Case Lembu Dairy - Beyond Milk

SMU Classification: Restricted

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SMU255
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LEMBU DAIRY: BEYOND MILK

Lembu Dairy is a leading dairy company based in Malaysia. As our milk wholesale business is
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performing well, we are now looking into producing new retail products, such as yoghurt, ice
cream, butter and cheese. We believe it will become a big success to complement our wholesale
business.

Donald Teh, CEO of Lembu Dairy

It was July 2015, and Dr. Patrick H. M. Loh, a seasoned investor based in Singapore – but
with
business experience in other Southeast Asian countries – was in the process of negotiating a
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strategic investment with Lembu Dairy, the fourth largest milk producer in Malaysia. A key

consideration to this negotiation was how Loh could help the company develop a new dairy product,
beyond milk, to boost its retail sales. Loh had already reviewed Lembu Dairy’s performance data

for the past decade and found that despite its strong performance in the wholesale milk trade, the

company faced stiff competition from its rival’s extensive and longstanding marketing prowess in

Malaysia’s retail space. Lembu Dairy was therefore keen to explore developing a new product line

to further expand into retail, and even internationally, as a means to boost sales.

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Loh was trained as a plant virologist and had been appointed as the AgriAdvisor to the AgriFood
and Veterinary Authority of Singapore while advising herbrelated companies in Southeast Asia.
Although Loh had no experience in dairy products, he had plenty of experience developing special
breeds of vegetable crops, as well as working with some traditional Chinese herbal medicinal plants.

From the extracts of these plants, he was able to develop a health supplement to reduce cellular
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aging through lipid peroxidation – a potential goldmine in the health and beauty industry. Loh
wanted to show how he could use his agricultural expertise and business acumen to bring unique

value to Lembu Dairy. He was confident that a new retail dairyproduct based on local tropical fruit
or Chinese herbal medicine could be a profitable hit. However, the company was cautious.

Lembu Dairy had limited resources and could only develop one new retail product at a time.

Besides, Donald Teh, the CEO of Lembu Dairy, was unsure whether it was worthwhile to diversify
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beyond the milk business. Even if the company were to offer a new retail product, they would need

to decide on what kind of dairybased product to develop. For example, yoghurt, ice cream, butter

and cheese all had different revenue and cost profiles that needed to be considered. Loh would need
to make a compelling case on how he could help the company succeed by becoming a strategic
investor with an equity stake.

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This case was written by Adjunct Professor Patrick Heng Meng Loh and Professor Terence Ping Ching Fan at the
Singapore Management University.
The case was prepared solely to provide material for class discussion. The authors do

not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised
certain names and other identifying information to protect confidentiality.

Copyright © 2016, Singapore Management University Version: 2016-01-25

This document is authorized for educator review use only by Norzaidahwati Zaidin, Universiti Teknologi Malaysia until Mar 2020. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860

SMU160016 Lembu Dairy: Beyond Milk
Lembu Dairy
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Lembu1 Dairy Sdn Bhd2 operated an integrated milk production business that managed its value
chain from cattle to carton. The company had a sizeable herd of Holstein Friesian cows – the
distinctive blackandwhite breed known for its high milk production, but which could also be used

for beef. This European breed was accustomed to grazing in slightly cooler climates, and was well

suited for the elevated altitudes on the slopes of Malaysia’s mountains.

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Lembu Dairy regularly supplemented the herds’ pasture grazing with nutritious feed. In terms of
milk production, the dairy maintained stateoftheart milking, pasteurisation and bottling facilities,

selling and transporting its finished milk products directly to supermarkets, grocery stores and large

food and beverage outlets with its modern fleet of refrigerated trucks. It also supplied its milk
wholesale to other firms to produce other dairy products. While Lembu Dairy mostly served
markets within Malaysia, the more developed citystate of Singapore offered an attractive nearby

market with higher spending power and dairy product consumption. As of mid2015, the futures
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3
market of whole milk traded around US$11
for every 45 litres for delivery in the next six months

to a year.

Profit Margin and Growth

Lembu Dairy’s performance was in line with dairyrelated listed companies. Publicly listed

companies in Asia focusing on milk production (upstream) typically registered operating margins
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between 5% and 35%, while those involved in the production of dairy products (downstream)
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registered margins between 10% and 25%. In a sample of nine representative publicly listed dairy

companies in East Asia, the average ratio of share price to earnings was about 18, the average
return on equity was 19%, and dividend yield was 1.9%.5

Loh believed Lembu Dairy was a wellmanaged company with recorded annual revenues of about

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S$50 million (US$36.5)6 in 2015. The company had grown in tandem with the Malaysian economy,

which averaged 4.8% annual growth from 2000 to 2015, and consistently registered a healthy profit

margin over the years – though retail performance lagged behind Lembu Dairy’s wholesale
operations.

Lembu Dairy in the Malaysian Market
Malaysia was a multiethnic society. The indigenous population of Malays were predominantly
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liberal Muslims. There was also a sizable Chinese population across much of Malaysia
who had
descended from immigrants in the late 1800s and early 1900s, as well as small populations of
people of Indian descent. On the island of Borneo, there were scattered aboriginals, referred to as

orang asli, who thrived in forested areas.

