Guan Chong to raise output


  • Business
  • Monday, 31 Jan 2005

BY ELAINE ANG

COCOA-derived food ingredients manufacturer Guan Chong Bhd (GCB) will focus on capacity building, market expansion as well as research and development (R&D) to drive its future business growth. 

GCB, which is targeting a listing on the main board of Bursa Malaysia in March, currently processes 53,000 tonnes of cocoa beans per annum. 

It has an annual processing capacity of 60,000 tonnes and sources its cocoa beans from Indonesia, Papua New Guinea, Ghana, Nigeria and Malaysia.  

Brandon Tay (left) and Hia Cheng showing some of the company's cocoa products.

Chief executive officer Brandon Tay Hoe Lian said that with over a decade of experience and years of experimentation, GCB had successfully expanded its product range to include four main categories of cocoa-derived food ingredients, namely cocoa liquor, cocoa butter, cocoa cake and cocoa powder. 

GCB's products are marketed under the trademark Favorich, which is a combination of the phrases ‘high in flavour’ and ‘rich in colour’, since 1996. The group recently invested over RM20mil to expand its factory, warehouse and machinery to increase the production capacity of cocoa powder. 

“This will increase cocoa powder production capacity to 25,000 tonnes from 5,000 tonnes before. Cocoa powder provides a better margin than cocoa cake. Demand is also higher for cocoa powder,” Tay told StarBiz in an interview. 

He said the group's focus would be on cocoa butter and cocoa powder as they were the main revenue generators for the group. Cocoa butter commands an average price of US$4,000 per tonne and cocoa powder about US$1,200 per tonne. 

Currently, the group’s cocoa-derived food ingredients are sold to multinational companies and international trading companies.  

International trading companies play an intermediary role between cocoa processors and end-users, namely chocolate and confectionery manufacturers. 

About 94.8% of the group's revenue in 2003 was derived from exports to Asia, Europe, North and South America, the Middle East and Africa.“We are working towards further penetrating markets in Asia like the Philippines, China and Japan; in Eastern Europe like Poland and Romania; and in the Middle East,” he said. Tay plans to reach a wider customer base by setting up marketing offices in different countries, especially in North America and Europe. 

Another important aspect to drive business growth is R&D. 

Tay said the R&D department played an important role in helping the group maintain high standards of quality for its products, meet customers’ expectations and continuously improve productivity and process efficiency. 

“At present, about RM50,000 is invested into R&D annually but this is expected to increase after listing as more funds are generated,” he said. 

The group's warehouse in Pasir Gudang

The group's plant is equipped with the latest state-of-the-art technology – a unique integration of expertise from Germany, Switzerland and the Netherlands to meet the fast changing demands and stringent requirements of quality. 

“We have expanded our operations to two processing lines with nibs alkalising facility (to produce different varieties of cocoa powder) to meet the requirements of our customers. Our plants are fully automated and operate 24 hours a day, 365 days a year,” Tay said. 

He is optimistic about the group's prospects in the cocoa industry.  

“Cocoa ingredients are widely accepted worldwide and there are basically no substitutes. Malaysia is the sixth largest cocoa processor in the world,” he said. 

Tay foresees increasing demand due to the emergence of new products as well as new markets. 

“New chocolate products would stimulate high demand for chocolates and this will result in higher demand for cocoa-derived food ingredients. Increased demand of chocolate products in Asia and Eastern Europe will also provide tremendous opportunities,” he said. 

Being a Malaysian company provides GCB with many cost advantages, including the lower cost of infrastructure, utilities and labour as well as tax incentives and duties exemption from the Government. 

“We are strategically located next to the Pasir Gudang Port and are able to enjoy easy access to the Port of Tanjung Pelepas and Singapore's PSA port. “Our warehouses in Pasir Gudang Port, which provide over 17,000 sq metres of storage, enable us to obtain the most competitive freight rates and timely and cost effective delivery for our products,” Tay said. 

According to Infocredit D&B (M) Sdn Bhd, there are 10 major players in the local cocoa-derived food ingredients manufacturing industry.  

Among them, GCB was the largest manufacturer in terms of actual cocoa bean processing volume in 2003. Based on its revenue in 2003, GCB was the top player in Malaysia with revenue of RM371mil, capturing a market share of 35.4%. Other major players include KL-Kepong Cocoa Products Sdn Bhd and Malaysian Cocoa Manufacturing Sdn Bhd. 

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