Distribution Strategies for the Food Manufacturing Industry

Maxis Business Spark series, Let’s Talk invites business owners from various industries to share, discuss and debate business strategies. Episode 3 of this series is called “Spark Let’s Talk: From Production to Consumption”, it has focused on the food manufacturing industry and what strategies they took to sustain the business. Guests invited to this episode are Loi Tuan Ee, founder and managing director of Farm Fresh, and Datuk Seri Nelson Kwok, founder and managing director of Nelson’s Group.  

Let’s see what are some of the remarkable and useful points that we can learn throughout the episode! 

1. Multi-channel model 

Farm fresh concentrated mostly on modern trade in its early years, particularly retailers like Tesco, Giant and AEON. They didn’t begin to enter the Ultra Heat Treatment (UHT) industry until 2018. As a result, they were able to sell their goods in more remote locations, including rural areas and remote locations.  

They also succeeded in creating a distinctive system of house dealers and stockiest. They have over 2500 home dealers through the system. Therefore, Farm Fresh have a backup to aid the company out when one downs, because they employ a home distribution network in addition to retail, to support microbusiness owners. 

Meanwhile, Nelson’s corn only appeared in shopping malls and retail outlets before the pandemic, because they relied heavily on exports for the majority of their revenue. However, they changed their business operation during the pandemic as their exports decreased to nothing – they began selling in convenience stores, supermarkets, hypermarkets and online. 

“We have to find ways to make it sustainable in order to survive in the business,” Datuk Seri Nelson Kwok said. 

Both of these well-known business leaders teach us that businesses must diversify their local distribution channels in order to reach out to additional demographic groups. Businesses should think about employing different distribution channels instead of only concentrating on one. 

2. Technology 

Both food manufacturers are self-sufficient in terms of cultivation and production. The perspective on how technology, automation, or digitalization affect farming and their company’s operation is shown below. 

According to Mr. Loi, automation or mechanization cannot be done if there’s a lack of the necessary skills. He added the workforce issue will remain a concern and will become worse. On the other hand, Farm Fresh is a rural-based development project. Since 90% of their staff is local, they have been able to resolve their labor shortage. However, Farm Fresh owns large tracts of land in Australia, where the flat topography makes it possible to utilize a lot of automation and technology. Farm Fresh thus has a technological edge. 

For Nelson’s corn, farming activities were also conducted in rural locations but with small acres of land. The farmers don’t have a lot of money to invest in automation. They will increase the price of their goods if they invest in technology. 

Despite this, Datuk Seri Nelson still believes that automation is necessary, such as employing machines to apply the seal rather than doing it in the manual way. Additionally, there is a labor scarcity, so they began employing tiny machines and updated their supplies. 

Nelson’s Corn previously employed foreign laborer for manual packaging, but they now have automated filling and sealing as well as a machine specifically built to pack sweet corn. As we can see, Datuk Seri Nelson makes use of automation to enable him to increase his production. 

It is undeniable that automation in agriculture is quite challenging, and while discussing automation and digitalization, many factors must be taken into account. But the food manufacturing industry should take a closer look at technology and automation as important instruments for supply chain optimization. 

3. Quality assurance is key to sustaining a brand 

As a dairy company, Farm Fresh strives to give customers the freshest dairy products possible. 

“If you don’t continue to have the right product, they will not stay with you,” Mr Loi said.  

“We believe in pure dairy product for our customer, our products don’t have preservatives and we don’t believe in colorings,” Mr Loi added. 

Mr Loi believes that retaining customers is an essential component of doing business, and as a result, his company has always placed the needs of its customers as its first priority. He also thinks that a brand’s ability to follow through on its commitments from the outset will have a significant influence and contribute to the company’s success year after year. Because of this, Mr. Loi and his company, Farm Fresh, will continue to keep their brand promise to put consumers first and will receive support from Malaysians as a consequence. 

4. Adapt to changes 

Most businesses currently have an internet store, and “Metaverse” will be the upcoming trend. “Although it will not happen recently, we need to study the matter to see how we can embrace the system in the near future,” Datuk Seri Nelson Kwok mentioned.  

In his opinion, the food manufacturing sector needs to adopt this strategy soon if it is to thrive in the retail sector. With the growth of the internet, it is essential to be adaptable and constantly be open to new ideas. 

If you want to watch the full episode and know more about what Loi Tuan Ee and Datuk Seri Nelson Kwok have shared, kindly visit this link:  

https://business.maxis.com.my/en/campaign/spark-lets-talk/?utm_source=eDM&utm_medium=email&utm_campaign=22_Q1_Enterprise_Corporate_SparkLetsTalk_Consideration_Traffic_eDM&utm_content=Episode1&dclid=CJK71pPjxfYCFQr_jwod6uQJzg

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