Malaysia was a middleincome developing country in Asia, which in recent years, had successfully

transformed from an exporter of raw materials into a diversified economy. The largest sector of the
economy was services, accounting for around 54% of the country’s gross domestic product (GDP).

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1
Lembu translated as ‘cow’ in Malay.

2
Sdn Bhd stands for Sendirian Berhad in Malay, equivalent to Privately Incorporated Limited Company.

3
US$1 =SG$1.37, US$1 = MYR 3.82, as at July 2015.

4
Business Monitor International, “Industry trend analysis – Industry consolidation to gather pace amidst low prices”, 2015.

5
A. Srinath, “Vietnam Dairy Products JSC”, J.P. Morgan Asia Pacific Equity Research, 5 May 2014.

6
Ibid.
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The manufacturing sector had grown steadily over the years and by 2015 accounted for 25% of
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GDP and more than 60% of total exports. Mining and quarrying constituted 9% of GDP, and
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7
agriculture added another 9%. Total food consumption had registered comparable growth to that
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of the economy in general, with a 2% growth in percapita food consumption.

The population had been growing steadily at about 2% per year in the preceding decade, and stood

at 27 million as of 2015. About 70% of Malaysians resided in urban areas, and were within easy

reach of large grocery retailers or supermarkets. Malaysia was among the most urbanised countries
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in East and Southeast Asia. Its GDP per capita exceeded US$10,804 in 2014, below that of Japan
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and Korea, but above that of China, Thailand and Indonesia.

The consumption of milk and related products had been significantly lower than in Western

economies on a per capita basis, although consumption was slowly increasing (refer to Exhibit 1
for a comparison of the annual percapita consumption of milkderived products in Malaysia,
Singapore, the U.S. and Western Europe).10
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For the last ten years, Lembu Dairy had been focusing primarily on Malaysian consumers. Annual

revenues were onesixth that of the largest dairy producer in Malaysia – and although Lembu Dairy

was not the largest dairy company in Malaysia – it was the only producer within a radius of 500 km
of its farm.11

Lembu Dairy did not face much competition in its wholesale milk trade, as there was not enough
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milk produced in Malaysia to cater to the local demand. The company’s two main milk products,
fresh milk and chocolate milk, faced stiff competition in its retail milk sales in light of its
competitors’ superior marketing capabilities. The demand for skimmed milk was not strong in
areas where Lembu’s products were sold. As a result, Lembu’s milk products were sold only in

certain parts of Malaysia.

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Opportunities to Diversify in Asia

Seeing a potential uphill battle in extending its milk product line, the top management of Lembu

Dairy was considering an extension of its product lines beyond milk in order to boost retail sales in

the downstream business. Donald Teh, the CEO, saw huge market potential given the growing
affluence and size of Asia’s middleclass, which had been a strong driver, not only for milk
consumption, but for other dairy products as well.

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To catch up with the stiff competition in the retail space, Teh began to explore diversification
opportunities that leveraged Lembu Dairy’s lower prices of material inputs and labour. At the same

time, Teh – along with the company’s top management – began studying profitable export
opportunities. The most immediate and viable option was increasing the number of exports to
neighbouring Singapore, which boasted significantly higher percapita incomes, higher consumer
7
Trading Economics, 2015. http://www.tradingeconomics.com/malaysia/gdpgrowthannual, accessed June 2015.

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8
Business Monitor International, “Industry forecast – Food – Malaysia”, 2015.

9
International Monetary Fund World Economic Outlook, “List of Asian countries by GDP per capita”, 3 September 2015,

http://statisticstimes.com/economy/asiancountriesbygdppercapita.php, accessed January 2016.
10
The World Bank, “Malaysia among Most Urbanized Countries in East Asia”, 26 January 2015,

http://www.worldbank.org/en/news/feature/2015/01/26/malaysiaamongmosturbanizedcountriesineastasia and
http://data.worldbank.org/indicator/SP.URB.TOTL.IN.ZS, accessed June 2015.
11
The name and location of the company were disguised for this case study because of the sensitivity of an ongoing commercial

negotiation at the time of writing.
3/16

prices as well as higher percapita consumption of dairy products relative to Malaysia, but with
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only marginally greater transportation costs.
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In East Asia, China’s meteoric growth, with its attendant increase in income and consumption of

dairy products, could not be ignored. Lembu Dairy’s management had observed that milk
production had doubled in China in the past decade, leading to a dramatic drop in milk prices
there.12 But there was also an opportunity for Lembu Dairy to sell milk as a preferred foreign
producer because milk production in China had a tarnished reputation as a result of several high

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profile news stories about contaminated milk incidents in 2008. Hence, Chinabased dairy
producers had not been successful in expanding overseas to Malaysia. Within China too, about
twothirds of milk products consumed in China came from foreign producers.13 Competition there
was intense.

