Old Malaysian Milks Thai Consumers to Drive Growth
Watch the video with Andrew Stotz or read a summary of the World Class Benchmarking on Fraser & Neave Holdings Berhad.
Background
Fraser & Neave Holdings Berhad was established in 1883, and is one of the oldest companies in Malaysia.
Its main businesses are the manufacture and sale of soft drinks and dairy products, and it is second largest in Malaysia in terms of market share. In the realm of isotonic sports drinks, the company has an overwhelming 85% market share.
Business Description
FNH is the No. 2 beverage firm in Malaysia by market share. It enjoys 27% market share of the ready-to-drink segment. Soft drinks account for slightly more than 1/3 of total revenue; dairy products for nearly 2/3.
It has four “power” brands: Oishi green tea, est Cola, 100plus (isotonic sports drink) and Nutri Soy, a soy drink. All have top market share in Malaysia, and FNH has been successfully teaming up with other ASEAN beverage companies to market these brands throughout the region via licensing and other manufacturing and marketing agreements.
Last year, the company’s Malaysian license ended for Red Bull, but Ranger, FNH’s own energy drink looks set to replace it after FNH launched an aggressive ad campaign showing a Ranger-drinking man able to scare off a bull accidentally dusted with red powder (a “red” bull).
Dairy products, including condensed and homogenized milk, are sold by FNH in Malaysia and Thailand. It buys forward only six months of its inventory for the milk powder used in its processed milk products, so the global glut in raw materials is helping steady profit margins.
World Class Benchmarking
Profitable Growth maintained its #2 rank, and has been stable in the top-three deciles. This means FNH ranks better than 472 of 590 large Consumer Staples companies globally.
Profitability in terms of ROA improved to #1 rank, i.e. among the best 59 large Consumer Staples companies in the world. Growth saw an improvement in rank to #3 from #6.
Profit margin improved to #2 from #3 and was the driver of the improved Profitability. We can also see that Growth was driven by this positive Margin change.
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