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Strong Halal Opportunities in Restive Xinjiang

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Mini Me Insights
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ACE soft drinks being sold in an Uyghur-owned grocery store in Turpan
During a recent trip to Xinjiang Uyghur Autonomous Region in December 2013, I was amazed to find a number of Malaysian FMCG products in Xinjiang. Among the Malaysian products found in one Uyghur-owned grocery store in Turpan were ACE soft drinks, Alicafe RTD coffee drink and Drinho Asian drinks. Also popular in Xinjiang are Turkish products including from the leading brand Ülker.

Despite a growing number of halal-certified products from other regions in China, it seems Uyghur consumers have shown stronger confidence in the halal certification issued by Malaysian and Turkish authorities. The distrust shown on the certification issued by China’s state-run Islamic body by Muslim consumers has resulted in some mainland companies mislabeling their products as coming from countries like Malaysia, which has a strict halal certification regime, in a bid to improve their market access into Xinjiang, according to Radio Free Asia. Such practices will be detrimental to Malaysian and Turkish exporters in the long run unless steps are taken to eradicate such practices.

 “One company contacted by RFA Uyghur Service, Tianren International Ltd., admitted it had been producing food products domestically and mislabeling them as certified halal goods from Malaysia, a predominantly Muslim country” link
In addition to the stricter halal certification, Malaysia and Turkey are perceived as friendlier towards the Uyghur communities due to their shared Islamic heritage.With the ethnic tension and violence still on going in Xinjiang, the consumption of products imported from Muslim countries can be interpreted as an act of defiance among the Uyghur communities against ethnic Han rule. Such sentiment bodes well for exporters from Malaysia and Turkey to tap into the Xinjiang market with about 9.5mn Uyghur consumers.
 Ülker graces the entrance of Ihlas Supermarket in Urumqi.

Brazilian Power

By
Mini Me Insights
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Since writing about Recca (黑卡） in early 2012, many things have changed. At first, it was a challenge getting hold of Recca functional beverages made from Brazilian ingredients eg guarana, acai and acerola in China. Now, during my travels in China, i was amazed to find Recca products in northeast China (Harbin, Shenyang and Changchun) and even as far as Urumqi and Turpan in Xinjiang. Guangzhou Recca Refrigerantes (广州黑卡饮料有限公司)  has done an amazing job in expanding its distribution reach to most of the country from mom-and-pop stores to large hypermarket chains.
Guangzhou Recca, founded in 2006, sell functional and energy drinks made from Brazilian ingredients. It claims to have a Brazilian partner in the form of Manaus-headquartered IMEX Indústria Comércioe Serviços Ltda, which provides the brand license and technology. I failed to find information about IMEX on the Internet. Perhaps Recca is trying to use the ‘Brazilian’ company to give it a Brazilian credential, often helpful given the perception of Brazil as energetic (football and samba) and natural (Amazon rainforest).
The most popular product is Recca 6 Hours Energy Drink. What differentiates Recca from Red Bull and other energy drinks in the market is the use of the PET bottle and guarana as an active ingredient. Guarana, perceived as more natural, thanks to its association with Brazil (rainforest), sets Recca apart from Red Bull, which uses taurine as its key ingredient. The PET bottle is smaller and robust, ideal for repeated use.
The success of Recca has opened the floodgate to new competitors. It will not be a surprise to see similar products filling store shelve going forward, all marketing with reference to Brazil such as Amazon and Amazon parrot.
“Healthy Energy- Amazon” from Hong Kong Amazon Group

 

Anyone heard of Pran?

By
Mini Me Insights
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Pran, Bangladesh’s biggest fruit and vegetable processor, is increasingly making its presence felt in Malaysia. A search on Jobstreet.com.my shows the company is recruiting 13 full-time sales executives to market Pran range of products in the general and modern trade establishments including highway rest areas, school, college and army canteens, cafeterias, petrol pumps and universities and restaurants.The company is also looking for merchandisers (promoters) to do sampling and merchandising in supermarkets, hypermarkets, minimarts, hotels and education institutions.

I first stumbled upon Pran juices and energy drink yesterday at a mom-and-pop grocery store in Pudu. A visit to Tesco and Aeon Big reveals Pran is occupying prominent position as promotional items in store shelves to tell the world that Pran has arrived. The 260g Pran mango juice (20% juice content) is selling at Aeon Big for RM 1.30. At Tesco, the apple and mango juice is selling at a normal price of RM 1.80. Pran juice drink is competing in the same category with Tropicana Twister, the number one juice drink in Malaysia.

As a newcomer, Pran does have an advantage as the brand can tap into the sizable number of Bangladesh workers in Malaysia who already have prior knowledge about the brand in their home country.

Product ML RM RM/L
PRAN Mango Juice Drink 260 1.80 6.92
PRAN Mango Juice Drink (Promotion price) 260 1.30 5.00
Tropicana Twister Juice Drink 355 2.29 6.45

What happened to My Cola marketing?