There was also opportunity in nearby Vietnam, where the growth in the middleclass population
had driven increased milk consumption of between 5% and 10% per year over the previous decade,

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14
attracting many foreign dairy producers to that market.

Developing New Products

To boost company revenues, senior management at Lembu Dairy had been evaluating options to

develop higher value products derived from milk, which could complement the existing product
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portfolios, rather than just increasing the scale of milk production. Loh was thus invited to pitch a

strategic investment to help augment Lembu Dairy’s business. After several months of research,
Loh, together with company’s senior management, had shortlisted four products that could be
produced relatively easily from milk: yoghurt, ice cream, cheese and butter. There were potentially

cost synergies between these new products and traditional milk products in terms of using similar

refrigerated trucks for transport, and in selling to similar retail outlets. According to Loh, this
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could help minimize new infrastructure investments upfront as well as ongoing operating costs.
Selling a fuller line of milk and milkderived products could also help Lembu Dairy better compete

for shelf space at retail outlets.

Lembu Dairy could divert about 40,000 litres of milk per month from its wholesale business to
support the production of one of the four related dairy products. The onetime infrastructure

investment for any one of the four products was estimated to be S$1.35 million (US$0.98 million).
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In addition, the incremental increase in operating cost was estimated to be S$18,000 (US$13,140)

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per month, including delivery to supermarket warehouses in Malaysia and Singapore. These
estimates were based on yoghurt and ice cream production and delivery, and could potentially be

smaller once the cheese and butter production was at steady state. However, because cheese and

butter production entailed less synergy and higher advertising costs than other milk products, the

company hypothesised that the incremental operating cost might turn out to be similar. Moreover,

transport into Singapore would not require Lembu Dairy trucks to cross into competitor ‘territory’,

but would nonetheless imply higher costs because of the time and formalities of crossing the
international border.
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Four Potential Products

12
Business Monitor International, “Industry trend analysis – Industry consolidation to gather pace amidst low prices”, 2015.

13
Ibid.
14
Business Monitor International, “Industry forecast – Dairy outlook – Vietnam”, 2015.

15
US$1 = SG$1.37, US$1 = MYR 3.82, as at July 2015

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Yoghurt
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Yoghurt was essentially milk with bacterial fermentation. Its creamy texture and slightly acidic
flavour made for a delightful dessert or breakfast accompaniment in Malaysia’s tropical climate.
Yoghurt was produced by boiling milk and then leaving some bacteria, called ‘seed’ yoghurt, to
ferment in it overnight. Typically, one litre of milk made one kilogram of yoghurt. On average,

yoghurt had a refrigerated shelf life of two to three months.

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Retail prices for the same dairy products in Malaysia were typically about one third less than those
in Singapore (refer to Exhibit 2 and 3 for yoghurt products on sale in Singapore, the market

landscape, and images of sample yoghurt products sold in Singapore and Malaysia).

Ice Cream

Ice cream was a popular dessert in Malaysia. A common way to make ice cream was to first create
a base of pasteurised milk, sugar and possibly eggs. Constantly stirring the mixture at cold
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temperatures would gradually produce a fine ice cream paste that could be consumed. Flavours

could be added either in the mix, or after the paste was formed. As the paste was cooled, the mix
could be aerated to make it lighter but creamy, richtasting ice cream did not usually involve
much aeration. Loh’s own investigation showed that while it was common practice for other
companies to use milk powder or cream to make ice cream, it might be more economical for

Lembu Dairy to make its own cream given its large milk production. However, this approach was

also less efficient. Loh calculated that it would take four litres of milk to produce one litre of ice
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cream, which was a higher input amount than what other ice cream manufacturers faced.

The average shelf life for frozen ice cream stored in a freezer was one to two years (refer to
Exhibit 4 and 5 for prices of ice cream on sale at supermarkets in Singapore, the market landscape,

and images of sample ice cream products sold in Singapore and Malaysia).

Cheese
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A more traditional means of keeping milk for longer time periods prior to refrigeration was the
production of cheese. To produce cheese, fresh milk was first heated and then left to stand with
some healthy bacteria and rennet enzymes that were normally found in the stomach of ruminant
mammals. The mixture was then left to curdle, with the liquid (whey) being drained away. The

semisolid part of this mixture, or the ‘curd’, was eventually set into cheeses, which in turn could
be left to ‘age’ to intensify its flavours. This aging process could take weeks, or even months.
About ten litres of milk was required to produce about one kilogram of cheese. The normal shelf
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life for packaged retail cheese stored in refrigerators was around one year (refer to Exhibit 6 and 7
for prices of common cheeses on sale in supermarkets in Singapore, the market landscape, and
images of some of these cheese products).

Butter

Pasteurised milk could also be churned mechanically and processed into butter. Butter was one of
the world’s oldest massproduced products, and could be salted or unsalted. Producing one
kilogram of butter required about twentyfive litres of milk. Butter had a shelf life of about one
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year in refrigerators (refer to Exhibit 8 and 9 for prices of butter on sale in supermarkets in

Singapore, the market landscape, and images of some butter products).

