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HOW I STARTED
• No customer
• Don’t know how to do organic business – no precedent.
• The market for organics was still in its infancy 10 years’ ago.
• My friends and my family thought I was mad to sell local organic vegetables at US2.80 per kilo. Who will buy my organic vegetables which is 3 times higher than the price of conventional vegetables?
• Low level of awareness - Now in Malaysia when you talk about organics: 7 out of 10 people now knows the term organic.
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HISTORY OF RETAILING IN MALAYSIA
LATE 1990’s• Sickness Industry• Customer Profile: 98% ethnic Chinese who are : -
a) cancer patientsb) degenerative diseasesc) Vegetarians and/or Buddhists
1999 - 2003• Emergence of “Mom and Pop” shops in Klang Valley and major towns in Malaysia • Real growth in the number of shops started from 2003 onwards.
2005 – 2008• Major Supermarket chains like Jusco, and Hypermarket like Carrefour started to create
organic corners.• Herd mentality – ‘me-too’• No growth in “Mom and Pop” shops since 2006
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PRESENT CUSTOMER PROFILE• Amongst consumers in the ASEAN countries, the Malaysians are more
sophisticated and knowledgeable about organic and health food in this region.
• 80% of the organic consumers are ethnic Chinese. Psychographic profiles of the Malaysian Chinese community are divided into G1 and G2.
• G1 Group (80%) – Chinese educated Mandarin speaking
• G2 Group (20%) - English educated, English speaking, some Mandarin
• The present consumer profiles have changed and are attracting more health conscious people in their early forties and those with young families
• Mothers will always give the best to their babies and kids.
• Aging baby boomers (late forties to sixties), who refused to age. Higher disposable income compared to their fathers time.
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SUPERMARKETS AND HYPERMARKETS
In Malaysia• Jusco (Store within a Store concept)• Carrefour (Store within a Store concept) • Cold Storage / selected Giant stores• Other niche Supermarkets – Isetan, Sogo, Village Grocers
In Singapore (only dry goods)• NTUC – 2 Outlets (Finest Stores)• Cold Storage – 12 Outlets• Shop & Save – 10 Outlets• Carrefour – 2 Outlets
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• Supermarkets and hypermarkets are paying more attention to organic products and most of them carry some organic products.
• Carrefour and Jusco have set up organic corners measuring from 800 to 1,000 sq ft in prominent corners adjacent to the Vegetables Section.
• Jusco was the very first supermarket that experimented with organic vegetables 6 years ago.
• Carrefour started one year ago with dedicated organic corners. Country Farms is the exclusive operator.
• Cold Storage also have Country Farm on their shelves in dedicated stores.
• The smaller supermarts carry a few selected organic items
TRENDS IN SUPERMARKETS AND HYPERMARKETS
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COUNTRY FARMS INSIDE CARREFOUR HYPERMARKET
800 - 1000 sq ft “Store Within A Store” – Selected Organic Partner with Country Farms
• Carrefour, WANGSA MAJU, KL• Carrefour, MID-VALLEY, KL• Carrefour, SUBANG, PJ • Carrefour, MALACCA • Carrefour, AMPANG• Carrefour, KLANG
• Carrefour, PENANG • Carrefour, JOHOR BAHRU• Carrefour, Tropicana City (opening Nov ’08)• Carrefour, PLAZA SINGAPURA• Carrefour , SUNTEC CITY, Singapore
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COUNTRY FARMS INSIDE JUSCO Supermarket
800 - 1000 sq ft “Store within a Store” – Selected Organic Partner with Country Farms
• Jusco, MIDVALLEY, KL• Jusco, SUNWAY PYRAMID II, PJ• Jusco, BUKIT TINGGI, KLANG • Jusco, TEBRAU CITY, JB• Jusco, PERMAS JAYA, JB
• Jusco, QUEENSBAY MALL, PG• Jusco, PERDA, BUKIT MERTAJAM• Jusco, AMPANG, KL (opening in Nov. ‘08)• Jusco, JOHOR (opening in Dec. ’08))
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COUNTRY FARMS INSIDECOLD STORAGE Supermarket
• Cold Storage Supermarket, BANGSAR • Cold Storage Supermarket, MIDVALLEY• Cold Storage Supermarket, GE MALL• Cold Storage Supermarket, KLCC• Cold Storage Supermarket, TS• Cold Storage Supermarket, THE MALL• Cold Storage Supermarket, SUMMIT • Cold Storage Supermarket, PUTRAJAYA
• Cold Storage Supermarket, MD• Cold Storage Supermarket, SUBANG PARADE• Cold Storage Supermarket, GURNEY PLAZA,• Cold Storage Supermarket, ISLAND PLAZA, PG• Cold Storage Supermarket, PELANGI MALL, JB• Cold Storage Supermarket, KUANTAN• Cold Storage Supermarket, IPOH• Cold Storage Supermarket, SOLARIS
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COUNTRY FARMS RETAIL OUTLET CUM RESTAURANT
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CFO RESTAURANT SERVING TASTY ORGANIC AND WHOLESOME FUSION FOOD
Tom Yam Spaghetti 8 – Booster Rojak
Organic Nasi Lemak with Rendang Chicken
Organic Soy Smoothies Fortified with Organic Flaxseed Oil
CF Organic Salad
Organic Fresh Juice – Green Apple with Wheat Grass
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“MOM AND POP” SHOPS
Typical Health Food Stores in Malaysia- Approximately 100 stores nationwide run by owner operators
- No growth in volume from these shops
- Consumers preferring to shop in Supermarket now
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• The ‘mom and pop’ no longer carry lots of organic food products. They now carry more natural products from Taiwan mostly: Beverage powder in tin cans, Asian sauces, fruit enzymes, vinegars, and cookies.
