instant access to the domestic market.

"We are in preliminary discussion with one now," he said.

- The Star Online