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Malaysia Food and Drink Report Q1 2010
Business Monitor International, Nov 2009, Pages: 59
The Malaysia Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Malaysia's food and drink industry.
The Malaysian economy appears to be over the worst of the downturn and the outlook for 2010 has improved significantly. We are forecasting that real GDP will shrink by 3.4% for 2009 before staging a mild recovery in 2010 to grow by 2.7%. In light of the improving economic conditions, a number of Malaysia’s food and drink producers are feeling cautiously optimistic, as demonstrated by some of the industry activity and financial results seen in the last quarter of 2009.
One such company is Nestlé Malaysia, which announced in Q309 that going forward, it expects to see top and bottom line growth by focusing on its longer-term objectives, one of which is to expand and invest further in the manufacture of halal products. In keeping with this objective, the company entered into a strategic agreement with the Halal Industry Development Corporation and the Small and Medium Industries Development Corporation in August. One of the benefits to Nestlé of this collaboration is the help it will receive in promoting its halal products internationally.
Meanwhile, in the alcoholic drinks sector, brewing majors Guinness Anchor Berhad (GAB) and Carlsberg Malaysia have experienced differing fortunes this quarter. GAB announced that for Q409 (financial year ending June 2009) net profit grew 41% to MYR27.4mn (US$7.8mn), with revenue for the period increasing by 10% to MYR276.3mn (US$80.8mn), while for FY09, net profit rose 12.8% to MYR141.9mn (US$41.3mn), with revenue climbing 8.4% to MYR1.3bn (US$370.3mn). These strong results have been attributed to successful promotions and new product launches. Not faring so well is Carlsberg Malaysia, which for Q209 ending June 2009 saw profit plummet 20.3% to MYR13.1mn (US$3.7mn) despite revenue rising 7.1% to MYR213.1mn (US$60.6mn). However, Carlsberg plan to improve profitability through its recent MYR370mn (US$105.2mn) acquisition of Carlsberg Asia unit Carlsberg Singapore. With the Malaysian beer market expected to remain quite stagnant (volume sales are forecast to increase by just 14.7% to 2014) it is not surprising that the company is looking overseas to boost sales.
Elsewhere, this quarter has seen little significant activity with the country’s mass grocery retail sector. However, both Tesco Malaysia and AEON Malaysia have reiterated their commitment to the country. With sales through mass grocery retail outlets forecast to increase 44.4% to reach MYR19.97bn in 2014, this commitment appears well founded.
Although the Malaysian economy has shown signs of picking up, in the immediate term the environment for the country’s food and drink producers is likely to remain tough.
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