• No longer can these shops be called organic shops – they are just health food store. The mom and pop shops are declining. They cannot compete with the supermarkets and the bigger organic retailers.
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Natural Products from
Taiwan
NATURAL PROCESSED PRODUCTS FROM TAIWAN
Multi-grain Rice Asian Sauces
Powdered Beverages in Tin Cans Cookies and Instant Beverages
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AWARENESS THROUGH EDUCATION
• Quarterly Newsletters / Brochures / Website• Organic fair / talks / food demonstration • Guest speaker for event & media• CFO spent approx. USD 120,000 per year on newsletters and communication
materials
• 20,000 copies printed every Quarter
• Mailed out 12,000 Free to members
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BUSINESS ORIENTATION
• Most health food stores tend to orientate towards:(a) Macrobiotic(b) Vegan or Vegetarian (shops refuse to sell meat products)(c) Buddhism
• Country Farms – APOLITICAL- We serve consumers from all walks of life- Halal (Pork Free)
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PRICE WAR
• Not uncommon – price war do exist amongst the distributors.
• Private label and contract packing are quite common as players differentiate themselves.
• Similar products in many different labels• China organic product – negative image – some re-
packers have resorted to purposely omit the country of origin on purpose (which is against the Malaysian labeling law).
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ORGANIC WHOLESALE & RETAIL IN MALAYSIA
Problems faced by retailers in Malaysia and Singapore• Shortage of locally grown organic perishables• Limited Assortments of local and imported organic products• Price Premium• Not many certified Organic farmers
SupplyDemandLocal fruits, vegetables & Poultry
MORE THAN
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SUPPLY CHAIN• 85% of organic products in Malaysia and Singapore are imported all over
the world.
• Made in Malaysia organic products:
• 2008 : Asian Noodles – one manufacturerBy 2009 : two to three processors - Rice Vermicelli, Condiments,
Asian Sauces, Soy Sauce
• Some cottage industry players processing soy sauce, miso, taufu & cookies.• Non certified organic processors without any GMP, HACCP or ISO
certifications.
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SUPPLY AND DEMAND MISMATCH
• In the last 2 years, the DEMAND for organic vegetables in Malaysia has increased but SUPPLY has not
• Big shortage of organically grown vegetables during rainy season in Nov / Dec / Jan – supply drops by 50%.
• Supermarkets such as Carrefour and Jusco are now demanding for CERTIFIED ORGANIC fruits and vegetables, chicken, and seafood products
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COUNTRY FARM’S IMPORTCountry of Origin
USA BrazilChina Inner MongoliaFinland ThailandSweden India Italy IndonesiaFrance PhilippinesGermany PakistanAustralia TurkeyNorway PeruNew Zealand
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PRICE POINT• The price differential between conventional and organic in the USA and EU is
narrow - between 25% to 30%.
