Opportunities in Increasing the Export of Food Products Based on the Consumer Preferences in Middle East 15 August 2008 Pr Dr Mad Nasir Shamsuddin Prof

Opportunities in Increasing the Export of Food Products Based on the Consumer Preferences in Middle East

15 August 2008

Pr Dr Mad Nasir Shamsuddin Prof Dr Jinap Selamat

Dr Roselina KarimProf Madya Dr Jamil Bojei

Dr Rosli SalehDr Tan Chin Ping

1

MAHA 2008

Business Environment

2

Market Size and Growth of The Malaysian Processed Food Exports to Middle East, 2002 – 2006

3

4

Strength1.Malaysia has a good image as a modern Islamic country.

2.Malaysian Halal Certification is perceived as more valid compared to

non-Muslim countries.

3.Malaysian products are perceived as safe and better quality vis-à-vis

other ASEAN countries.

4.Labour productivity is relatively high compared to other ASEAN

countries.

SWOT ANALYSIS

5

Weakness1. Problems faced dealing with Malaysian exporters – lack of professionalism,

such as lack of follow-up, seriousness, lack of correspondence, and very slow in response. Very short-term perspective. SMI entrepreneurs lack legal/social/cultural environment in the importing countries.

2. No consistent supply. 3. Malaysia is weak in understanding and adapting local flavor.4. Sea transportation is not efficient5. Branding is not well established. Too many brands. Each entrepreneur

markets its own brand. Do not have branding which is unique for the country.

6. Although packaging is good, some products have the choices of color which are not attractive.

7. Packaging does not guarantee long shelf-life.

SWOT ANALYSIS

6

Weakness (cont..)8. Cost of production is high. Analysis from the survey indicates that the

prices of products from Thailand are below the Malaysian cost of production. In general, the Malaysian products are about 20% more expensive.

9. Malaysian food products. 10. No strategic alliances like importers or distributors. No private agents to

market the products due to the lack of entrepreneurial skills. 11. Entrepreneurs do not have enough capital to effectively export their

products. 12. Not able to identify consumer needs in terms of taste and preferences. 13. Almost all the local processed product type and categories do not follow

market labeling requirements. 14. Some of the ingredient list do not specify the percentage the ingredients,

nutritional facts, serving size, customer service information.

SWOT ANALYSIS

Opportunities1. 60% of the Saudi’s consumers are youth (< 35 years) and thus indicating

a growing consumer markets and willing to try new products.

2. Saudis’ consumers have purchasing power.

3. GCC is a growing region. Average GCC (8%); Saudi Arabia (10%).

4. Rising costs of production in EU & USA.

5. Tourism industry in Malaysia contributes to developing awareness

among Arab consumers who have been to Malaysia.

6. Strong government supports for SME development in food processing

7. Strong government support in halal products and halal-hub centre

FAMA-UPM Program 4: Project 2 7

SWOT Analysis

Threats 1. Stiff Competition of the Malaysian food products from Thailand,

Indonesia and the Philippines. The prices of the Malaysian

products are generally higher due to the higher production costs.

2. Subsidized tariffs for air transportation by Thailand.

3. Chinese products invading the markets, translated into cheaper

prices.

4. With declining USD, the products from Malaysia are more

expensive.

5. Weak R&D that match SME requirements


SWOT Analysis

General Electric Model

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Ranking Based on Overall Acceptability of Products by Respondents in the ME

No Product Name Category Overall Acceptability Willingness to Buy

1 Sri Kaya Jam and Spread 4.46 4.5

2 Pineapple Jam Jam and Spread 4.16 4.59

3 Starfruit Jam Jam and Spread 4.14 4.28

4 Almond and Ginger Cookies Cookies 4.07 4.2

5 Filled Chocolate Chocolate 4.01 4.31

6 Black Pepper Tapioca Chips Snack 3.96 4.06

7 Pink Guava Juice Beverage 3.92 4.1

8 Roselle Jam Jam and Spread 3.92 4.39

9 Coffee Beverage 3.86 4.24

10 Sesame Ball Snack 3.84 4.2

11 Almond and Tiramisu Chocolate Chocolate 3.83 3.87

12 Butter Cookies Cookies 3.81 4.01

13 Carambola Juice Beverage 3.69 4.2

14 Tamarind Juice Beverage 3.39 3.74

15 Sos Cili Padi Sauce 3.31 3.95

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Ranking Based on Overall Acceptability of Products by Respondents in The ME

Analysis of Acceptance


Middle East

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Beverages

Snacks

Middle East


DMG Butter CookiesNoraini’s Ginger and Almond

Benns Almond TiramisuDazzle Filled

Cookies

Chocolates

Middle East


FAMA Serikaya FAMA Jam

FAMA Chilli sauce

Sauces

Jam & Spreads


Demographic – Consumer’s Gender


Demographic – Age of Consumers

Demographic – Country of Origin



Demographic – Occupation

Consumer Acceptance - Snacks

*Overall Acceptability denoted by appearance, aroma – Smell,flavor – Sweetness, texture – Body or viscosity and aftertaste. (5= Like Extremely and 1 = Dislike Extremely)

