Case study: Synergy's new Bangkok hub

Don't try to tell a Thai which kind of mango he should like

By RJ Whitehead

- Last updated on GMT

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Don't try to tell a Thai which kind of mango he should like
Last month, Synergy, the Irish-owned flavours and ingredients company, opened a new manufacturing facility in Thailand, making it the latest in a long line of Western companies tapping the country as a major outpost.

The idea of moving into Asia started about five-and-a-half years ago. We just had to get into that market after reading all the market data about​ it,” says Geoff Allen, the company’s general manager in Thailand. “We surveyed Indonesia, Singapore, Hong Kong and Thailand – the whole region, in fact, and looked at what our competitors were manufacturing​.

Thailand is the fifth largest flavours market but only two companies were operating there. It imports 80% of its flavours and there’s an abundance of food science technologist in the country​.”

 Synergy’s operation began with a technical facility incorporating applications labs run by local technicians. From that grew sales and marketing teams and now it has a purpose-built manufacturing plant with dedicated sweet and savoury labs and a flavour creation operation.

The Bangkok plant will supply a network of distributors across the Philippines, Indonesia, China and, of course, Thailand. Although the company doesn’t have other Asian offices, it has since 2009 supported teams across the east with research and market visits.

We decided to enter softly and understand the requirements​,” continues Allen. “We have already built our whole business in the region on service, innovation and marketing because our plan was focus on a smaller number of customers with biggest product advantages we can offer​.

I think we have innovated by the way we look to supply customers. For instance, we try to make time and distance divisible for them – nobody wants to wait weeks for order to arrive so we absorb the air-freight costs​.”

Synergy learnt very quickly that they couldn’t force European flavour profiles on Asian consumers. This became especially apparent when the company tried to market 20 mango flavours that had been developed in Europe but for which there was no place in the market.

Allen says this is even more so in Thailand because of the prevalence of local produce, making local customers more sensitive to tastes – the can intherantly tell the difference between a Thai mango and, say, an Indian mango.

Now we have an Asian flavour library that meets the needs of the local market. In fact, we spend 80% of our development time tailoring flavours in this way​.”

The company started off in Thailand with a zero base but saw good growth by the end of the first year. It has continued to grow to the point Synergy Thailand has now doubled in size over the last two years. But with such fast growth, how long will it take to mature as a market?

It will mature, but it goes back to picking the right partners and having involved customers. We will keep investing, and our biggest focus is currently on bringing the latest technologies to the market. For instance we are bringing over a range of tea and coffee products from Synergy in America that use spinning cone technology. Customers here have never seen something like that before​,” explains Allen.

The technology might come from overseas but as per the requirements of the Thai Board of Investments, Synergy must source 51% of its raw materials from the local market. At least, this was the original plan, but now the company is finding that at least 60% of these come locally, given Thailand’s biodiversity and the quality of its produce. All new suppliers must conform to the same grades as UK suppliers do.

Now Synergy has invested in infrastructure, what’s next for the Thailand office?

One thing we’ve learnt is you can enter the market and grow business from nothing. But our shareholders and board would like to see us acquire new technologies so we’re looking out in China to seeing what’s available there​,” answers Allen.

There are, however, no plans to move into China, a market keenly prized by other flavour companies, like Firmenich, which has recently been expanding in Shanghai. Indeed, having found something in the region of 1,000 local businesses in the country when he was researching the Asian market, Allen was put off the idea of establishing in the Far East.

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