Towards a world-class beverage company


  • Business
  • Monday, 24 Feb 2003

BY ELAINE ANG

F & N Coca-Cola (M) Sdn Bhd (F&NCC) has in the last three years executed a paradigm shift to put emphasis into its brands, people and asset management.  

“We need a 360-degree turn in the orientation of our business approach as in a changing world it is not possible to look at only one facet of the business,” its managing director Ng Jui Sia said in an interview with Starbiz.  

According to Ng, the whole theme of the success in the business is to try to manage the interest groups and influence them towards the company's purpose which is to be a world-class total beverage company in Malaysia. The interest groups in this case are the stakeholders, shareholders, customers, consumers, suppliers, community and employees.  

Ng said that over the years F&NCC had built very strong relationships, connecting with consumers, customers and employees alike.  

He said F&NCC had to identify every opportunity to interact with its consumers, not only to understand what their needs/psyche were, but to provide a portfolio of brands and products relevant and could be identified with so that they could continue to have affinity with the company's brands. 

Ng Jui Sia

“Malaysian consumers with their different racial and religious groups are very unique and this diversity is useful to the company as we can activate different brands/products at different times of the year like Deepavali, Chinese New Year and Hari Raya,” he said 

On Chinese New Year and Hari Raya sales, Ng said all drinks did better than expected during these uncertain times with 30% more business during the festivals than in normal months. 

He also stressed the importance of retaining the loyalty of F&NCC customers, which also included retailers, to its brands. He said there must be a win-win situation for both parties.  

“Selling our products must be profitable for our customers. Addi- tionally, we also provide them with good service by having about 30,000 cold drinks equipment like coolers and vending machines in the market. We not only make our products available, we also ensure that the supply chain is efficient so that when demand goes up, we would be able to provide sufficient supply,” Ng said. 

He added that of the 60,000 retailers in Malaysia, the company had dealings with 40,000.  

The company plans to make use of information technology to assist in managing its supply chain by installing e-sales and distribution software into its 100-odd distributor partners.  

F&NCC aims to ensure suppliers are able to supply the products at the quality that is required by giving them enough information to collaborate their supply chain to the company's – whatever errors can be reduced significantly once suppliers have enough information to work on.  

“Local suppliers will be able to grow their business with us,” Ng said. 

He added that the company's strategy was to concentrate on a few good suppliers whose systems were collaborative with it than to try to work with everybody as some might not be committed to the business if they only formed a small part of it.  

F&NCC also places importance on its employees and they are trained to form self-improvement cell groups to come with continuous improvement ideas – reduce costs, increase revenue and make operating processes easier.  

Based on these strategies, the company has turned around and been profitable for the past three financial years.  

According to Ng, the company's losses were attributed mainly to the Asian financial crisis, the loss of confidence in the market place where consumer spending took a dive, including the retail scene.  

“At the time many of our assets profile were not well-structured to weather the storm. This was rectified by rationalising our assets and distribution profile. We learnt not to only focus on brands but on customer relationship, people and assets. We had to be nimble and flexible,” Ng said. 

F&NCC currently has three plants located in Kota Kinabalu, Kuching and Shah Alam. Its Butterworth plant had become a depot or distribution centre during the company’s rationalisation of distribution points last year. The Shah Alam plant manufactures 90% of the division’s production requirements. 

“Our capital expenditure resources are put into the distribution infrastructure to make our distribution partners more effective, to reduce cycle time of service rather than on production infrastructure and expansion,” he said, adding that the plant in Shah Alam was capable of serving the needs of the division up to 2005/2006.  

Production capacity of the Shah Alam plant is 45 to 50 million cases of drinks per year (1 case = 24 cans). The plant is currently producing 37 million cases yearly. 

F&NCC, a 90% subsidiary of F&N Holdings and 10% owned by Coca-Cola, has five brands under its umbrella : Coca-Cola, 100Plus, the F&N brands, Seasons and Sprite.  

At present, F&NCC has 67% share in the carbonated soft drinks market, 90% in the isotonic drinks market and 10% share in the Asian drinks market.  

On the impact of sports drink Gatorade in the isotonic drinks market, Ng said it was too premature to tell but he was confident that 100Plus would be able to hold its own in the market.  

However, there is not much room to increase market share, especially in the carbonated drinks market.  

“The important thing is to drive the category to expand the total pie rather than just expand market share. We plan to do this by identifying the consumption locations and making our brands more relevant,” Ng said, adding that total advertising and promotion costs per year were about 9% to 10% of the company revenue from the soft drinks division. 

The soft drinks division, which is the highest contributor to the F & N group pre-tax profit with 53% last year, is still on course for good growth, according to Ng. 

With a business strategy focused on information technology, optimising its supply chain management and distribution system management, F&NCC looks set to do well. 

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