Q What short-term plans does your company have to expand international facilities? Are there any plans for new facilities?

A We invested $40m in new factories in the UK during the year 2004. This will enable us to pursue growth in our existing markets, as well as own-label business, with the major retail multiples in the UK. The investments translate to increased manufacturing capacity to support additional annual sales of up to $90m, for growth in the next few years.


This underscores our commitment to meet our goal and triple earnings over the five-year period [2003 to 2008].

We are the leader in the chilled ready-meals (CRM) technology in the UK. The market is worth £1.5bn, and is growing at 11% or over £150m a year.

In Ireland, the 100% acquisition in March 2004 of Cresset Limited, will provide us with a platform to expand our CRM business beyond the UK. We have completed a new plant costing $10m. We expect Cresset to address both the Irish and continental European CRM markets progressively in the coming years.

In China, our 96%-owned Shanghai ST Food Industries subsidiary has established a good distribution network in Shanghai and in more than 20 other major Chinese cities.

In addition, we continue to look for M&A opportunities. We have been, and will be, prudent and will be guided by our strict investment criteria of sustainability of returns above a hurdle rate that recognises both country and market risks.

Q How would you explain the company’s general approach to investment?


A Our international strategy is focused on three core regions, namely Singapore and south-east Asia – including Australia, the UK and Europe, and China. In this strategy, we focus on the pre-packaged food industry and see this as a multi-domestic, rather than a globalised, industry.

The Singapore market will continue to be a key market for us, both as a test-bed of group-wide business and management concepts, as well as a source of strong cash flow. We believe that despite its relatively small size and highly competitive environment, the Singapore market can still offer growth opportunities.

Growth will continue to be led by our overseas operations, especially in the UK. Our UK/Europe operations gave a sterling performance in 2004 with a 22% growth in sales and 33% growth in pre-tax profits.

In the UK, our strategy to focus on selected categories in the chilled foods sector has proven to be well-founded. This is an industry worth over £12bn and growing at 5% a year. In the latest published industry statistics (IRI Omniscan), out of the top 20 categories identified in the UK chilled foods market, there were only four categories growing at double digits. Through management foresight, and perhaps a tinge of luck, SFI happens to be in these same four higher-growth categories, namely chilled ready-meals, fresh prepared fruit, fresh fruit juices, and fresh soup.


Q What drives the company’s expansion and investment strategies?

A Continuous improvement is part and parcel of our everyday working life. Together with its emphasis on the highest food quality and hygiene, SFI continuously seeks to review and upgrade our standards of customer service and quality of its products.

SFI adds value to its overseas operations in a number of ways. We have introduced to our overseas operations proven managerial processes such as ‘economic value-added and six sigma’ business improvement methodologies, and instilled a culture of rigorous financial discipline.

Our food distribution business re-aligned its strategy in 2003 to focus on selected distribution channels. We identified the more promising market and product segments and the key success factors to deliver growth and healthy margins, and have drawn up strategy maps for each of these business segments.



Lawrence Yeo is CEO & principal consultant at investment consultancy AsiaBiz Strategy Pte Ltd