On 8th January 2013, Straits Times ran an article on Super Group, entitled “Right ingredients for a successful brew” and on 4th February 2013, it featured another article, entitled “‘Regional wings’ strategy helps Super Group grow”. I will summarise the salient points covered in those two articles in this blog post.
“Right ingredients for a successful brew” article
- Chairman of the firm, Mr David Teo, believes two factors have driven the company so far: becoming focused on its core products and having a strong regional strategy (incidentally the next article is about this). Back in 2008, the company sold off its non-core businesses, like the vending machines enterprise, and concentrated its energy and talent in the coffee business. At the same time, the company decided to sell the ingredients it was producing for its instant coffee mixes.
- The firm produces its own ingredients to ensure product quality and make to make sure they are integrated from start to finish, unlike other instant coffee makers. Having started off to ensure consistency in its coffee products, the ingredients unit has since morphed into an immense source of revenue for the firm.
- Super Group sells ingredients like creamers to ice cream makers and bottled drink companies.
- The ingredients part of the business accounts for 31% of the revenue while the other 69% is accounted for by the consumer segment.
- The company will continue focusing on its regional strategy in Asia.
- Super is in the top three in several instant coffee markets, including Myanmar, Thailand and Singapore.
- The company has been in Myanmar for over 15 years and has built a strong distribution network there with a partner. Most of the shops there are mom-and-pop shops so Super took a long time build their presence and sell directly to them.
- Super is confident that its first-mover advantage and strong network will be enough to fend off competitors who are also eyeing the market in Myanmar.
- The company is now focusing on increasing its presence in the region, including China. There is immense potential in the low- to middle-income group which sees coffee as a luxury item.
“‘Regional wings’ strategy helps Super Group grow” article
- Super Group has three ingredients manufacturing facilities and six packaging plants in the region, including one of each in Singapore.
- On top of rising costs in Singapore, the reason to move overseas was to localise itself in the various markets. This means making different blends of its instant coffee mixes for different markets and packaging them differently. For example, the Thais prefer their coffee sweeter so Super produces sweeter coffee there. While in Singapore, Singaporeans prefer lesser sugar. In Myanmar, Super recently came up with a sachet that has sugar on one side, separated from the coffee and creamer on the other side, so drinkers choose their own sweetness level.
- Super Group continues to invent new products and packaging designs and it can do so efficiently due to its regionalisation strategy. For example, recently in Malaysia, the company took just six to eight months to roll out a new product – the “Super Power” range of five-in-one coffees, which are a blend of its white coffee mix with added ingredients like tongat ali, collagen and ginseng.
- Since the company manufactures in Malaysia itself, it did not have to deal with import procedures, which are quite strict. The company could also get halal certification and other certificates all in the country itself, making things easier.
- Even as it spreads its wings across the region, the company will keep its home base and some high-end manufacturing activities in Singapore. The local plant now makes high-end creamer and can create foam out of instant creamer and creamer that can dissolve in cold water to make instant iced-coffee.