By
Mini Me Insights
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F&N launched its own cola flavoured carbonated soft drinks My Cola in peninsular Malaysia in 2013. F&N ceased to be the bottler of The Coca-Cola Company in Malaysia in 2011, thus losing a major source of revenue. Now, F&N is back with a vengeance to take on Coca-Cola. Both MyCola and Coca-Cola come in red. MyCola is selling at RM 0.10 cheaper than Coca-Cola for the PET version. The two have similar taste.

Looking at My Cola marketing and packaging design, I can’t help but wonder why the pack design gives the impression that it is “cheap” with a private label feel to it. The name My Cola, as in Malaysian Cola, also doesn’t sound exciting. Driving in KL, you can’t help by notice the boring banners at eateries promoting the new drink in town.

Look at our neighbour Thailand. Serm Suk’s Est Cola, the Pepsi-lookalike, has all the success ingredients. The name is hype and the use of handsome celebrities makes Est Cola looks cool. The three spokespersons are singers Pakin ”Tono” Kumwilaisuk from The Star Season 6, Sukrit ”Bee” Wisetkaew from GMM Grammy and Pirat ‘”Mike'” Nitipaisalkul’. So there is still much to learn from Est Cola if My Cola wants to successfully compete with the giant Coca-Cola.

Wonderful Pistachios

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Mini Me Insights
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Wonderful pistachios from the US have finally arrived in Malaysia in time for the Chinese New Year. The product is distributed by Sangla Foods Sdn Bhd. Ethnic Chinese in Malaysia love to having pistachios during Chinese New Year as pistachios is also known as “Happy Nut” in Mandarin. So, the timing is right for Wonderful to make an appearance in the local market to tap the festive demand.
As a fully-imported product, Wonderful pistachios is priced at the mid-level based on the current promotion price of RM 13.98 per 168g pack. The normal price is about RM 16. US-made Sunkist is is the most premium pistachios in the market.
  Product Gram RM RM/KG
Sunkist In-shell Pistachios Lime & Chilli 150 15.89 105.93
Non-promo Wonderful Pistachios Pepper & Garlic 168 16.00+ 95.24
KISE Salted Pistachios 160 14.50 90.63
Camel Natural Pistachios 150 13.39 89.27
Promo Wonderful Pistachios Pepper & Garlic 168 13.98 83.21
Tai Sun California Pistachios 130 9.40 72.31
Tong Garden Salted Pistachios 180 12.00 66.67
N.O.I. Salted Pistachios 128 8.45 66.02
Store check: Nov-Dec 2013 in Aeon Big, Aeon Supermarket, Econsave & Giant hypermarket/supermarket, KL
Wonderful can clearly differentiate from the pack by making a splash in the market with a red packaging for Chinese New Year instead of having it in the purple-black scheme. The red packaging will make it stand out as a festive gift during Chinese New Year.
By the way, at a promotion price of RM 13.98, it is cheaper than China.  In China, the same product is sold online through Yihaodian.com, the country’s top online supermarket, at a price of RMB 43.9 (RM 23.77). So it is cheaper to buy Wonderful in Malaysia than in China.

Tortilla with a Mission

By
Mini Me Insights
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Mondelez’s Chacho’s has found a new rival – A tortilla with a mission. Mission Foods, a unit of US-based Gruma Corp, has started filling store shelves in Malaysia with its Mission Tortilla Chips. The Mission Tortilla Chips can now be found in leading supermarkets/hypermarkets such as Aeon and Tesco as well as in minimarket chains like KK Mart.
Malaysian consumers are very familiar with Chacho’s but what about Mission? From the picture above, it looks like both have the same packaging size but behold, Chacho’s is better value for money. Weighing at 80g, with a retail price of RM 3.00 at Tesco and RM 2.90 at Aeon, Chacho’s is cheaper with a per unit price of RM 0.036 per gram compared with Mission, which weighs 65g with a price of RM 2.70 at Tesco and Aeon. The per unit price of Mission is RM 0.042 per gram. Mission is priced at a slight premium over Chacho’s as it is made in Shanghai, China, while Nacho’s is locally manufactured in Malaysia, both employing imported ingredients.
Taste wise, Mission tortilla chips are less salty than Chacho’s. This can be a good thing as consumers now want to cut down on their sodium intake.
The Mission Tortola Chips claims to contains 30% less oil than potato chips and is 100% made from real corn. So it seems Mission is promoting itself as a healthier snack to potato chips, the most popular snack category. Can Mission continue to make inroad into Malaysia? It depends very much on getting the products into more stores, making consumers familiarise with the new kid in town and differentiating itself as the true tortilla corn chips in consumers’ mind. However, it will be a tough fight against Mondelez, which has a strong distribution network and enjoys the first mover advantage in the niche tortilla segment.

Grilled KFC?

