Fraser & Neave : F&NHB to Leverage Combined Strengths with Cocoaland to Expand Share in Packaged Food

F&NHB to Leverage Combined Strengths with Cocoaland to Expand Share in Packaged Food

Posted on 25th November 2022Print

Following the acquisition of 100% equity of Cocoaland Holdings Bhd (Cocoaland) by Fraser & Neave Holdings Bhd (F&NHB or the Group) on 4 November 2022, Cocoaland became a wholly-owned subsidiary of F&NHB. On 25 November 2022, it was delisted from the Main Market of Bursa Malaysia.

The acquisition of Cocoaland is a strategic move to realise the Group's long-term goal to expand into the packaged food segment and support the growth of F&NHB's Halal food pillar. With the completion, F&N looks forward to leveraging the strengths of both organisations to generate synergistic values for shareholders.

Cocoaland is the largest gummy candy producer in Malaysia, with its flagship Lot 100 brand. It is also an established contract manufacturer for local and multinational pharmaceutical customers. Currently, Cocoaland is still a small player in the total confectionary, sweets, biscuits, and savoury snacks category worth RM4.2 billion in Malaysia*.

"We see huge potential to grow our share in this category, especially in the healthy and functional range. F&NHB plans to build upon Cocoaland's strengths and invest in the brands to introduce new portfolios such as plant-based and health & wellness products," said F&NHB Chief Executive Officer, Lim Yew Hoe.

He added that Cocoaland brings a lot of synergies to the Group, with its product range having an identical route to market and consumption occasion as F&N's current beverage and dairy products. Cocoaland's popular snacks and confectionary also complement F&N and Sri Nona to create a wider portfolio and enhance the Group's expansion overseas, especially to halal markets.

"Domestically, Cocoaland can leverage F&NHB's expansive distribution network and procurement synergies. Meanwhile, Cocoaland offers ample capacity for expansion with four manufacturing plants in Malaysia to support our existing business and future growth. For example, Sri Nona will utilise vacant factory space to increase its much-needed capacity for ketupat, and Cocoaland's beverage line will produce more F&N products," Lim added.

Despite supply chain disruptions and the rising cost of goods sold (COGS) facing the industry, Cocoaland has made a remarkable recovery compared to the same period last year. For its third quarter, which ended on 30 September 2022 (3QFY22), Cocoaland recorded RM71.7 million in revenue, a 55.8% year-on-year growth, while net profit surged to RM10.6 million from RM4.1 million a year earlier.

Cocoaland's third-quarter results are aligned with F&NHB's same-period performance for its Malaysia operations.

"Cocoaland's strong performance for this financial year and the increased consumer demand for packaged food suggests opportunities to grow further. We will leverage the innovation, new product development and brand management capabilities of F&NHB to maximise the potential of our existing brands and develop new ones," said Bryan Lee Chee Kong, F&N's newly appointed Managing Director for Cocoaland Group.

"The Group's long-term goal for Cocoaland is to build it into East Asia's most recognisable gummy manufacturer and a leading producer of chocolate products internationally. With our existing good relationship with Cocoaland's management and the injection of a fresh team of professional and experienced leaders into the company, we are optimistic about capturing future opportunities that will drive our expansion to other global and domestic markets," said Lim in conclusion.

*Euromonitor Packaged Foods Nov 2019