Smell the Coffee

Food Empire’s range of flavored coffee mixes, snack foods and teas are sold in over 60 countries. Last year, the Singapore-based company achieved a record revenue of more than US$425 million, up 6.9 percent in just 12 months.

But the manufacturing behemoth, which owns a range of major brands including MacCoffee, CaféPHO and Klassno, didn’t get off to the best of starts when it launched just over 40 years ago as an electronics trader.

In fact, sales were so slow that it very nearly went out of business during its first 12 months. Current Group CEO Sudeep Nair remembers those early struggles clearly. He had just joined the firm as a marketing consultant and was working closely with the Founder.

“It was a very small, private company that was not doing so well,” he says. “In the end, we decided to switch away from electronic goods and try food and beverages instead, primarily coffee.”

The move proved highly successful, with its coffee mixes becoming particularly popular in Eastern Europe and the countries of the former Soviet Union, which had just broken up. That region became so critical, in fact, that the Founder gave Nair an ultimatum.

“Nearly all of our biggest clients were in and around Russia so he basically said to me that either we focus on them, or we go out of business,” he says. “He convinced me that I needed to move to Moscow, so that’s what I did.

“I set up an office there and that’s when our journey really began. Even today, if you ask me where I’m based, I’ll say half the time in Singapore covering Asia, and the other half in Dubai as that’s now closely connected with Moscow.”

The Perfect Mix

The conflict in Ukraine has made traveling to Russia much harder than it was two years ago, but still essential to maintaining what remains Food Empire’s biggest market.

“I should really be spending more time there, but there aren’t too many flights these days. I’m always traveling and rarely stay in one city for more than a couple of weeks, which is unfortunate but it’s the only way to move the group forward,” Nair explains. “My life is very hectic, but that’s a good thing.

“My role is to always be looking at what’s next, the big picture. We have very talented teams so I’m here to guide them and help them achieve their goals.”

Nair reveals that his company’s history can essentially be divided into two very distinct parts. The first 20 years were spent building up its brands throughout Eastern Europe, Russia, Ukraine and several central Asian countries.

“We were very successful very early and credit ourselves with creating the coffee mix category in those territories,” he notes. “Before we arrived, nobody knew what it was. Russia is predominantly a tea-drinking country so coffee was a scarce commodity. We had to not only introduce them to coffee but also to coffee mix.”

His teams created an entire beverage category and, since then, has skillfully hung on to its market leadership in the face of some fierce competition.

Asian Challenge

Impressed by Nair’s ability to build and run robust businesses, in 2012, the Food Empire board heralded the second part of the company’s story by asking him to replicate his model for Asia. But straight away he knew it would be a much more challenging undertaking.

“Initially, we were skeptical that we could pull it off as coffee mix had been around for well over a decade so, unlike in Russia, we were late into the market,” he acknowledges. “But I was still very interested in finding out more about these new markets so I traveled around the countries of South-East Asia to learn more.”

One of his first decisions was that the new division should be headquartered in Singapore to provide a central base from which to guide operations.

---

---

Advertisement

But he still couldn’t shift the nagging doubt that the investment required to make any discernible inroads into the likes of India, Malaysia, Vietnam, Cambodia and Thailand would be exorbitantly high.

It was then he had a brainwave that would end up transforming Food Empire into an even more powerful player in beverage markets worldwide.

“Battling to get a big enough foothold simply wouldn’t have worked, so I figured the smartest move would be to diversify into the coffee mix ingredient market and supply the existing players,” he says.

“I decided we’d start in three countries – Myanmar, Vietnam and the Philippines. I knew there was still a possibility that we’d fail in all of them, but if just one was a success, I knew we could build on it.”

Instant Success

Food Empire already had trusted partnerships with the leading manufacturers and distributors across the regions, including Kingmao International, known to many as Asia’s ‘Beverage King’. So it could leverage those and gain more when the major retailers saw the quality of its products.

Coffee mix pouches contain instant, soluble coffee, non-dairy creamers and sugar. For the coffee itself, Nair opened a manufacturing unit in India, while the creamer plant was located in Malaysia, where the company negotiated substantial tax breaks from the government.

“I saw it as a 10-year journey, and there were lots of skeptics at the beginning, but I was used to building businesses from scratch,” Nair recalls. “And that’s what we did. In less than a decade, we had more than US$162 million in annual revenue. This year has been our most successful and we’re a much stronger group because we took a chance and challenged ourselves to succeed.

“It’s really humbling. We’ve lived through crises and never wavered from our vision. I always say, you can only control what you can control. The rest will manage itself. But we make mistakes, we learn and we do better each time.”