** Overall Packaging denoted by packaging design, color, size of Pack and Overall (5=acceptable and 1=not acceptable)

Consumer Acceptance - Snacks

Consumer Acceptance - Beverages





Consumer Acceptance - Cookies



Consumer Acceptance - Cookies

Consumer Acceptance - Chocolate



Consumer Acceptance - Chocolate

Consumer Acceptance – Jam / Spread



Consumer Acceptance –Jam/Spread

Consumer Acceptance – Jam / Spread

Consumer Acceptance – Sauce



Consumer Acceptance – Sauce

Preference Test in Jeddah


Product Category Type of product

Local brand Competitor’s brand

Jam Pineapple jam AgroMas Halwani Bros

Beverage Coffee Anggerik 3-in-1 Nescafe 3-in-1

Cookies Butter cookies DMG Royale Danish

Americana

Cookies Ginger & almond cookies

Noraini’s Jules Destrooper

AlmondCookies

Coffee 3 in 1Vs

Vs

Preference Test in Jeddah (cont..)


Agromas VS Halwani Bros

Pineapple Jam

DMG Royale Danish VS Americana Butter Cookies

Preference Test in Jeddah (cont..)

Product Category

No. of respondents Jam Beverage Cookies

Pineapple jam

Coffee(3-in-1) Butter cookies Ginger & almond cookies

Prefer Malaysian product

26

AgroMas34

Anggerik 3-in-17

DMG Royale Danish

10

Noraini’s

Prefer competitor’s product

34

Halwani Bros27

Nescafe 3-in-136

Americana16

Jules Destrooper

Total no. of respondents 60 61 42 26

Min. no. to show sig. difference at P<0.05

39 30 28 19

Notes: No significant difference

Significant difference

Significant difference

No significant difference

Paired Comparison Test for Preference of Malaysian Products Versus Competitors

Techno-Quality-Economic Matrix for Export Ready and Product Potential by Product Category



Techno-Quality-Economic Matrix for Export Ready and Product Potential by Product

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ME – Ready

Bumi Hijau Black Pepper

Jalen Chilli

Black Pepper & Spicy Flavoured FAMA

Nani Fried Sesame Kart Food Steamed Bun

Muslim Best Salsa Sauce

ME - Potential

Way Forward

No Strategy Action Plan Remarks

1. Identify relevant market segment

1. Introduce food products that are more appealing to younger generation (e.g. trendy packaging)

2. Target the promotion to younger generation (e.g. associated with sport activities, school children)

1. The younger generation tends to be more open & willing to try new products

2. Promote products which are produced by SMEs that have sufficient capacity to meet importer demand

1. Encourage SMEs to collaborate, form a consortium to achieve the size needed to meet importers demand.

1. Most SMEs are under capacity to venture into export markets

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Way Forward


3. Improve the professionalism of the Malaysian entrepreneurs

1. Training in Entrepreneurship Development especially in export market promotion, ethics, and legal-cultural environment

1. Lack of professionalism among Malaysian exporters (communication and promises)

4. Develop structured human resource in terms of functionality

1. Restructure human resource to have staff that are competent (e.g. export activities should undertake by export manager, quality control personnel to ensure consistent product quality)

1. Most SMEs do not have structured functions in the human resource set-up

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Way Forward


5. Upgrade processing technology

1. Upgrade the processing technology of SMEs through government incentive schemes (e.g. soft loan, tax deduction, technical support)

1. About 50 % of SMEs surveyed still use manual or semi-automated processing technology.

2. SMEs must utilize relevant processing technology in order to be competitive.

6. Develop a systematic raw materials procurement system

1. Establish contract farming for raw materials supply

2. Train SMEs entrepreneurs in price forecasting

1. SMEs are facing inconsistent supply and quality of raw materials as well as fluctuation of in the price

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Way Forward


7. Identify critical success factors of companies that are successful in exporting food products

1. Training in Entrepreneurship Development especially in export market promotion, ethics, and legal-cultural environment

1. Lack of professionalism among Malaysian exporters (communication and promises)

8. Promote strategic alliance between SMEs and LEs

1. Promote contract manufacturing between SMEs and Les

2. Promote joint venture to reduce cost

3. Joint promotion between SMEs and distributors in importing countries

1. In Thailand, food manufacturing SMEs aligned themselves with large Enterprises (LE) for exports market.

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Way Forward


9. Formulate Malaysian food branding

1. Develop a ‘unified brand’ for all Malaysian food products produced by new SMEs players

1. Food products presently marketed by the individual brands. Global brand helps to reduce the advertisement and promotion cost.

