Food Empire still has appetite for growth

Food Empire chief executive Sudeep Nair feels a deep satisfaction now that the company has come into its own. He says: "Now, seeing how Food Empire has evolved - from a staff of 40 to more than 3,000 now - it's about enriching people's lives through
Food Empire chief executive Sudeep Nair feels a deep satisfaction now that the company has come into its own. He says: "Now, seeing how Food Empire has evolved - from a staff of 40 to more than 3,000 now - it's about enriching people's lives through the brands and communities we build." PHOTO: FOOD EMPIRE

Food Empire chief executive Sudeep Nair's somewhat unexpected career journey began with a switch from coding to computers and then to coffee.

The software programmer realised early on that the role wasn't his cup of tea and turned to computer equipment sales.

It was during a buying trip to Bangkok in 1992 that Mr Nair crossed paths with Food Empire chairman Tan Wang Cheow, who was then running a consumer electronics dealership. The pair hit it off, and the following year Mr Nair threw in his lot with Mr Tan.

"Our business focused on exporting electronics goods to Eastern Europe. As it was a pure trading model, operating conditions could be brutal," Mr Nair, 50, recalled.

"Some of our contacts were interested in sampling new beverages, so we brought over some sachets of 3-in-1 coffee mix. After that, trial orders for the coffee mix took off.

"We didn't want to handle someone else's brands. So after our first test product - a 3-in-1 instant coffee mix - was well accepted by the market, we knew we had struck gold."

In 1995, with 40 employees in a small office in Moscow, the MacCoffee brand was born although Mr Nair saw it as more of a hardship posting: "I was hesitant to move to Moscow."

After the Berlin Wall fell in 1989 and the Soviet Union dissolved in 1991, Russia and Eastern Europe were in disarray. Mr Nair said: "Other colleagues who came over stayed up to a month before quitting, and there was no one else left to do the job."

Another hurdle was educating the local, predominantly tea-drinking market: "At that time, no one knew much about instant coffee. Thankfully, the locals were game to try new products."

By 1997, the firm had a multimillion-dollar MacCoffee brand that was taking Moscow by storm. "That was our first high," added Mr Nair.

However, the low wasn't far behind. The Russian financial crisis struck in 1998 when oil prices plummeted and brought the economy down in one fell swoop.

Fortunately, Russia bounced back over the next two years. Said Mr Nair: "Food Empire returned to growth from 2000, and that year, we successfully listed on the Singapore Exchange."

The group expanded rapidly between 2000 and 2005, spreading its wings to states such as Ukraine and Kazakhstan, but the next trough was just around the corner in the form of the global financial crisis.

By then, the realisation that Food Empire was too dependent on a single market had hit home.

"Our operations were too concentrated and we saw the urgency of diversifying out of this region," Mr Nair said. "But there were many challenges and we didn't make much headway."

In 2012, he was promoted to chief executive and decided to expand to Myanmar, the Philippines and Vietnam.

"We had tried to penetrate these markets through an export and trading model, but failed because there were too many local players and competition was intense," he noted.

Instead, Food Empire began investing in people and resources to build its brands and then set up manufacturing plants in places like India and Malaysia for key ingredients such as instant coffee, non-dairy creamer and, later, potato crisps.

"Of the three markets, we achieved clear success in Vietnam. We bled for three years and were on the verge of shutting, but finally we turned it around," Mr Nair said.

Over the past five years, Food Empire has grown its Vietnam sales from $2 million to $50 million and won more than 10 per cent share of its market for instant coffee.

The group continues to tweak its blueprint for the Philippines: "Our entry strategy wasn't quite right, and we're trying again with a new team and a new direction."

But Myanmar was a failure: "We pulled out of that market last year, largely because of its unstable currency. None of the F&B brands in Myanmar has been able to raise prices, and everyone is grappling with huge margin compression."

A new and immediate challenge is the coronavirus pandemic. "We've not seen a direct hit to our supply chain but consumer demand has been affected," Mr Nair said, adding that the strong balance sheet should provide a buffer.

Revenue for the year ended Dec 31, 2019 rose 1.5 per cent to US$288.6 million (S$407.7 million), while net profit jumped 44.9 per cent to US$25.7 million.

Food Empire produces a wide variety of instant beverages such as regular and flavoured coffee mixes, chocolate drinks and flavoured fruit teas. It also markets breakfast cereal, frozen food and snacks. Raw ingredients, like instant coffee and non-dairy creamer, are sold to other food manufacturers.

After nearly 30 years, Food Empire has finally come into its own, noted Mr Nair, who feels a deep satisfaction: "When I was in my mid-20s, financial success was the main goal. Now, seeing how Food Empire has evolved - from a staff of 40 to more than 3,000 now - it's about enriching people's lives through the brands and communities we build.

"I tell my staff - don't look at the large multinationals, focus instead on the small, local businesses which have made their mark."

His biggest muse is wife Irina, whom he met in 1995 when she was working for the firm in Moscow.

And he has some advice for their 21-year-old daughter Anastasia: "I always tell her, whatever you choose to become - a painter, entrepreneur or lawyer - pursue it with all you have.

"Only with determination and passion can you create an impact."

• This is an excerpt from Singapore Exchange's Kopi-C: The Company Brew, a column featuring C-level executives of SGX-listed firms. Previous editions are on SGX's website www.sgx.com/research

A version of this article appeared in the print edition of The Straits Times on May 11, 2020, with the headline 'Food Empire still has appetite for growth'. Print Edition | Subscribe