Fraser & Neave targets Middle East to offset weak domestic demand

By Dominique Patton

- Last updated on GMT

Related tags: Middle east, Islam, Drink, Asia

Malaysia's largest soft drinks maker Fraser & Neave Holdings
says it will treble its exports sales in the next two years by
entering the Middle East's condensed milk market.

The company said it wants to boost exports to counter soft consumer demand at home. F&N reported a 19 per cent decline in sales of soft drinks - which account for more than half its overall revenue - during the second quarter.

Exports of condensed and evaporated milk to Africa and other Asian markets like the Philippines and the Middle East only accounted for some RM100 million of the firm's total revenue last year.

But it has just started selling into the Middle East, where it believes a recognized brand from a Muslim country will give it an edge over competition.

"We want to take advantage of the 'halal' status to enter the Middle East. The evaporated milk market there is huge due to the tea-drinking culture,"​ chief executive Tan Ang Meng told reporters last week.

Despite a decline in beverage sales, the group has seen revenue increase in its dairy segment and glass business. And for the first six months to the end of March, net profit rose 10.2 per cent to RM72.87 million compared with the prior year's first half.

The increase was driven by two price rises during last year - one on soft drinks, the other on condensed milk - as well as overall tightening of operating expenses.

Higher profits will allow F&N to launch some major promotions this year to entice Malaysians to drink more soft drinks. Campaigns during the World Cup season in particular should help it maintain sales at last year's level or lift them higher, said Tang.

The firm also continues to search for acquisitions in branded foods to offset the lower spend on beverages, said the chief executive officer.

Related topics: Business, South East Asia, Beverages

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