Founded in 1985 by Tan Khang Khim, Perusahaan Saudi was born out of the need for cost-effective, time-saving and high-quality food products. 27 years down the line, Saudi has grown to become one of the most recognised food brands in northern Malaysia, with strong growth prospects in the entire south east Asian region.
Business Review Australia caught up with Louis Tan, nephew of the company’s founder and current COO, to find out more about Saudi’s success and plans for future expansion.
Bringing us up to date
Specialising in the production of high-quality frozen food, Saudi has come a long way since the mid 1980s, when it operated out of a single primitive warehouse unit. Developing over the years, Tan explains how “Saudi has become a pioneer in the market for lower income product ranges”, diversifying in what was a very simplistic market. “Before us there was only a very simple burger, frank, chicken pattie. But as we keep up, our R&D keeps on evolving, and we have always been able to improve our standards both in terms of food quality and variety.”
In the year 2000, Saudi moved to its current location, a five hectare plant located in the heart of Kedah’s industrial area in Sungai Petani. From this site, Saudi has cemented its reputation in the northern territories; and since the 2003 opening of the Saudi Cold Storage sales office in Shah Alam, the company has looked to gain greater market penetration in the southern reaches of Malaysia. In 2009, Saudi was floated on the Kuala Lumpur Stock Exchange (KLSE), moving away from its roots as a family orientated business.
Operating in a saturated market
Producing in the region of 30 tonnes per day, Saudi operates in a hugely crowded frozen food industry. Malaysia alone has “over 50 brands in the market and a population only a little over 27 million”. However, more than half of these brands are precisely that, just brands. They do not have their own manufacturing plants; rather, they act as distribution houses, rebranding products with their own labels. Saudi currently packs for a number of these companies and the estimated volume accounts for about 10 percent of total production.
Tan continues by explaining how this can pose a problem for the business; “due to the very low entry level in Malaysia, more and more companies are coming into the industry aiming for the same sort of customer as us. It is fine that they want to rebrand our product, but the problem arises that we are all targeting the same customer.
“So when it comes to low innovation and an oversupply of brands, we see the erosion of our profit margins due to a price war. In the long run we cannot compete by just producing a standard product and trying to sell as many as we can. We need to innovate.”
Through years of creative R&D, Saudi has been able to create more variety and quality for its core, low-income customer base, introducing a number of unique products and securing a strong market share.
Management and staff training
As an ISO22000 accredited company, Saudi makes extensive training provisions for all 500 members of staff that it currently employs. Stringent food hygiene and Halal regulations require all production and warehousing staff to attend regular external training programmes in order to improve their knowledge and skillset. With regards to the management, sales and marketing departments, external training gurus come to the offices and deliver three-day training programmes every six months.
Management
Management style is one area in particular where Tan is implementing change, as he elaborates; “good employees are harder to obtain and retain, because incentives have been offered at an unsustainable level, focusing solely on financial rewards.”
Instead “we try to do it differently in a sense that we know that Generation Y is different to the previous generation. Our younger employees want personal recognition, they are very expressive, they are aspirational, it is not just about the pay check.” To this end, Saudi tries to promote from within, creating a clear hierarchy upon which employees can progress.
Tan recognises that the company needs to change tact, becoming friendlier towards Generation Y ideals if Saudi is to thrive. “We need to move away from a command chain culture of ‘I’m the boss, listen to me’. Most of our employees go to university, or overseas for studies, coming back here, if you use that kind of style, try and micro-manage them, they will leave.”
There is a generation gap between the Generation X managers and the Generation Y employees who are joining the ranks. Tan believes that “if we are successful in bridging this gap, we will flourish”
Investment and development
With the turn of the new financial year, Saudi is looking to focus on three main areas of investment, expansion and development:
Top of Tan’s agenda is always the quality of product; “we will invest in new and improved machinery to make us more innovative, setting us apart in the market”.
“We are also looking to expand into the international export market, especially our neighbouring countries; Brunei, Indonesia, Vietnam and the Philippines. However we are also keeping an eye on countries in the Middle East. Malaysia dictates some of the world’s strictest Halal regulations, making export to Islamic countries much easier for us.”
Tan concludes; “there is also a need to streamline our range of brands, developing stronger identities and association with target consumers. We intend to fulfil this ambition with strong marketing campaigns, involving local celebrity endorsements to reach out to our customers.”
In good hands
Tan has officially only worked at Saudi for seven months, having joined in Dec 2011. However, his involvement with the Saudi brand has been a long and invested one. Educated in the US, Tan received a BSc in Food Science and Technology from Ohio State University, followed by an MBA in Business Administration from San Francisco. Supplemented with several years of industry experience in both the food quality and corporate development industries, Tan is well placed to take Saudi on to another 27 years of success and expansion.
