Championing local herbs

  • SME
  • Saturday, 18 Apr 2020

Good foundation: Ng believes Bio-Nutricia will survive the current challenging period as the industry slowly stabilises.

AS a child, Ng Kuak Ping watched his grandmother mix her own concoction of herbs and medicines to soothe his discomfort when he was unwell.

These homemade remedies remained with him through much of his life and kept him interested in naturally sourced ingredients and their nutritional benefits.

“My grandfather, who used to run a traditional Chinese medicine shop, also gave me early exposure on what good ingredients can do to help keep people healthy, ” says Ng, who went on to become a nutritionist and has been involved in the health food and supplements industry ever since.

Ng is one of the co-founders of Bio-Nutricia Manufacturing Sdn Bhd. The company, founded in 2006, started life as a consultancy firm advising other companies – mostly multi-level marketing (MLM) outfits – on product development for health and food supplements, including sourcing of raw ingredients and securing the right manufacturers.

Ng’s affinity with MLM operators also stems from the fact that health foods are usually the mainstay products of these companies.

“We work closely with MLM companies as I am impressed with the ideas behind many of these companies, and personally know most of the founders as well.

“Although there are some players who don’t enjoy good reputations in the way they run the business, the majority of them actually have good intentions and started out because they wanted to promote something that is healthy and beneficial to the public, ” he says.

New products: R&D is essential to enhance local herbal products in the global market.New products: R&D is essential to enhance local herbal products in the global market.

Bio-Nutricia eventually went into manufacturing in 2008 with a factory in Kajang. The decision to move beyond consulting was partly due to demand from customers for products and also because the downstream operations offered better margins. This will also allow the company to expand its research and development (R&D) capabilities.

Ng, who heads the company as its main nutritionist, says his team is looking to explore additional food technologies that would make healthy food and ingredients more palatable.

This includes perfecting a new coating technology that will help mask unpleasant tastes in otherwise healthy food ingredients. Like bitter gourds, for example. Although full of beneficial nutrients, the bitter taste is usually a turn off for many people.

Competitive edge

The company currently specialises in natural food ingredients made with natural flavours, colours and phytonutrients for gourmet culinary and bakeries. Their products include extracts of pandan, lemongrass, roselle, butterfly pea and vanilla. They are used as ingredients to promote anti-ageing, detoxification, immunity boost, weight loss and bone and joint health, says Ng.

Sizeable manpower: The company has over 40 people at its manufacturing hub.Sizeable manpower: The company has over 40 people at its manufacturing hub.

Its products come in a variety of forms including liquid, gel, powder, chewable tablets and herbal beverages.

While the majority of its customers are MLM companies in Malaysia, Ng says there is also growing demand from health and beauty product wholesalers and sport nutrition specialists, including a number of US and Singapore based multinationals.

Around 30% of its products are currently exported but Ng hopes to eventually derive 70% of its sales from the export market within the next five years.

Bio-Nutricia is working towards getting the necessary certifications which will enable it to supply ingredients to multinational food and beverage companies. This will also help expand as well as diversify its customer base.

Apart from producing its own range of ingredient products, the company also provides original equipment manufacturing services, which give it ongoing business.

Ng says staff count at its manufacturing hub currently counts over 40 people. Its turnover at the moment tops RM20mil.

Long-term potential

The food manufacturing business is a long-term business. It takes time to build up one’s portfolio of products as it requires a lot of R&D work. But Ng notes that penetrating the multinationals market is key for the company to move up the value chain as this will not only bring in the revenues, but also push the company to meet higher quality standards and open the door to developing new products.

Locally, the company has established a network of warehousing facilities strategically located near various industrial areas to support its expansion plans and serve manufacturers in different parts of the country.

But the overseas market is where future growth will come from, says Ng, as the domestic market is not big enough to support its ambitious growth target.

However, Bio-Nutricia currently lacks the distribution network and market knowledge to penetrate countries in its target markets of Asean and Europe. It will also have to be careful about meeting food production standards set in the different countries.

The natural plant-based health ingredients manufacturing is a niche area in the food industry in Malaysia, but Bio-Nutricia’s main competition comes from state-owned universities and government agencies that are commercialising their R&D work through other local small enterprises, says Ng.

And while these institutions may have an upper hand in terms of R&D resources and capabilities, Bio-Nutricia has the advantage of a bigger production capacity of up to 60 tonnes per month.

Its manufacturing plant in Kota Damansara, Selangor enables it to also have better quality control over its products.

Ng says this advantage as well as its research expertise will help take Bio-Nutricia to the regional markets.

“This gives us an extra edge in competition among buyers from the higher-end health food and beverage companies, ” he says.

There are also other smaller ingredient suppliers, which manufacture their own food ingredients, that may potentially give Bio-Nutricia a run for their money. But Ng believes that if it sticks to its targets and plans, the company can carve out a slice of the pie for itself.

Notably, business has slowed significantly in the short-term given the ongoing movement control order (MCO). The company is currently operating at 50% manpower and has cut off overtime for staff.

Ng says its supply chain has also been badly disrupted by the Covid-19 outbreak as some of its suppliers have stopped operations.

Bio-Nutricia is planning to apply for some of the aid for SMEs under the government stimulus packages as Ng says this will be helpful in lessening the financial burden on the company as with many other businesses.

While a dark cloud hangs over the industry and over many SMEs given the long term effects of this pandemic, Ng says companies with deep pockets or strong cash management will likely survive.

In this respect, Ng believes Bio-Nutricia has laid a good foundation to survive this period. He does not foresee any major change in its business direction or focus as it continues to move forward.

In fact, Ng opines that the situation for health supplement players will stabilise soon enough, although a recovery will be gradual.

Tropical herbs

One of Bio-Nutricia’s advantages in being based in Malaysia is that it can tap into the rich local biodiversity, including the abundance of readily available herbs and plants with high nutritional value.

This will support the company’s ambitious goal to be the leading regional health ingredient supplier.

The use of medicinal herbs to ease health conditions and improve wellness dates back centuries, especially in South-East Asian countries which are rich with natural resources. Herbal remedies were used before the invention of modern medicine.

However, one of the issues that is slowing down the development of the herbal industry in Malaysia is the lack of an industry standard to ensure the consistent quality of raw herbs.

In general, Ng says the quality of fresh herbs in Malaysia is similar or better than the imported ones. The herbs are collected directly from the jungle or harvested from the farms.

But the lack of a standard would mean that these local herbs are not measured to match imported herbs.

There is certainly room for Malaysia’s herbal industry to grow in the global market, especially in China and other North Asian countries.

But the majority of herbal ingredient makers in Malaysia are SMEs, and most of them do not have the capacity to invest in R&D and value-added activities because of their limited financial and knowledge resources.

Ng says R&D in the herbs industry is essential to enhance the competitiveness of local herbal products in the global market through the creation of new products from local herbs.

To fast-track the company’s international expansion, Ng says it is looking for strategic partners who can provide marketing expertise and have a distribution network in regional markets for food related products.

The company has been pursued several times by potential suitors over the past two years but Ng says these have been mostly financial investors with little strategic value.

Ng and his family currently hold the majority stake in the company.

“We are looking at the long term prospects where the growth in demand for health ingredients still has a long way to go, ” he says.

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