Flavours

The company estimated that adding extra equipment to handle new product flavours would
significantly affect its marginal production costs. However, Loh insisted that this could be an

5/16

important differentiator. For example, fruits indigenous to Malaysia or certain Chinese herbs could

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be used to add unique flavours to Lembu Dairy’s products (refer to Exhibit 10 and 11 for
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examples of these fruits and herbs).

Transport Sensitivity of Dairy Products

Yoghurt, ice cream, cut cheese and butter required refrigeration for storage, and these products
were therefore transportsensitive. Hence, the further the transport distance between the point of
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production and the final retail location, the higher would be the total transport and refrigeration cost.

Supermarkets and grocery retailers bought their produce and marked up the retail prices at about

two or three times that of the wholesale price (refer to Exhibit
12 for the same brand and flavours

of ice cream retailed in different countries).

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The Value of Entrepreneurial Experience

If Loh could make a convincing business case for the new product line, senior management at
Lembu Dairy would agree to finance the new venture by offering him an equity stake rather than

asking him to be a debtholder. Teh seemed to be interested in having Loh as an equity partner

because of Loh’s connections in Singapore, a potentially thriving new market for Lembu Dairy. In
this arrangement, Loh would become a strategic investor together with Lembu Dairy in a newly
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formed subsidiary for the purpose of managing the new milkderived products.
The only thing left
to do was to agree on a business plan that would set the wheels in motion.

Still, Loh could not help but wonder whether or not his investment into the company would be
profitable. How could he better position himself in terms of being able to offer something more

than just cash to Lembu Dairy’s new line of business?
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No
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EXHIBIT 1: COMPARISON OF PER-CAPITA CONSUMPTION IN DIFFERENT REGIONS
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Consumption per capita Malaysia Singapore USA Western Europe
per year (US$)
Yoghurt & sour milk 4.89 14.28 26.53 46.27
Ice cream & frozen desserts 5.65 18.26 46.94 42.30
Oils & fats (includes butter)
23.93 13.48 25.12 51.36
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Cheese 0.81 7.76 66.87 110.12
Total population (Millions) 29.7 5.4 316.5 402
GDP per capita ('000 US$) 10.54 55.18 53.04 46.90
*Note: data in 2013, except 2011 for Western Europe
Sources: Euromonitor; https://en.wikipedia.org/wiki/Western_Europe;

http://macroeconomics.kushnir.mk.ua/index.php?indicator=gdp&area=western_europe&lang=en, accessed in
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August 2015)
EXHIBIT 2: RETAIL PRICES OF YOGHURT IN SINGAPORE
Brand Product Flavours Size per Price Discounts

origin pack (SGD)
Meiji Japan Strawberry, mango, 140g $1.10
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original etc.
Luscious by Singapore Strawberry, aloe 2 × 135g $1.90
F&N vera, etc.
Alive by F&N Singapore Strawberry 2 × 135g $2.50 To $1.95
Alive by F&N Singapore Mango, apple & 2 × 135g $2.65
pomelo, etc.
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Marigold Singapore Blueberry, aloe vera 2 × 140g $2.50

Marigold Singapore Low fat 2 × 140g $2.20 To $1.75
Marigold Singapore Non fat 2 × 140g $2.50
Danone Greek Australia Raspberry & white 4 × 125g $9.00
chocolate
Nestle Malaysia Natural 470g $3.95
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Farmer’s Australia Greek 500g $4.95

Union
Farmer’s Australia Natural 500g $5.00
Union
Pauls Australia Natural 500g $5.20
Alive by F&N Singapore Fruit chunk (Aloe 1kg $5.95
Vera)
Marigold Singapore Non fat 1kg $6.75
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Yoplait Australia Natural 1kg $7.15
*Note: US$1 = SG$1.37, US$1 = MYR 3.82, as at July 2015.
Source: Survey of Singapore supermarkets including Market Place, Giant and NTUC conducted in April-June, 2015, conducted
by the authors and research assistant Mr. Low Hwan Hong.

7/16

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Market Landscape for yoghurt in Singapore and Malaysia

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According to Euromonitor, the sale of yoghurt products in Singapore increased from S$82 million

16 17
(US$59.9 million) in 2010 to S$116 million (US$84.7 million)
in 2015.

The corresponding figures by weight were 15,176 tonnes in 2010 and 17,924 tonnes in 2015. The

market leader in terms of market share by retail value in 2015 was Yakult at 49.2%, followed by

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Malaysia Dairy Industries at 29.4%, and then F&N Foods (Singapore) at 4.4%.

Half (50.4%) of all yoghurt products in Singapore were sold through supermarkets in 2015, and in

total 85% were sold through brickandmortar grocery retailers.

In Malaysia, the sales of yoghurt products increased from 41.5 tonnes in 2009 to 68 tonnes in 2014.

The corresponding figures in sales were MYR 348 million (US$91 million)18 in 2009 and MYR
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565 million (US$148 million)
in 2014. The leader in terms of market share by retail value in 2014

was Malaysian Milk at 36.5%, followed by Nestlé at 25.6%, and then Yakult at 16.1%.