• Wide price differentials in Malaysia: ranging from 100% and 300% (depending
on the type of organic products)
Imported Fresh Produce from California, USA
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• Malaysians love temperate climate organic vegetables
• Heavy reliance on imported produce for assortments – USA, Australia, New Zealand
Imported - USA Imported - Australia
TEMPERATE CLIMATE VEGETABLES
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• The Four Hills of West Malaysia1. Cameron Highlands2. Lojing Heights3. Bukit Tinggi4. Gunung Jerai
• Lack of suitable land in Cameron Highlands. Moratorium on hill cultivation
• Other highland areas - not cold enough to produce temperate climate vegetables such as:1. carrots2. broccoli3. cauliflower 4. celery5. potato
CONSTRAINS IN FARMING
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LIMITED ASSORTMENTS OF LOWLAND VEGETABLES
Asian Leafy Vegetables Asian Leafy Vegetables
Tropical Fruits Tropical Fruits
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LOCAL FARMERS• 70% of organic farmers are highly educated with tertiary education.• Small Acreage (2 - 10acreas) – No economies of scale.• Most farmers practiced some form of organic farming• Certified farmers by NASAA & SOM
• Titi-Eco• Zenxin• Loh Organic
• Certified by SOM• Titi Eco• Kahang Organic• Natural Red (Ishak)• GK Organics• Ponak Plantation
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MALAYSIAN ORGANIC CERTIFICATION UNDER THE DEPARTMENT OF
AGRICULTURE
SOM ( SKIM ORGANIK MALAYSIA )
• launched in 2005• certified ten (10) farm operators to date
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MALAYSIAN PIONEERS IN ORGANIC FARMING
Mr & Mrs GK Gan ( GK Farms )
Ms Tan Siew Luang ( Cetdam )
Mr Lim (Titi-Eco Farm )
Mr Ho ( Ho Organic )
Mr Lee Ong Sing ( Cameron Organic )
Mr Ho San Cheh (Vision Eco Organic Farm)
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COMMON COMPLAINTS BY FARMERS
• Lack of Suitable Land• Poor Top Soil• Labour Problem – Malaysia has almost 2.1 million foreign workers (legal
and illegal) in various industries. Population of Malaysia is 28 million • Not many passionate and knowledgeable organic farmers. • Many young Malaysians prefer white collar jobs• Insufficient capital for expansion or to build rain shelters• Climate - Too much rain or too dry• Low Yield • Constant Insect Attacks
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Poor Top Soil “Kangkong” & Local Spinach – easy to grow
Wet climate – susceptible to fungus attack
Lots of soil conditioning
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ORGANIC CERTIFICATIONS
• Organic certification is the most important factor in the organic industry. Malaysian government has not enforced rules on organic labeling yet.
• Liberal use of the word “Organic” and Organic logos
• Customers do not question the authenticity of the products. It’s all based on trust.
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ACT ( Export ) ICEA
SOM ( Farm Production ) OAM ( Service Provider )
SERVICE PROVIDER / ORGANIC CERTIFICATION IN MALAYSIA
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HOW TO GROW THE ORGANIC MARKET IN MALAYSIA
§ Create A Wider Market: The Middle to Upper Class Segment§ Catch 22
Situation§ Make Organic
Food even more affordable§ Volume Purchase
Small Market
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• Work with Supermarkets as partners.
• Work in partnership with big FMCG organizations to contract pack organic products to further expand to more mainstream consumers. Example: Contract packing of oats, sugar and etc
• The growth will be from the Supermarkets – not from the “mom & pop” shops.
• Commoditized popular organic products and bring them to the mainstream market through the supermarket channels.
Organic Oats Organic Raw Cane Sugar
Organic Rice OrganicSoy Sauce
Organic Bihun Natural Himalayan Rock
Salt
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• Grow the Organic market to create a wider market. • Achieve economies of scale to make organic food more affordable to the
public. Organic will never be cheap, there is a premium tied to organic.• Trade with regional countries• Reduce Carbon Footprint• Price Point - Magic Rule - “20% to 30%” for Vegetables & Groceries• (Organic products are priced at 20%-30% more than the conventional
price.) • Organic Sea Food – 30% more than conventional• Natural Sea Food (Chemical Free) – 15% to 20% more than
conventional seafood• Malaysia has high middle class population. Our aim is to pursue the middle
class segment in urban sectors.• Promote the local manufacturing and processing of organic food products
e.g. noodles, tomato ketchup, jams, etc,.
COUNTRY FARM’SLONG TERM PLAN
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RICE VERMICELLI• Mainly for Export• Made in Malaysia product – Rice Vermicelli (Non Organic –
certification in mid 2009) • Not from white flour with emphasis on high fibre
Vermicelli – Brown Rice, Tomato & Beetroot
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ORGANIC ASIAN NOODLES• Mainly for Export• Made in Malaysia product –
Asian Noodles • Value Added by
manufacturing in Malaysia ( M’sia does not produce any flour)
• MATRADE encourages Malaysian companies to export manufactured food products extensively
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T
H
A
N
K
Y
O
U
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ECOWASH• Consumers care more for themselves than caring for the
environment• Although price is quite compatible, consumers still prefer detergent
with lots all foam (example: maids)• Mainly Caucasians are aware and buys Ecowash • Ecowash’s range: Dishwashing Liquid, Floor Cleaner, Colour Wash
and Washing Powder with Bleach
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BIOKINDER• Recent Melamine Scare – Panic and damage control• Certification via Ministry of Health to allay their fears• Country Farms Infant Formula, Toddler and Goat Milk originates
from the US and Germany
Product of USA Product of Germany
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ORGANIC SEASONINGS• To be certified in 2009• Processed in Malaysia exclusively for Country Farms• Gluten Free Soya Sauce
Organic Light Soy Sauce and Soy Sauce Organic Chunky and Creamy Miso
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