KOTA KEMUNING: Dairy milk company Maestro Farm Sdn Bhd expects to achieve double-digit sales growth this year, driven by last year’s performance and high domestic demand for produced milk, according to managing director Chuah Teong Chin.
Based on 2020 statistics, he said, there was demand for 69.5 million litres per year for produced milk in Malaysia. However local production alone is unable to fulfil the demand.
“We are targeting double-digit growth because we see some gaps that we can take advantage of. Malaysia is producing only about 43.4 million litres, short of 37% to 40%. (Due to) this shortfall, we have to import from overseas, whether in the form of liquid, powder or ice.
“So the industry is growing rapidly, that’s how we see the background and understand the trend. Especially among young generations, they tend to love these milk products. Nowadays, almost every month, you see a new cafe coming up. Cafes need milk,” Chuah told SunBiz.
Currently, the company has eight offerings, which consist of pasteurised and ultra-high temperature (UHT) dairy milk products.
At present, Maestro Farm imports its raw materials from Australia and New Zealand but will look into sourcing locally for its upcoming fresh milk offering.
The company launched its products in the market in October 2021, and started distributing them within the Klang Valley before venturing north to Penang last year. It will open an office in the southern region of Peninsular Malaysia soon and aims to expand to Sabah and Sarawak, which is pending permit approval.
The company plans to roll out two new offerings this year – a fresh milk product and a full cream UHT milk product.
Chuah believes that prospects for the company in the local milk industry are “pretty good” due to high demand but “short” supply in the domestic market.
“We need more of these dairy products. After seeing the trend from our performance last year and this year, it looks pretty bright as long as you are offering the right mix of products,” he said.
Chuah said fresh milk is the best-selling product in the market, but pointed out that its production comes with many challenges. Despite differing opinions in the industry, he believes that fresh milk should only be locally sourced.
“When you bring it over to Malaysia, is it still fresh? In Malaysia’s requirement, if you bring in any product, you need to either pasteurise it or it needs to go through the UHT process. If you double pasteurise it, it can’t be fresh milk.
“To get fresh milk from local sources, the industry is short. You have to pay very high prices as well as in consistency and quality of the product ... raw materials are also very challenging. Milk is a sensitive product. Once you are not careful with the temperature, you have to throw it away,” he said.
On Maestro Farm’s business model, Chuah said the company has a key distributor for its retail segment which distributes to a network of well-known retailers. To date, its products are sold in 274 retail outlets, which contributes 80% to its business while the remaining is generated from its cafe operator clientele, online and direct selling via agents.
Last year, the company entered the online sphere, through the Keluarga Malaysia Cheap Sales or DE Dagang, which is a government initiative by Malaysia Digital Economy Corporation.
“Online sales contribution is still pretty small but I think the important thing is that people are more aware of and know us. I believe online will catch up,” he said.
The company has plans to grow its online business, but foresees that logistics will be the main challenge for its pasteurised products, driven by the need for a cold chain which will incur higher costs.
For online, Chuah said, the viable plan is to offer its UHT range, which includes its plant-based milk product.
On outlook, he said 2023 will be challenging for the company due to high prices of raw materials, which he believes will affect its product margins.
“Due to inflation, we have to increase our selling prices as well but everywhere ... the whole world is facing the problem. The only worry I have is the economic situation, the layoffs and everything. People will be more cautious when austerity drive kicks in, then there will be fewer people going to cafes to consume,” said Chuah.
However, he added that he is “still positive” on the outlook this year based on its expansion plans and the “gaps” in domestic milk supply.
Source: The Sun Daily
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