About a third (35.6%) of yoghourt products were sold through traditional grocery retailers, 35.1%

through small, independent grocers, 28.2% through hypermarkets and only 7.7% through
supermarkets.

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Source: Euromonitor, “Yoghurt and Sour Milk Drinks in Singapore”, Mar 2015,
http://www.euromonitor.com/medialibrary/pdf/samples/sample_report_packaged_food_yoghurt_and_sour_milk_
drinks.pdf, accessed Jan 2016.
Euromonitor, “Yoghurt and Sour Milk Products in Malaysia”, Apr 2015, http://www.euromonitor.com/yoghurt-
and-sour-milk-products-in-malaysia/report, accessed Jan 2016.

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EXHIBIT 3: SAMPLE YOGHURT PRODUCTS SOLD IN SINGAPORE AND MALAYSIA

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Sources:
Redmart, F&N Alive Nurture Low Fat Yoghurt, https://redmart.com/product/alive-nurture-low-fat-yoghurt-with-
apple-and-pomelo-15780, accessed Jan 2016.
Redmart, Marigold Non Fat Cup Yoghurt, https://redmart.com/product/marigold-non-fat-cup-yoghurt--
blueberry, accessed Jan 2016.
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16
US$1 = SG$1.37, US$1 = MYR 3.82, as at July 2015.

17
Ibid.
18
Ibid.
19
Ibid.
8/16

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Redmart, Nestle Natural Set Yogurt, https://redmart.com/product/nestle-natural-set-yogurt-13989, accessed Jan
2016.
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Redmart, Famers Union Greek Style Natural Yoghurt, https://redmart.com/product/farmers-union-greek-style-
natural-yoghurt-15799, accessed Jan 2016.
EXHIBIT 4: RETAIL PRICES OF ICE CREAM IN SINGAPORE
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Brand Product Flavours Container Price Discounts
origin size (L) (SGD)
Andersen's of
Singapore Vanilla, Chocolate, 0.473 $14.25
Denmark etc.
Ben & Jerry's USA Vanilla, Chocolate, 0.473 $14.50 To $10.63
etc.
Ben & Jerry's USA Salted Caramel Core 0.473 $16.70 To $13.95
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HaagenDazs USA Vanilla, Chocolate, 0.473 $14.80
etc.
HaagenDazs USA Crème Brulee 0.414 $15.90
New Zealand New Cookies and Cream 0.473 $12.85 To $8.98
Natural Zealand
New Zealand New Classic Vanilla 0.473 $12.40
Natural Zealand
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Mars France Snickers 0.500 $9.40
Mars France Mars 0.500 $9.40
Wall's Thailand Chocolate Almond 0.750 $8.70 To $5.73
Fudge
Wall's Thailand Hershey's chocolate 0.750 $8.70 To $5.98
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Wall's Thailand Oreo 0.750 $8.70

Wall's Thailand Strawberry 0.750 $8.70
Cheesecake
Meadow Thailand Bold Chocolate 0.750 $9.90 To $7.88
Gold Decadence
Meadow Thailand Heavenly 0.750 $9.90
Gold Macadamia
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Nestlé La Malaysia Chocolate 1.200 $9.10

Cremeria
Magnolia Malaysia Vanilla, Chocolate, 1.500 $4.90
etc.
Nestlé Malaysia Vanilla, Chocolate, 1.500 $4.90
etc.
Wall's Thailand Vanilla, Chocolate, 1.500 $6.30
etc.
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Market Landscape for ice cream in Singapore and Malaysia

9/16

According to Euromonitor, the volume of ice cream sold in Singapore increased from 14.8 million

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litres (6,213 tonnes) in 2009 to 16.5 million litres (7,196 tonnes) in 2014. In terms of sales, these

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20
equated to S$108.4 million (US$79 million)
in 2009 and S$137.5 million (US$100 million)21 in
2014 respectively.

When ice cream was grouped together with confectionery, biscuits, cakes and snack bars, Kraft

Foods had the largest market share by retail value at 13.4% in 2014, followed by Unilever at 6.5%

and Khong Guan Biscuit at 4.5%. The leading ice cream brands in 2014 were HäagenDazs at 2.1%
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by retail value among this large group of ‘impulse and indulgence products’, followed by Magnolia

by F&N Foods (Singapore) at 1.6%; and then Ben & Jerry’s by Unilever at 1.4%.

22

The sale of ice cream was forecasted to grow to S$153.2 million (US$112 million) in 2019.

In Malaysia, the volume of ice cream sold increased from 31,302 tonnes in 2009 to 35,413 tonnes
23

in 2015. In terms of sales, these equated to MYR 486 million (US$127 million) in 2009 to MYR
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24
608 million (US$ 159 million) in 2014.

