Fraser & Neave Holdings Bhd Annual Report 2020

091 ANNUAL REPORT 2020 03 md&a Despite a challenging year due to the COVID-19 pandemic, F&B Thailand pulled in a very encouraging performance, aided by successful execution of operational strategies as well as recovery in the Indochina and export markets. While movement restrictions severely impacted the domestic general trade and foodservice channels during the emergency decree in Thailand which began in March 2020, continued focus on our strong hawker network in Thailand, Cambodia and Laos helped to buoy sales while enhancing brand loyalty and visibility. During the emergency decree, schools as well as dining outlets – hotels, restaurants, cafes and hawkers – were required to close, impacting demand for a range of our products. Fortunately, this was buffered by increased demand from home consumption. We continued to strengthen our distribution network and increase coverage by 2,000 new outlets despite muted demand from general trade and foodservice channels. Marketing spend on traditional media and channels was tightened during the most intense shutdown months. However, as the lockdown gradually lifted in the third quarter, efforts to drive sales resumed, especially for new products. With higher investment in advertising and promotions, sales volume picked up once again in the fourth quarter. Throughout the year, there was also a greater emphasis on digital marketing to build brand visibility and loyalty. Continued product innovation, meanwhile, meant we were able to meet the increasing demand for healthier options with the launch of products that cater to the changing tastes of our consumer demographic. In November 2019, we introduced a novel ready-to-eat product, milk candy tablets made from100 per cent NewZealandmilk. MagnoliaMilkies was launched nationwide in Classic Malt, Strawberry Yogurt and Hokkaido Milk flavours, and garnered positive response. By the end of the financial year, the product had gained the third spot in its market. Overall agility in meeting market changes enabled us to maintain our leadership in key categories, namely that for sweetened condensed and evaporated milk with more than half of total market share. Carnation continued to command the superior segment, aided by the launch of a 0% Fat, 25% Reduced Sugar condensed milk with high milk powder content. In the mainstream segment, TEAPOT maintained its lead with the introduction of squeezable tubes in Matcha Green Tea and Mango flavours, improving its in-home penetration. The 1kg pouches of Carnation and TEAPOT evaporated milk also proved very popular, especially among hawkers looking for value deals. Sales of these products increased from 5,000 cases a month in November 2019, when they were launched, to 25,000 cases in September 2020. We continued providing support to our hawker customers in domestic Thailand market, Cambodia and Laos through a loyalty programme utilising innovative digital media. Through this programme, the team ensured a high level of engagement with hawker customers by setting up a Line chat specifically for them (which now has more than 8,000 members) and keeping track of the hawkers’ movements and orders to ensure they are always well-stocked with our products. The Export market performed particularly well this year, growing by 14 per cent thanks to strong sales in Cambodia and Laos, which contributed to over RM200 million in revenue along with expanded distribution and reach. Today, TEAPOT is the market- leading brand in condensed milk market in both Cambodia and Laos. A star product was the 160g evaporated milk, which gained significant traction in Africa. This year, for the first time, we received a special recognition towards our commitment in developing Halal products for Thailand and export markets, by winning the prestigious Thailand Best Halal Company of the Year 2020 from the Central Islamic Council of Thailand. We were also awarded the Diamond Level for National Occupational Health and Safety Award, and Silver Level for Zero Accident Campaign 2020 fromMinistry of Labour Thailand. Meanwhile, we were also recognised by the Ministry of Labour Thailand, with our eighth consecutive Excellent Establishment on Labour Relations and Welfare Award. Despite a challenging year due to the COVID-19 pandemic, F&B Thailand pulled in a very encouraging performance, aided by successful execution of operational strategies as well as recovery in the Indochina and export markets.