38 FGV HOLDINGS BERHAD ABOUT FGV MANAGEMENT DISCUSSION & ANALYSIS VALUE CREATION Business Strategy STRATEGIC BLUEPRINT - HIGHER VALUE COMMODITIES AND PRODUCTS Delivering our goals in 2022 while maintaining palm oil as the mainstay of our business, we are strategically deploying appropriate resources into high value synergistic businesses with steadier profit margins, higher returns, and bigger market size. Our decision to establish a strong and dynamic presence in Consumer Products and Integrated Farming is based on a prudent long-term growth strategy that is able to deliver sustainable returns for all stakeholders. These new growth avenues in higher value-added economic activities can mitigate some of the key trends that the Malaysian plantation industry has been facing for the past few years, such as: Malaysia’s huge food import bill of approximately RM60 billion per annum represents a huge import substitution opportunity for local players that are able to produce and sell similar high quality products but at better prices. FGV’s Strategic Business Plan guides us towards meeting this existing gap through Consumer Products and Integrated Farming. Cost escalation due to Malaysia’s continued growth in national income per capita which leads to higher cost structures Declining margins from commodities as costs continue to escalate while CPO prices are subject to market forces Long-term possibility of Malaysia’s palm oil upstream and midstream businesses to be undertaken by lower income palm oil producing nations due to their lower cost structures CONSUMER PRODUCTS The value of Malaysia’s packaged food market was forecasted at RM33.21 billion in 2021 and this segment is expected to grow by 2.30% in year 20227. In the past decade, FGV has launched and established several consumer brands of food products, and gained market leadership in the refined cooking oil and margarine segments. FGV sees potential in this business segment and is committed to invest in brand development and innovative marketing strategies to groom these brands into higher value branded consumer products both locally, and in the future internationally. With this aspiration in mind, we have recently established Consumer Products Sector as the commercial arm for FGV to build and grow the Group’s Fast-Moving Consumer Goods (FMCG) products. The Consumer Products Sector will provide strategy for the Group’s route-to-market by focusing on the marketing and distribution of FGV’s FMCG products to consumers and industrial customers. Currently, FGV’s Consumer Products aspirations are to further strengthen our leadership position in refined cooking oil and margarine segment, towards achieving strong product recognition as top leading FMCG brands in the domestic market. In 2021, several strides were made on this front, leading to the following achievements: Achieved higher refined cooking oil sales revenue in 2021 by 33% Saji Raya festive video “Mangkuk Tingkat Mak Teh” which was inspired by a real life story, was named Top 3 Raya Video by Marketing Magazine and The Star Saji Merdeka’s festive video “Gelora” which depicted the current circumstances of people affected by the pandemic, was awarded Top 10 video by Marketing Magazine 1 2 3 7 Source: Euromonitor
RkJQdWJsaXNoZXIy NDgzMzc=