Founded in 1985 by Tan Khang Khim, Perusahaan Saudi was born out of the need for cost-effective, time-saving and high-quality food products. 27 years down the line, Saudi has grown to become one of the most recognised food brands in northern Malaysia, with strong growth prospects in the entire south east Asian region.
Business Review Australia caught up with Louis Tan, nephew of the company’s founder and current COO, to find out more about Saudi’s success and plans for future expansion.
Bringing us up to date
Specialising in the production of high-quality frozen food, Saudi has come a long way since the mid 1980s, when it operated out of a single primitive warehouse unit. Developing over the years, Tan explains how “Saudi has become a pioneer in the market for lower income product ranges”, diversifying in what was a very simplistic market. “Before us there was only a very simple burger, frank, chicken pattie. But as we keep up, our R&D keeps on evolving, and we have always been able to improve our standards both in terms of food quality and variety.”
In the year 2000, Saudi moved to its current location, a five hectare plant located in the heart of Kedah’s industrial area in Sungai Petani. From this site, Saudi has cemented its reputation in the northern territories; and since the 2003 opening of the Saudi Cold Storage sales office in Shah Alam, the company has looked to gain greater market penetration in the southern reaches of Malaysia. In 2009, Saudi was floated on the Kuala Lumpur Stock Exchange (KLSE), moving away from its roots as a family orientated business.
Operating in a saturated market
Producing in the region of 30 tonnes per day, Saudi operates in a hugely crowded frozen food industry. Malaysia alone has “over 50 brands in the market and a population only a little over 27 million”. However, more than half of these brands are precisely that, just brands. They do not have their own manufacturing plants; rather, they act as distribution houses, rebranding products with their own labels. Saudi currently packs for a number of these companies and the estimated volume accounts for about 10 percent of total production.
Tan continues by explaining how this can pose a problem for the business; “due to the very low entry level in Malaysia, more and more companies are coming into the industry aiming for the same sort of customer as us. It is fine that they want to rebrand our product, but the problem arises that we are all targeting the same customer.
“So when it comes to low innovation and an oversupply of brands, we see the erosion of our profit margins due to a price war. In the long run we cannot compete by just producing a standard product and trying to sell as many as we can. We need to innovate.”
Through years of creative R&D, Saudi has been able to create more variety and quality for its core, low-income customer base, introducing a number of unique products and securing a strong market share.
Management and staff training
As an ISO22000 accredited company, Saudi makes extensive training provisions for all 500 members of staff that it currently employs. Stringent food hygiene and Halal regulations require all production and warehousing staff to attend regular external training programmes in order to improve their knowledge and skillset. With regards to the management, sales and marketing departments, external training gurus come to the offices and deliver three-day training programmes every six months.
Management
Management style is one area in particular where Tan is implementing change, as he elaborates; “good employees are harder to obtain and retain, because incentives have been offered at an unsustainable level, focusing solely on financial rewards.”
Instead “we try to do it differently in a sense that we know that Generation Y is different to the previous generation. Our younger employees want personal recognition, they are very expressive, they are aspirational, it is not just about the pay check.” To this end, Saudi tries to promote from within, creating a clear hierarchy upon which employees can progress.
Tan recognises that the company needs to change tact, becoming friendlier towards Generation Y ideals if Saudi is to thrive. “We need to move away from a command chain culture of ‘I’m the boss, listen to me’. Most of our employees go to university, or overseas for studies, coming back here, if you use that kind of style, try and micro-manage them, they will leave.”
There is a generation gap between the Generation X managers and the Generation Y employees who are joining the ranks. Tan believes that “if we are successful in bridging this gap, we will flourish”
Investment and development
With the turn of the new financial year, Saudi is looking to focus on three main areas of investment, expansion and development:
Top of Tan’s agenda is always the quality of product; “we will invest in new and improved machinery to make us more innovative, setting us apart in the market”.
“We are also looking to expand into the international export market, especially our neighbouring countries; Brunei, Indonesia, Vietnam and the Philippines. However we are also keeping an eye on countries in the Middle East. Malaysia dictates some of the world’s strictest Halal regulations, making export to Islamic countries much easier for us.”
Tan concludes; “there is also a need to streamline our range of brands, developing stronger identities and association with target consumers. We intend to fulfil this ambition with strong marketing campaigns, involving local celebrity endorsements to reach out to our customers.”
In good hands
Tan has officially only worked at Saudi for seven months, having joined in Dec 2011. However, his involvement with the Saudi brand has been a long and invested one. Educated in the US, Tan received a BSc in Food Science and Technology from Ohio State University, followed by an MBA in Business Administration from San Francisco. Supplemented with several years of industry experience in both the food quality and corporate development industries, Tan is well placed to take Saudi on to another 27 years of success and expansion.
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