Jul 26, 2013

    Super seeks bigger slice of Asia pie

    SUPER Group, Singapore's largest instant-coffee maker, is seeking its first acquisition in a decade as it battles Nestle for a bigger share of the market in South-east Asia and China.

    "We are building our war chest for acquisitions," said Mr Darren Teo, Super's head of corporate strategy and business development.

    "Organically, the company is doing well, but we are looking at ways we can expand faster. We are at the right (part) of the growth story."

    The seller of the Owl and Super Coffeemix brands wants to add "fast growing" coffee producers with established labels, Mr Teo said.

    The Singapore-based company also wants to buy beverage-makers to expand its range of non-coffee brands.

    Coffee consumption in countries such as Vietnam and the Philippines surged by at least 55 per cent from 2008 to 2011, more than 10 times quicker than the world average, according to the International Coffee Organisation.

    A total of US$4.2 billion (S$5.3 billion) in food-and-beverage purchases in South-east Asia was completed this year, according to data compiled by Bloomberg.

    Super - whose coffee-mix sachets compete against Nestle's Nescafe, a key product for the world's biggest food-maker - is interested in companies that have production facilities, ready-made ingredients and a distribution network, said Mr Teo, who makes key strategic decisions at the company on behalf of his father, Mr David Teo Kee Bock, the company's chairman.

    Super made its last purchase in 2003, when it bought Owl International - a closely-held instant-coffee maker - for about S$20 million, said Mr Teo, 30.

    Along with Owl, the company's Super Coffeemix brand competes with Nestle in eight Asian countries, including Singapore, Malaysia and Thailand, said the younger man, whose family has the biggest stake - about one third - in Super.

    Super may seek to acquire a closely-held coffee producer in Indonesia, the Philippines or China that is worth as much as S$100 million, said Mr James Koh, an analyst at Maybank Kim Eng Holdings.

    "Super might be keen to acquire brands that would help it expand its market presence in these places where it is not so strong, or in new markets," he added.

    Super had S$96.1 million in cash and securities investments as of March 31, according to its statement in May.

    The company also plans to introduce new products, such as cereal and malt drinks, in Myanmar.

    This will help push its annual sales growth to as much as 15 per cent over the next five years, Mr Teo said.