Exports key to Tropical growth


  • Business
  • Monday, 12 Jan 2004

BY ELAINE ANG

THE Tropical group of companies, which manufactures canned seafood, is still relatively unknown to many despite having operated in the country since 1972. And that's the way chairman Datuk Tan Boon Pin likes it.  

Humble and unassuming, Tan doesn't believe in “blowing his own trumpet” (as he calls it) regardless of how well the group has performed, preferring to march to his own drumbeat. 

From a small canning factory initially set up to manufacture canned tropical fruits and sardines for the domestic market, the group has grown by leaps and bounds and now has plants in Thailand, Australia and even as far as Chile. 

Datuk Tan Boon Pin with some of the company's products.

The growth was mainly attributed to the group's bold decision in 1976 to venture into the manufacture of canned tuna for export. The switch to the export market proved to be the right move, propelling the group into the forefront of the food processing industry and becoming a catalyst for its global expansion. 

The group's expansion overseas started in 1979 when its second cannery, Tropical Canning (Thailand) Co Ltd, was incorporated as a joint venture with Thai investors in Haadyai to produce canned seafood - including tuna, shrimp, crab meat and baby clams - for export.  

Its third cannery followed in 1987 in Pattani, Thailand, under the name Pattani Food Industries Co Ltd with special emphasis on the production of canned pet food and sardines for export. 

As a reflection of the group's successful foray overseas, Tropical Canning (Thailand) was listed on the Stock Exchange of Thailand in 1989. 

Seizing an opportunity to expand beyond the shores of Asean, the group acquired the renowned Australian canned seafood manufacturer Safcol Group of Australia in 1991.  

With the acquisition, the group gained a strong foothold in the Australian retail market, as well as the control of Safcol's cannery in Australia, which specialises in canned abalone, and another in Chile, which specialises in exotic canned seafood such as sea-asparagus, limpet, Pacific clams, salmon and Chilean abalone. 

The acquisition of Safcol, which used to be the one of the group's contract buyers, was a very memorable event for Tan in more ways than one.  

Reminiscing the acquisition, Tan remembers feeling tremors from an earthquake in Sumatra while having negotiations on the purchase with the party from Safcol in Shangri-la Hotel in Penang. 

Tan said the group invested A$10mil at the time for the acquisition of the company and its two brands, Safcol and Snappy Tom

“We saw a need to have a brand of our own and the fastest way was to acquire a well-known brand with market share rather than to develop one ourselves,” he said, adding that Safcol was a name that was reputable worldwide. 

“Even so, it was a tough period for us then as we had no exposure in handling an international brand, especially the distribution and marketing aspects,” he said.  

However, the difficulties are now behind the group and Tan expects Safcol to contribute US$30mil to group revenue this year compared with US$25mil in 2003. 

The group also expects to launch the rest of Safcol's products under the brands Safcol and Victoria in the local market in the next few months. 

“We have plans to penetrate North America and Europe this year,” he said, adding that Safcol products were currently available in Australia, the Middle East, Africa and Eastern Europe. 

“Besides the international market, we also want to develop the Malaysian market, hence the re-launch of Snappy Tom, our cat food, now and the launch of the brands under Safcol in the next few months,” he said, adding that the group also had its own brands - TC Boy, Bumble Bee, Roda, Bintang and Ocean Pearl

Tan said the group was also planning to penetrate Asian markets like China, Hong Kong and Brunei for its TC Boy brand of products.  

Tropical also plans to introduce new value-added canned seafood products with different flavours and sauces as well as launch its new dog food Goodlife in another three to four months. 

With this, Tan said, the group was expected to record a 15% increase in revenue for the year ending Dec 31, 2004, to US$172mil compared with US$150mil in 2003, contributed mainly by tuna, pet food and shellfish products.  

The group's main revenue generator is contract manufacturing for companies in the United States, Britain and Canada. 

“About 65% of our revenue is from contract manufacturing while the rest are from the sales of our existing brands. However, we are repositioning the group to generate 50% of our revenue from contract manufacturing and 50% from our brands by the end of 2005,” he said, adding that this would put the group into a more comfortable position. 

In line with its plans to penetrate new markets, Tan said the group was building a 15-acre plant near Shanghai, China. “We expect the plant to be completed by the middle of the year and it will cater to export sales to the Western world and the domestic market in China,” he said. 

The group has also set up a new state-of-the-art plant, completed in June 2003, next to its 20-year old plant in Haadyai.  

“The new plant is one of the most modern plants around with the latest machinery. The production capacity of the plant is also nearly double now,” he said. However, he declined to disclose the amount of investments.  

The group now produces an average of about 16 million cans per month, of which 95% are exported. 

Besides seafood, Tropical also has a fruit and vegetable canning company, Farm Fresh Products Manufacturing Co Ltd in northern Thailand. 

Related Stories:Tropical's Tan – from government servant to successful businessman Tropical's Snappy Tom heading for Canada 


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