FOOD EMPIRE HOLDINGS LIMITED (SGX:F03)
Food Empire - Phố -bulous Ice Coffee In Vietnam
- On 13 January 2020, we visited Vietnam (Ho Chi Minh City), which is Food Empire’s second largest market. Food Empire’s sales in Vietnam is mainly anchored by its star product, Café Pho and their variants.
- Currently top 3 in terms of value in the instant coffee industry, Food Empire captures c.80% of their sales through General Trade.
Food Empire - Company Background
- Food Empire (SGX:F03) is a food and beverage (F&B) company that manufactures and markets instant beverage products, frozen convenience food, confectionery and snack food. In FY18, beverages constitute 86.8% of their topline.
- Food Empire's products are sold to over 50 countries. Its key market, Russia accounts for 40% of its revenue FY18, followed by Indochina (18%), Kazakhstan (13%) and Ukraine (9%).
- Food Empire was listed on 25 April 2000 on the main board of SGX at $0.13. The Group operates 8 manufacturing facilities in India, Malaysia, Myanmar, Russia, Ukraine and Vietnam.
Site Visit Highlights
- Strength in General Trade underpinned by dedicated sales and marketing team. Food Empire’s sales representatives are incentivised to reach out to the local retailers for better product visibility within the stores compared to their competitors. Weekly, the team would visit the retailers to ensure that the stores are well-stocked. Given that the product is priced at a premium, Food Empire also differentiates themselves by providing the option for consumers to purchase their products in sachets, which is more accommodating for those with lower expenditure capacity.
- Capitalises on festivities to create brand awareness. Food Empire refreshes the packaging of their products regularly to celebrate festive seasons with the locals. To engage the growing group of savvy millennials, Food Empire also produces commercials that reinforce their fun and refreshing brand image. Most recently, Food Empire collaborated with Tóc Tiên, a local pop celebrity, to celebrate the Vietnamese New Year, through a Youtube music video which garnered 50mn views in 2 weeks.
- Automation eased packing bottleneck. During our visit, the factory in Vietnam was operating 24 hours 6 days work week. It upgraded its packing operations to be able to produce 4.6x more cartons in a month. Given that the factory is equipped to operate 24/7 and that they are able to meet any surge in demand by tapping on their neighbouring factory in Malaysia, Food Empire should be able to take on more capacity when required.
- Launched new products to compete and more in the pipeline. Food Empire ventured into variations of Café Phố to increase sales and compete with its competitors for market share in different submarkets. Post Café Phố, Food Empire rolled out Café Mê and Café Kết (hot coffee, 3in1), Café Phố Đen Đá (ice coffee, 2in1), Café Phố Nhà Làm (ice coffee, 3 in 1, more premium than Café Phố). To cater to a growing group of millennials, Food Empire is currently experimenting on creating uniquely flavoured energy drinks targeted to refresh and ‘buff’ young gamers in Vietnam.
Investment Actions
- No stock rating or price target provided, as we do not have coverage on Food Empire.
- See Food Empire Share Price; Food Empire Target Price; Food Empire Analyst Reports; Food Empire Dividend History; Food Empire Announcements; Food Empire Latest News.
- See attached PDF report for more details and also the site visit pictures.
Tan Jie Hui
Phillip Securities Research
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https://www.stocksbnb.com/
2020-02-07
SGX Stock
Analyst Report
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