The leader in terms of market share by retail value was Nestlé at 34% in 2014, followed Unilever at

33% and then F&N Holdings at 17%. The leading ice cream brands included Nestlé with 12.3% of

ice cream sales, King’s by F&N Holdings with 9.3%, Cornetto by Unilever at 7.7%, and Wall’s by

Unilever at 7.6%.
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Source: Euromonitor, “Ice Cream and Frozen Desserts in Singapore”, Dec 2015, http://www.euromonitor.com/ice-
cream-and-frozen-desserts-in-singapore/report, accessed Jan 2016.
Euromonitor, “Ice Cream and Frozen Desserts in Singapore”, Oct 2015, http://www.euromonitor.com/ice-cream-
and-frozen-desserts-in-malaysia/report, accessed Jan 2016.
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EXHIBIT 5: SAMPLE ICE CREAM PRODUCTS SOLD IN SINGAPORE AND MALAYSIA

No

Sources:
Redmart, Ben and Jerry’s, https://redmart.com/product/ben-and-jerry's-chococolate-fudge-brown-ice-cream-

15061, accessed Jan 2016.
Redmart, Haagen-Dazs, https://redmart.com/product/hreplacement-characteragen-dazs-vanilla-icecream-14592 ,

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accessed Jan 2016.
20

21
Ibid.
22

23
Ibid.
24
Ibid.
10/16

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Redmart, Wall’s, https://redmart.com/product/wall's-selection-hershey-ice-cream-15050, accessed Jan 2016.
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Redmart, Meadow Gold, https://redmart.com/search/meadow%20gold, accessed Jan 2016.
EXHIBIT 6. RETAIL PRICES OF CHEESE IN SINGAPORE
Brand Product origin Flavours Container Price Discounts
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(kg) (SGD)
The Laughing Australia Original, cheddar 0.250 $4.40
Cow or light
Cowhead USA Original 0.250 $4.35
Chesdale New Zealand Original 0.250 $5.10
Chesdale New Zealand Herb garlic 0.250 $5.20
Kraft Australia Singles, light 0.250 $5.85 To $5
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President France Camembert 0.250 $5.95
Chesdale New Zealand Original 0.500 $8.85
Chesdale New Zealand Trim 0.500 $9.58

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Market Landscape for cheese in Singapore and Malaysia

In Singapore, 2,920 tonnes of cheese were sold in 2010, and this grew to 3,279 tonnes in 2015.
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The largest category, nonspreadable processed cheese, constituted 53% of the total sales, followed
by unprocessed cheese at 28%, according to Euromonitor. By sales, the retail values were S$51
25 26

million (US$37 million) in 2010 and S$61.8 million (US$45 million)
in 2015.

Kraft Foods had the largest market share in the cheese category in 2015 at 29.2%, followed by
Fonterra at 26.4% and then Lactalis at 12.0%.

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61% of cheeses in Singapore were sold through brickandmortar supermarkets, followed by 12.9%
in hypermarkets and 10.4% from small, independent grocers.

In Malaysia, 2,494 tonnes of cheese were sold in 2009, rising to 2,605 tonnes in 2010 and 3,078

tonnes in 2014. The largest category, nonspreadable processed cheese, constituted 96% of these
sales in 2014. By sales, the retail values were MYR 70.7 million (US$18.5 million)27 in 2009,
rising to MYR 75.9 million (US$19.9 million) 28 in 2010 and MYR 89.5 million (US$23.4
million)29 in 2014. In 2014, Mondelez, which sold the popular Kraft singles product, secured a 45%

market share by value, compared with the next largest share of 29% by Fonterra, which sold the
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25
USD/SGD 1.37 SGD, USD/MYR 3.82, July 2015

26
Ibid.
27
Ibid.
28
Ibid.
29
Ibid.
11/16

Chesedale brand of cheese products. 45% of cheese products were sold through hypermarkets,
t
followed by 43% through independent, small grocers, and 12% through supermarkets.
os
Source: Euromonitor, “Cheese in Singapore”, Mar 2015, http://www.euromonitor.com/cheese-in-singapore/report,
accessed Jan 2016.
Euromonitor, “Cheese in Malaysia”, Apr 2015, http://www.euromonitor.com/cheese-in-malaysia/report, accessed

Jan 2016.
rP
EXHIBIT 7: SAMPLE CHEESE PRODUCTS SOLD IN SINGAPORE AND MALAYSIA
yo

Sources:
Redmart, The Laughing Cow, https://redmart.com/product/laughing-cow-cheez-dippers-4-tubs-cheese-14690,

accessed Jan 2016.
Redmart, Cowhead, https://redmart.com/product/cowhead-slice-cheddar-cheese-14516, accessed Jan 2016.

op
Redmart, Cheddar, https://redmart.com/product/kraft-cheddar-cheese-25517, accessed Jan 2016.
President, Official Website, http://presidentcheese.com/, accessed Jan 2016.

tC
EXHIBIT 8: RETAIL PRICES OF BUTTER IN SINGAPORE
Brand Product Flavours Container Price Discounts

origin size (kg) (SGD)
Elle & Vire
France Unsalted or 0.200 $5.05
salted
Kerrygold Ireland Unsalted or 0.227 $6.35
salted
No
Anchor New Unsalted or 0.250 $4.70

