Bakery ingredients maker maintains its innovative streak amidst growing competition
LIM Teck Hwa speaks fondly of the tenacity, passion and proud sense of ownership that his father, Lim Keem Kok – the founder of Harvest Bakery Ingredients – has for the company.
The business started from a small shop lot in 1985 making flavour emulsions for cakes.
Keem Kok had a pioneering mindset when it came to building the business. He believed that innovation is the key in moving the company forward.
The quest to improve its products saw Harvest Bakery coming out with many firsts for the then nascent bakery ingredients industry here, including being the first manufacturer in the country to manufacture coloured and flavoured Imolko.
With the success of the emulsion, the enterprising Keem Kok travelled to Europe and the US to learn more about the industry and to source for more quality bakery ingredients. This led to its next product range, the Sponge Cake Mix with ingredients sourced from Europe.
The elder Lim is particularly mindful of the fact that Harvest Bakery has come a long way to be one of the manufacturers with the most complete range of bakery ingredients.
Harvest Bakery has now established its name as a major supplier in the industry. It supplies bakery ingredients to bakery chains, hotels, supermarkets, food manufacturers as well as wholesalers.
“We are carrying Malaysia’s flag as far as bakery ingredients are concerned. There is no similar company from Malaysia that supplies and manufactures the entire chain of bakery ingredients like we do.
“Today, we have the capacity to produce over 200 varieties of ingredients from over 20 different product ranges, including premix baking powder, butter blends and margarine, ganache, fondant, pastes and chocolate spreads under our own brands. If you like cakes, chances are you have eaten or bought one that contains some of our ingredients,” says Teck Hwa.
The company’s signature product, chocolate Imolko, is still one of Harvest Bakery’s bestselling products. It is mainly used for flavouring buns, cakes, creams and other baking products.
Harvest Bakery’s Imolko quickly caught on among the network of bakery and cake shops in the country for its aroma and taste.
With the baton now passed on to Keem Kok’s sons, Teck Hwa says he and his two other siblings are now responsible to take the business to the next level. That role includes expanding the company’s market reach and establishing strategic partnerships, which is the focus of Teck Hwa as the export manager.
His elder brother Lim Teck Guan is the company’s managing director, while his other brother, Lim Teck Wee, takes care of production, warehousing facilities and the factories.
While the business is established, Teck Hwa acknowledges that the industry landscape is changing all the time, and Harvest Bakery cannot afford to rest on its laurels. It needs to continue seeking new innovation and maintain high product quality to stay in the game.
Teck Hwa says Harvest Bakery is operating in a matured industry. Apart from a multitude of local players, it also faces competition from large multinationals that are setting up production bases in Malaysia to penetrate the Asean and Asian markets.
However, regional countries such as the Philippines, Vietnam, Indonesia and even Singapore still offer growth potential and will be the main growth driver for the company in the future, notes Teck Hwa.
Export markets, mainly to Singapore and Brunei, currently make up less than 20% of the company’s total sales.
Harvest Bakery is also looking into a possible expansion into the retail market with products such as its premixes, butter and margarine and other bakery ingredients, by introducing smaller-sized packaging.
At the moment, its bakery powders, premixes and emulsifiers are the main revenue generators for the company. Its other major products include baking and cooking chocolates under the Tropica Compound Chocolate brand, margarine under the Buttermas label, Butter-Blend and Latifolia Margarine Emulsion, chocolate Imolko and coffee Imolko.
Harvest Bakery is also involved in trading of imported baking or compound chocolates, jams and flavourings for the bakery and pastry market.
Business is growing and the company is bursting at the seams. It currently has two running operation centres, comprising a manufacturing plant and an office cum warehouse.
“We have run out of space with our three buildings, which occupy some 1.5 acres of land. We will be investing in a new 1.2acre plant near our current location. Investment for the new building is estimated at around RM17mil. This is to expand and improve our production capacity, quality and for new product lines,” says Teck Hwa.
The company’s total production stands at around 3,000-3,500 tonnes annually, excluding trading products.
On average, the company currently records a turnover of around RM5mil per month, or about RM60 annually. Depending on the seasonal demand for bakery ingredients, Teck Hwa foresees growth of around 3%-5% per annum.
New demand trends
The size of Malaysia’s bakery industry is estimated to be worth around RM2bil annually.
Cakes are one of the staple desserts for locals and appear on the table in almost every occasion. Thus, cakes are widely seen as a stable and recession-proof business.
However, Teck Hwa cautions that ingredient manufacturing is neither a high-growth nor a high-margin venture.
He points out that cakes are categorised as foods that are rich in sugar and a growing number of health-conscious consumers are looking for healthier alternatives. He also notes a rising trend among consumers in markets such as Singapore towards gluten-free bakery products and pastries with less sugar content.
Some of the future demand in the market, he expects, will be trans-fat free-, multigrain- and whole grain-based baked goods that are low fat, low calorie, organic and enriched with vitamins and minerals with added flavours.
Consequently, Teck Hwa says the company has been looking at developing products of a healthier variety. Future investments, therefore, must focus on enhancing the company’s capabilities in these products.
Innovation, a legacy of his father, is still very much at the heart of the company’s development. And Harvest Bakery has been investing in R&D as well as on testing and quality control to ensure its products are tip top and improved with the times. Every ingredient and product is tested and verified to be free-of-contamination by its in-house scientist to ensure safety and product quality, Teck Hwa adds.
According to him, there is a risk of quality control slipping out of their hands. Some of these products, he explains, are resold in different packaging to end customers or are added into their own range of products in the outlets. As much as it tries, this makes it difficult for the company to monitor the quality of the products that end up in the hands of end users.
Going forward, Teck Hwa says Harvest Bakery will consider potential tie-ups with private equity or strategic investors to help fund its expansion plans.
It was previously approached by a Dutch company and Australian-based investors two years ago but the management had decided then that Harvest Bakery was not ready to give up its stake as there was still room to grow on its own, he says.
At the moment, Harvest Bakery is fully owned by the Lim family.
Nonetheless, Teck Hwa says the company may consider forming strategic partnerships in another “one to two years’ time” should there be any potential synergies and market access opportunities as the company looks to expand its production capacity, ramp up its R&D and penetrate new export markets.
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