SINGAPORE: One of the first things Vipul Chawla did when he joined FairPrice Group as its chief executive in 2022 was to take a stroll in a FairPrice supermarket, where he struck up a conversation with an elderly customer.
It was a Wednesday, and Vipul learnt that the customer was at the store shopping for eggs.
Senior citizens enjoy additional discounts on their purchases on Wednesdays, and this would help her offset the rising costs of eggs and other basic essentials.
With core inflation forecast at 2.5% to 3% in Singapore in 2023, Vipul quickly cemented a strategy to sustain the FairPrice mandate of keeping prices fair for its customers while continuing to stay profitable as a business.
The supermarket chain would now channel more resources towards growing its house brand business, allowing it to develop the products its customers needed the most at much lower costs compared with other brands.
“Own Brands and Food Solutions (OBFS) is central to our social mission of helping customers moderate their costs of living,” Vipul recently told The Straits Times during an interview at the FairPrice corporate office in Joo Koon.
By maintaining its own portfolio of house brands, FairPrice has greater control over the source, quality, marketing and therefore the cost of producing these goods.
This enables it to provide customers with a steady supply of good quality essential products at price levels that are below the prevailing rate of inflation, OBFS chief executive Grace Chua told The Straits Times at the interview.
In January 2022, for example, OBFS acquired OJJ Foods, Singapore’s largest pork processor, which gave it control over the value chain for pork products.
It has since rolled out two new own-brand products – Golden Chef dumplings and Delicato sausages – that are now on sale at FairPrice stores.
“The OBFS business will allow us to unlock more value for customers as we can make sure our own brands meet the necessary safety standards and match the quality of the existing market leader in that category, but at a lower cost,” Chua said.
OBFS was set up in 2019 to help strengthen FairPrice’s position as an affordable, accessible, and quality food provider in Singapore.
It first started with the FairPrice and Pasar house brands, which are priced 10% to 15% below other brands, but has since expanded its portfolio to 12 own brands.
These cover a total of 2,000 products across 54 categories, 300 of which were launched since 2020, including the Harvest Fields and Origins food brands, Life beverages and Just Wine.
At FairPrice, one in three shopper baskets now contains a house brand product, according to company data, while the number of FairPrice online baskets with a house brand is seven in 10.
Still, OBFS brands currently make up just around 15% of goods sold at FairPrice, compared with the global average of 30% for house brand penetration in supermarkets.
Chua said the business unit will continue expanding its portfolio of house brands and be on the lookout for more acquisitions that could help it secure the supply of basic essentials.
As demand rises, OBFS is expected to double its revenue from S$500mil (RM1.7bil) now to S$1bil (RM3.4bil) in 2030.
Vipul added that at those levels, OBFS is now one of the largest fast-moving consumer goods companies in Singapore, with promising potential for growth. — The Straits Times/ANN
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