Fraser & Neave Holdings Bhd Annual Report 2019

A N N U A L R E P O R T 2 0 1 9 03 Management Discussion & Analysis 055 Consumers are becoming more health conscious and seek foods as well as drinks that are nutritious and low in calories. This has seen the emergence of organic food stores and low-fat variants of different types of food. In the beverages segment, many have switched to low-sugar or no-sugar versions of their favourite drinks. The ageing demographic is also growing, and again presents an emerging market for F&B companies to target with products that provide the nutrients that would ensure prolonged health. Awareness of healthier products through social media and news feeds online is resulting in increased expectation of F&B companies to be more innovative in its product offerings. HEALTH CONSCIOUSNESS Along with greater access to information through the net, people are becoming more aware of critical environmental issues such as global warming and marine litter. Added to this, many governments, including the Malaysian government, are making concerted efforts to reduce and eventually eliminate single-use plastics while promoting greener technologies and lifestyles. Malaysia has pledged to reduce its carbon emissions intensity by 35 per cent from the 2005 baseline, and by a further 10 per cent with assistance from developed countries.6 Thailand, meanwhile, has set a reduction target of 30 per cent by 2036 from a 2010 baseline. Consumers themselves actively seek brands that contribute to a greener environment and more sustainable planet. We made a conscious decision to lower our total sugar index many years ago, and accelerated our efforts in FY2019. About 90 per cent of our ready-to-drink products sold in Malaysia today contain less than 5g of sugar per 100ml, meeting the healthier choice logo criteria of the Ministry of Health Malaysia. We are also offering smaller portions of consumer favourites. At the same time, we are investing more into expanding our fresh milk categories in Thailand. Recently we entered into conditional agreement to purchase 4,454 hectares of land in Perlis to be developed into an integrated dairy farm to support the Group's ambition to establish fresh milk as a new growth pillar. Meanwhile, RM30 million has been invested into new equipment in our plant in Shah Alam to enable the production of more healthier products as well as smaller can formats. We strive to reduce our carbon footprint by employing various energy-efficient processes in our production line, as well as enhancing logistics efficiencies. We have invested in a solar photovoltaics system to be installed at our Rojana plant in Thailand. Our target is to reduce our greenhouse gas emissions intensity by five per cent from 2017 to 2020. At the same time, we are reducing the volume of materials used in our packaging and looking into recycled PET bottles. Since 2007, we educate schoolchildren on the importance of reducing waste and the 5R principles (reduce, reuse, rethink, recycle, reinvent) through our school recycling programme in Malaysia, which has grown significantly over the years. The number of participating schools more than doubled in FY2019, while the volume of recyclable wastes collected more than quadrupled. ENVIRONMENTAL SUSTAINABILITY • 10 out of 12 of our RTD product categories has healthier choice • 41 products certified by the Healthier Choice Logo of Malaysia’s Ministry of Health or Thailand’s Ministry of Public Health, up from 20 in FY2018. • 4.76 million kilogrammes recyclables collected through F&N school recycling programme since 2007. • 10% reduction in our packaging ratio compared to last year. • > 90% of our beverages’ packaging comprise of recyclable materials.