Taipei Times: Why did you choose to issue TDRs in Taiwan?
Super Group (超級集團) executive director Peter Tan (陳天恩): Singapore is small and [Singaporean] Prime Minister Lee Hsien Loong (李顯龍) has always asked us to step out of the country and make more business overseas. We need to make more friends for international ventures. After many years of experience in China, venturing alone there is difficult for Singaporean firms due to cultural differences.
Taiwan is closer to China and Taiwanese know their way around in doing business in China. Taiwanese always don’t take “No” for an answer and they will make it work despite possible regulatory limitations in China, so we need to tap into these talents.
TT: When did you make the foray into China and Taiwan? It seems we don’t get much of Super Group’s products here.
Tan: We started our investment in China as early as 1994 with cereal flakes. Our cereals were selling so well that at the time, distributors were queuing up at our factory with cash. They hoped to get a 1 or 2 percent rebate from us if they gave us cash. The tea-drinking habit in China is changing and now we have to teach Chinese how to drink coffee.
If you persevere long enough in China, you would get back the returns with a successful brand name.
In Taiwan, we used to sell our instant coffee through distributors, but the cost of operating was too high and the partnership ended. We now only have ingredient sales here.
We are working with a few potential distributors now and in the very near future, we will have coffee-related products with a new concept re-enter the Taiwan market. The new products will be something Taiwanese consumers are deprived of and we will fill in the gap.
TT: Super Group doesn’t only sell branded products but also manufactures raw ingredients — such as non-dairy creamers and instant coffee powder — and sells to other food and beverage (F&B) companies. Your company’s statistics showed that branded products account for 90 percent of your total turnover and ingredients only take up 10 percent. Will you increase your ingredients sales in the future?
Tan: Yes, we will have double-engine growth for our business in the future. Our idea is to stabilize our ingredient business and at the same time continue to focus on our finished products.
We aim for double-digit sales growth every year for our branded products especially now that we are targeting China.
The F&B sector will take less of a hit even during financial crises, as people always have to eat. As long as we take 10 percent of the future growth in China’s coffee market, that would be enough for the company and the shareholders. Our sales in China now are still the tip of the iceberg.
After the incident of melamine poisoning [a toxic chemical added to dairy products by Chinese suppliers that sickened thousands of Chinese children in 2008], big Chinese brands would not trade their brand image for low-quality non-dairy creamers. They now want quality items with reasonable prices.
We have strong R&D and the know-how to teach our partners to blend our ingredients into their end products with standard quality.
We hope that one day, the ingredients and finished goods will each take up 50 percent of our turnover.
The production of ingredients in the past was mainly for internal use, but now some of them are sold to third parties who produce confectionaries, soup or milk tea.
We have very strong buying intentions from big Chinese and Taiwanese companies and that’s why we doubled capacity at our plant in Wuxi, eastern China, to 50,000 metric tons from August. Our current total capacity is 75,000 metric tons including the 25,000 metric tons output in our Singapore plant. By July next year, we hope to increase total capacity to 100,000 metric tons. This will truly make us one of the biggest suppliers of non-dairy creamers in China.
TT: Taiwanese companies Tingyi (Cayman Islands) Holding Corp (康師傅控股) and Uni-President Group (統一集團) have gained a strong foothold in China’s F&B market. How do you view them: as rivals or partners?
Tan: China is so big that each province could be viewed like an individual market.
So the players have to congregate to jointly educate the consumers on the concept of drinking coffee.
If that day comes, I believe the China market will be as huge as the coffee market in Europe.
Before that, you should not swallow a pie that is bigger than you can eat. So we are all gearing toward the market potential. Only when each of us is big enough in the next three to five years, then we will view them as a competitor.
For now, we could be in a strategic alliance. We can supply them with ingredients and educate the market together.
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