10. Identify a reliable private distribution agent for marketing purposes

1. MATRADE must develop database on marketing agents

2. MATRADE should develop criteria in selecting reliable export agent

1. Promotion by agents and product distribution was identified as the most serious marketing problem.

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Way Forward


11. Position SMEs food products as premium products

1. Enhanced joint promotional effort by manufacturers and distributors to support product positioning

1. In general the production costs of Malaysian food products is 20 % higher than Thailand and Indonesia

12. Establish food products Distribution Centre

1. Establish a private trade representative in Dubai (as a gateway) by a consortium of SMEs

1. Need to establish a Distribution Center - acts as a distribution agent.

2. MATRADE needs to identify reliable distributors/importers as agents.

3. Strategic partnership as a pushing factor in marketing the products.

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Way Forward

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Techno-Quality-Economic Matrix for Export Ready and Product Potential by Product

Opportunities (O)More preferable than established brandNext popular beverage in the after tea

Strength (S)Overall acceptability score is high

Treats (T)Compete with the established product in the market

Weakness (W) Lack of coffee flavour and

aroma Lack of bitterness (Jeddah) Low in viscosity (thin

mouthfeel)


Situational Analysis - Coffee

Strategy

Product Improvement (flavor, aroma, viscosity)

Improve product image to be at par with the established brand. (Incorporate health element ingredient such as Tongkat Ali and Conduct in-house promotion in foreign countries)

Execute aggressive advertising and promotion (Participate in trade exhibition and Assign foreign agent for promotion)


Action Plan - Coffee

Opportunities (O)No similar product in the marketHighly acceptable by consumers

Strength (S)Unique in tasteProcessing and packaging technology is readily availableBrand new productThe product is highly accepted

Treats (T)Existence of indirect competitors

Weakness (W)Unknown shelf lifeCritical food safety issueLack of HACCP /ISO22000 CertificationLack of coconut flavourLack of spreadability Inappropriate labeling design- picture of coconut on the label is disproportionate with picture of other ingredients

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Situational Analysis – Seri Kaya

Strategy

Implement product improvement (shelf life)

Implement product improvement (flavor, spreadability)

Improvement in product labeling

Develop food safety management system (establish effort

to obtain the necessary certification)

Develop preemptive strategy Apply for registered

trademark

Introduce product promotionFAMA-UPM Program 4: Project 2 52

Action Plan – Seri Kaya

Opportunities (O)•Preference of product equivalent to existing product.•Product is highly accepted (in term overall acceptability and sensory attributes)

Strength (S)Processing and packaging technology is readily availableAvailability of raw materialThe product is highly accepted

Treats (T)Compete with similar product in the market

Weakness (W)Lack of sournessProduct is too sweet

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Situational Analysis – Pineapple Jam

Strategy

Implement product improvement (flavor) - optimum

sourness and sweetness

Execute aggressive advertising and promotion

(participate in trade exhibition, conduct in-house

promotion in foreign countries and assign foreign agent

for promotion)

Implement product differentiation

Increase production for export


Action Plan – Pineapple Jam

Opportunities (O)No similar product in the market

Strength (S)Brand new productHighly accepted by consumers in term of sensory attributesProcessing and packaging technology is readily available

Treats (T)Nil

Weakness (W)Consumers are unfamiliar with productPoor product uniformity (sesame seeds separated from the ball during frying)The filling is too sweetTexture is too chewyFluctuation of quality due to improper cold chain management

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Situational Analysis – Frozen Sesame Ball

Strategy

Dough Improvement

Widen the selection for the frozen snack in terms of filling

Educate consumers on the product usage conduct promotion through

a) in store promotion, b) infomercial promotion and c) professional

chef cooking TV series or website .

Upgrade product safety (develop and implement food safety

management system (GMP, ISO 2200, HACCP))

Upgrade knowledge among staff dealing with cold chain

management (conduct training in cold chain management)


Action Plan – Frozen Sesame Ball

Opportunities (O) High market potential Willingness to buy is moderate (4.06 out of 5 scale for black pepper flavor)

Strength (S)Sensory attributes of black pepper flavoured tapioca chips is quite acceptable (score out of 7 hedonic scale for black pepper flavor)Products with varieties of flavors

Treats (T)Compete with established snacks such as potato chips and extruded products

Weakness (W) Poor product quality (e.g.. broken

into pieces) Lack of uniformity and consistency

in terms of colour and shape. Shorter shelf life – rancidity, loss of

crispiness Lack of processing and packaging

technology Low quality of the lid opener as the

opener easily broken and the strength of the metal lid is weak (easily torn apart). 57

Situational Analysis – Tapioca Chip

Strategy

Develop promotional program to introduce tapioca chips (conduct

promotion through in store promotion and infomercial promotion)

Need for product improvement (using reconstituted technology)

Upgrade packaging technology (adopt nitrogen-filled packaging

technology)

Upgrade processing technology (promote automated processing

machinery among SMEs)

Improvement in product shelf life (up to 2 years)

Improvement on product quality (training on handling during

transportation)FAMA-UPM Program 4: Project 2 58

Action Plan – Frozen Sesame Ball

Documents

Opportunities in Increasing the Export of Food Products Based on the Consumer Preferences in Middle East 15 August 2008 Pr Dr Mad Nasir Shamsuddin Prof