Zealand salted
Golden Churn Australia Unsalted or 0.250 $5.10
salted
SCS Australia Unsalted 0.250 $5.20
President France Salted 0.250 $5.80
Lurpak Denmark Unsalted or 0.250 $6.90 To $5.98
salted
Do
Harmonie Denmark Organic 0.250 $10.75
12/16

t
Market Landscape for Butter in Singapore and Malaysia

os

According to Euromonitor, 1,211 tonnes of butter was sold in Singapore in 2009, and this grew to

30
1,283 tonnes in 2014. The corresponding figures in sales were S$13.9 million (US$10 million)
in
2009 and S$16.5 million (US$12 million) 31 in 2014 respectively. The most recognised butter
brands in Singapore in 2014 were Anchor of Fonterra at 2.5% among total edible oil sales, Meadow

Lea at 2.2% and Lurpak at 1.4%. Of all retail oils and fats products in Singapore, 57% was sold

rP
through brickandmortar supermarkets, followed by 20% through small, independent grocers, and

12% through hypermarkets.

In Malaysia, 1,900 tonnes of butter (excluding margarine) was sold in 2010, and this grew to 2,300

tonnes in 2014 and 2400 tonnes in 2015. The corresponding figures in sales were MYR 43.5
million (US$11.4 million)32 in 2010, MYR 56.1 million (US$14.7 million)33 in 2014, and MYR
34
59.8 million (US$15.7 million)
in 2015.
yo

The leading brands of butter and margarine in Malaysia in 2015 were Naturel margarine of Lam

Soon with 7.9% share of total edible oil sales, Golden Churn butter by Ballantyne Foods (at 0.6%
share), and Anchor butter by Fonterra (at 0.5% share). Of all retail oils and fats products in
Malaysia, 19% was sold through hypermarkets, followed by 18% through supermarkets, and 60%
through small, independent grocers.
op
Sources:
Euromonitor, “Oils and Fats in Singapore”, Mar 2015, http://www.euromonitor.com/oils-and-fats-in-

singapore/report, accessed Jan 2016.
Euromonitor, “Oils and Fats in Singapore”, Mar 2015, http://www.euromonitor.com/oils-and-fats-in-

malaysia/report, accessed Jan 2016.
tC
EXHIBIT 9: SAMPLE BUTTER PRODUCTS SOLD IN SINGAPORE AND MALAYSIA

No
Sources:
Redmart, Elle & Vire, https://redmart.com/product/elle--vire-unsalted-gourmet-butter-block-25144, accessed Jan

2016.
President, Official Website, http://presidentcheese.com/, accessed Jan 2016.

Do
30
USD/SGD 1.37 SGD, USD/MYR 3.82, July 2015

31
Ibid.
32
Ibid.
33
Ibid.
34
Ibid.
13/16

t
Redmart, Lurpak, https://redmart.com/product/lurpak-butter-salted-200g-replacement-for-250g-44122, accessed
Jan 2016.
os
Fairprice, Golden Churn, http://www.fairprice.com.sg/webapp/wcs/stores/servlet/en/fairprice/golden-churn-pure-
creamy-butter---tin-454g-49181, accessed Jan 2016.
EXHIBIT 10: EXAMPLES OF FRUITS INDIGENOUS TO MALAYSIA
rP

yo
Mangosteen (left): slight tangy, high in antioxidant, vitamin C. Cempedak (right): sweet flavours, high in vitamins
A and C

op
tC

Rambutan (left): mildly sweet, high in vitamin C and minerals. Pomelo (right): mildly tangy, high in vitamin C,
potassium.

Sources: http://hubpages.com/travel/popular-tropical-fruits-of-malaysia;
No
http://blog.seasonwithspice.com/2011/09/pomelo-salad-with-shrimp-recipe.html, accessed in January 2016.

EXHIBIT 11: TRADITIONAL CHINESE HERBS/FRUITS RESEARCHED BY LOH

Do

Luohanguo (above) or ‘monk fruit’, Momordica grosvenori high in vitamins, very sweet, soothes throat & coughs,

14/16

t
SGD 0.13/gram; dried (left) and fresh (right)
os
rP
Goji berry (above) or wolfberry (Lycium barbarum): high in carotene, vitamins & antioxidants, tangy flavours,
yo
op
Longan (above) or ‘dragon eye’, Dimocarpus longan): high in vitamins, phosphorous, sweet, soothes insomnia,
tC
No
Lychee (above) (Litchi chinensis): high in vitamins, calcium, potassium, sweet with slightly sour flavours, SGD
0.05/gram; dried (left) and fresh (right)
Sources:
http://www.banbuonduoclieu.com/blog/cao-kho-qua-la-han-luo-han-guo-
extract/; http://www.sanherb.com/products/corsvenor-momordica-fruit/luo_han_guo_extract.html;
Do
http://www.hzrebtech.com/china-100_natural_wolf_berry_chinese_herbal_extract_poweder_with_polysaccharide-
1803048.html; http://www.cholesterolbattle.com/wolfberry/; http://www.dreamstime.com/stock-image-dried-
longan-fruit-white-background-image34125841; http://www.aliexpress.com/cheap/cheap-longan-
tree.html; http://www.aliexpress.com/w/wholesale-dried-lychee.html; http://www.wisegeek.org/what-is-a-
lychee.htm, accessed in January 2016.
15/16