By
Mini Me Insights
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 It seems KFC, famous for its fried chicken, is looking at ways to broaden the appeal of its food in Asia with seemingly healthier food that is grilled, not fried. This comes as rival McDonald’s has started introducing vegetarian options in North America with the new Mediterranean Veggie and Santa Fe Veggie wraps.
In Malaysia, KFC rolled out the Golden Wrap chicken in January 2013. The chicken “consists of kam heong marinated quarter-cut chicken on a bed of sweet corn kernels and sliced button mushrooms all wrapped in a special paper, then deep-fried to perfection. Kam heong, which means golden fragrance in Cantonese, blends spices with pepper.” (NST: 25 January 2013) To me, the picture seems to suggest the chicken is grilled or baked. The use of special wrapping paper in the preparation of chicken is usually used in the making of beggar’s chicken, a Chinese delicacy.
In Indonesia, it is called grilled chicken.  Launched in March 2013, the grilled chicken is prepared using New Orleans Marinade. In South Korea, KFC launched a similar grilled option in August 2013. All of these products are offered on a limited basis. I haven’t tried these limited-edition KFC grilled chicken as I still find the original KFC fried chicken the best. KFC = fried chicken.

Empire Strikes Back!

By
Mini Me Insights
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White coffee players beware, Nescafe is striking back! Not only is Nescafe aggressively marketing its instant white coffee in Malaysia, the birthplace of white coffee, it has also made white coffee part of its product line up in China as seen in the picture taken in Chengdu, capital of southwest China’s Sichuan province.  Mainland Chinese are gradually developing a taste for white coffee as evidence by the appearance of imported white coffee products, mainly from Malaysia, on supermarket shelves.  Mainland tourists are also buying white coffee in bulk when visiting Malaysia and Singapore or when they are vacationing in Indonesia. I have seen mainland tourists buying the Indonesian ‘white coffee’ variant in Bali, which shows the low awareness of the origin of white coffee among mainland consumers.

Let’s see if there is any price difference between an imported OldTown original flavour white coffee and a Nescafe white coffee in China. During a store check in Chengdu, the Nescafe White Coffee (5x29g) is selling for RMB 15.50 or RMB 0.107 per gram, while the OldTown Original Flavour White Coffee (360g) is selling for RMB 36.90 or RMB 0.103 per gram. Given the usual case of lower selling price per unit for larger pack, it seems there is not much price difference between Nescafe and OldTown white coffee products in China.  However, Nescafe has the distribution reach and its products have better shelf placement whereas OldTown is not carried in most stores and its products are usually located in the imported food section, which implies that they are usually more expensive than the rest.

Therefore, it is not at all surprising to see mainland consumers becoming more acquainted with the taste of Nescafe white coffee given the brand’s strong distribution and marketing prowess in China.

Tesco W27KL8

By
Mini Me Insights
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 Tesco W27KL8

Tesco has recently launched an aggressive push to popularise its online home delivery service. I was surprised to find a stack of Tesco postcard-sized DM in my mailbox at home. The DM contains a voucher code worth RM 20 that can be used for orders valued at RM 100 or more. However, the actual savings is only RM 10 since the cost of delivery is RM 10.

Besides DM, the UK hypermarket chain is giving away the voucher code for free on leading search portals such as Yahoo!.  It is clear that Tesco wants to win the online grocery game.

A Season for National Service

By
Mini Me Insights
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In China, when natural disasters strike, big businesses MUST donate. If you don’t donate, your reputation will be swept under the carpet. The mainstream and social media will hurl accusations at you. So, regardless of your current financial situation, you still have to do your national service even if you are a multinational.
With the recent earthquake in Ya’an, Sichuan province, it is time for another round of national service and the top three donors were surprisingly MNCs. As of 5.35pm on 23 April 2013, 309 enterprises donated more than RMB 600 million to the relief efforts, of which 32 were foreign enterprises, 74 state-owned enterprises and the rest private companies. Over 75% of the donated amount came from foreign companies and local private firms. The top three donors were Samsung with RMB 60 million, followed by Apple RMB (50 million) and Foxconn (RMB 50 million). Improving corporate image is the main possible reason for the massive amount of donations by Samsung, Apple and Foxconn. These enterprises hope that by donating huge amount of money, they will come under less scrutiny from overzealous government officials who are bent on finding fault in their products, services and the way these firms treat their workers and customers.
Being a hugely successful foreign company in China has its pitfalls at a time when the trust in domestic brands is at its weakest. In a bid to improve consumer confidence in local brands, the Chinese quality watchdog has been very proactive in uncovering quality problems in leading brands to prove to Chinese consumers that the so-called reputable foreign brands are fallible. The key message of these actions is to inform local consumers not to put blind faith in foreign goods and start trusting local brands again.
For MNCs, PR is important. The methods employed to deal with the Chinese state and consumers will determine the companies’ future in the market. Donation is a subtle way to boost reputation but when the company comes under intense pressure, a sincere apology can sometimes be the final face saving solution to appease the accusers.
When Apple came under fire for allegation of discriminating against Chinese consumers with its after-sales service, this was what Apple CEO Tim Cook had to say “We realised that there are people who think Apple has been arrogant and negligent in dealing with consumers’ feedback,” Mr Cook wrote in Chinese. “This is due to our insufficient communication with outside parties. We are profoundly sorry about any concerns or misunderstandings that this has brought to our consumers.” It must be a joy for Chinese consumers to see Apple, one of the world’s top smartphone makers, admitting its fault. The apology, coupled with the subsequent RMB 50 million donation, shows it is important to navigate the minefield cautiously and be ready to do your national service, keep your pride low and treat your Chinese consumers well.
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