t
EXHIBIT 12: RETAIL PRICES OF THE SAME ICE CREAM IN DIFFERENT PLACES AROUND
os
THE WORLD
Brands Container Place of Price Distance from

size (L) sales (SGD) origin (km)
Ben & Jerry's (Salted
0.473 Singapore $14.50 15,000
Caramel Core)
rP
0.473 Malaysia $10.59 15,000
Caramel Core)
0.473 UK $7.25 5,250
Caramel Core)
0.473 France $7.75 5,600
Caramel Core)
0.473 USA $5.30 0
yo
Caramel Core)
HaagenDazs (Vanilla, 0.414 Singapore $14.80 15,000
macadamia nut brittle,
etc.)
HaagenDazs (Vanilla, 0.414 China $18.70 10,000
etc.)
op
HaagenDazs (Vanilla, 0.414 UK $9.00 5,250
etc.)
HaagenDazs (Vanilla, 0.414 France $8.70 5,600
etc.)
tC
HaagenDazs (Vanilla, 0.414 USA $5.46 0

etc.)
Nestlé La Cremeria 1.2 Singapore $9.10 300
(Chocolate)
Nestlé La Cremeria 1.2 Malaysia $5.73 0
(Chocolate)
No
Do
16/16

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SMU Classification: Restricted

Opportunities to Diversify in Asia

Sources: Euromonitor; https://en.wikipedia.org/wiki/Western_Europe;

EXHIBIT 2: RETAIL PRICES OF YOGHURT IN SINGAPORE

Brand Product Flavours Size per Price Discounts

Marigold Singapore Blueberry, aloe vera 2 × 140g $2.50

Farmer’s Australia Greek 500g $4.95

Yoplait Australia Natural 1kg $7.15

*Note: US$1 = SG$1.37, US$1 = MYR 3.82, as at July 2015.

EXHIBIT 3: SAMPLE YOGHURT PRODUCTS SOLD IN SINGAPORE AND MALAYSIA

EXHIBIT 4: RETAIL PRICES OF ICE CREAM IN SINGAPORE

Wall's Thailand Oreo 0.750 $8.70

Nestlé La Malaysia Chocolate 1.200 $9.10

*Note: US$1 = SG$1.37, US$1 = MYR 3.82, as at July 2015.

EXHIBIT 5: SAMPLE ICE CREAM PRODUCTS SOLD IN SINGAPORE AND MALAYSIA

Redmart, Ben and Jerry’s, https://redmart.com/product/ben-and-jerry's-chococolate-fudge-brown-ice-cream-

Redmart, Haagen-Dazs, https://redmart.com/product/hreplacement-characteragen-dazs-vanilla-icecream-14592 ,

accessed Jan 2016.

EXHIBIT 6. RETAIL PRICES OF CHEESE IN SINGAPORE

Brand Product origin Flavours Container Price Discounts

*Note: US$1 = SG$1.37, US$1 = MYR 3.82, as at July 2015.

Euromonitor, “Cheese in Malaysia”, Apr 2015, http://www.euromonitor.com/cheese-in-malaysia/report, accessed

Redmart, The Laughing Cow, https://redmart.com/product/laughing-cow-cheez-dippers-4-tubs-cheese-14690,

Redmart, Cowhead, https://redmart.com/product/cowhead-slice-cheddar-cheese-14516, accessed Jan 2016.

President, Official Website, http://presidentcheese.com/, accessed Jan 2016.

EXHIBIT 8: RETAIL PRICES OF BUTTER IN SINGAPORE

Brand Product Flavours Container Price Discounts

Anchor New Unsalted or 0.250 $4.70

Harmonie Denmark Organic 0.250 $10.75

*Note: US$1 = SG$1.37, US$1 = MYR 3.82, as at July 2015.

Euromonitor, “Oils and Fats in Singapore”, Mar 2015, http://www.euromonitor.com/oils-and-fats-in-

Euromonitor, “Oils and Fats in Singapore”, Mar 2015, http://www.euromonitor.com/oils-and-fats-in-

EXHIBIT 9: SAMPLE BUTTER PRODUCTS SOLD IN SINGAPORE AND MALAYSIA

Redmart, Elle & Vire, https://redmart.com/product/elle--vire-unsalted-gourmet-butter-block-25144, accessed Jan

President, Official Website, http://presidentcheese.com/, accessed Jan 2016.

EXHIBIT 10: EXAMPLES OF FRUITS INDIGENOUS TO MALAYSIA

http://blog.seasonwithspice.com/2011/09/pomelo-salad-with-shrimp-recipe.html, accessed in January 2016.

Brands Container Place of Price Distance from

Haagen­Dazs (Vanilla, 0.414 USA $5.46 0

*Note: US$1 = SG$1.37, US$1 = MYR 3.82, as at July 2015.

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