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Fruitnet.com Staff


Video: Clear goals for Malaysia

The recent Fresh Produce Malaysia conference highlighted emerging opportunities both at the upper-end of the local market and in the intra-Asian trade

Video: Clear goals for Malaysia
GCH Retail's Tham Oi Loon

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Malaysia may already be established as one of South East Asia’s more mature markets, but it holds significant room for growth in both the import and export fields.  

The country’s fresh produce business is moving into a new phase of growth characterised by opportunities in the mid- to higher-end consumer segment. Opportunities are also emerging within the Asian region, where there is significant untapped potential for Malaysia to capitalise on the underdeveloped intra-Asian trade.

These were some of the key messages to come out of last week’s Fresh Produce Malaysia conference, which took place in Kuala Lumpur at the Mandarin Oriental Hotel on 15-17 March.

Malaysia’s first international conference and networking event for the fresh fruit and vegetable business attracted 175 delegates from 19 countries, including representatives from right across the value chain.

In attendance were major food retailers like Giant, Carrefour and Aeon/Jusco; key importers and exporters; growers and packers; companies providing services and technologies to the fresh produce business; and a range of major government agencies.

Setting the scene for the conference, Veiverne Yuen of Rabobank International noted that consumption, production, modernisation and modern retail penetration were all increasing across South East Asia. With its higher production costs, Malaysian produce must find its niche on regional and international markets, which on a price and quality basis, was likely to be “middle-to-upper-class”, he noted.


Staff training key for modern retail trade  

Delegates received direct insights into the opportunities and challenges for Malaysia’s expanding modern retail trade through presentations from key executives at GCH Retail, which operates the Giant hypermarket and Cold Storage supermarket chains in the country. While supermarket and hypermarket retailing has expanded aggressively to reach "almost every town in Malaysia”, this modern trade currently only accounts for around 10-15 per cent of fresh produce sales in the country, with the vast majority still controlled by the traditional trade, according to GCH Retail’s general manager for fresh, Tham Oi Loon.

Whereas traditional markets in Malaysia only operate for four to six hours, modern retail outlets must run for 13-15 hours, making it a challenge to keep product fresh, he observed. And GCH Retail’s category manager for imported fruit and vegetables Retna Malar emphasised that training staff on how to manage and merchandise fresh produce is a key issue in the bid to grow the modern trade’s share of fresh produce sales in Malaysia.

“The challenge for us `the modern trade` is on the selling floor, and this goes back to people – not many people are trained, the staff turnover is fast and there is lots of migration within the modern trade,” she said.

“For the past three years, we `GCH Retail` have been putting up very structured training programmes for our staff, especially when it comes to handling programmes.”

Suppliers to the retail sector can also play a key role in supporting staff training and growing sales of their products in turn, as a case study presentation on the Washington Apple Commission’s training seminars with the modern trade revealed.

“With better understanding of the product, the retail staff will have more confidence to carry, display and promote the product,” said local Washington Apple Commission representative Eddie Saw. “We want to create not just brand loyalists, but brand activists.”

Price has traditionally been the main driver of promotional programmes in Malaysia, and it remains the main front on which the modern retail trade is battling for market share. But Fresh Produce Malaysia’s retail panel stressed that other factors such as staff and consumer education were becoming more important, especially as opportunities arise for newer products at the higher-end of the market.

Room for improvement on domestic supplies

Another opportunity highlighted by GCH Retail was the scope to upscale and upgrade Malaysia’s own domestic fruit and vegetable production to achieve more consistent supplies, and further exploration of Malaysia’s position as a supplier came on Day 2 of the conference. Norma Othman of Malaysia’s Department of Agriculture set the scene by outlining the country’s status as a significant net importer of fresh produce and the technical and phytosanitary hurdles facing exports. On a brighter note, she pointed out that a newly-approved international MRL standard for starfruit, one of Malaysia’s signature export lines, and plans to benchmark Malaysia’s SALM certification system against GlobalGAP by the end of this year, should help to overcome market obstacles.

In the subsequent presentation, Ishak Abbas of the Federal Agricultural Marketing Authority (FAMA) underlined that Malaysia’s own quality assurance standards such as SALM and Malaysia’s Best were already adequate for international markets. However, certifying and convincing Malaysia’s small-scale farmers, which make up the majority of the country’s production base, is no easy feat, as Sathianathan Menon of QA Plus Asia-Pacific outlined. The fact that neither SALM nor Malaysia’s Best guarantee a premium price has been one of the major hurdles, he explained.

Malaysian Agrifood Corporation (MAFC) has given fresh impetus to Malaysia’s image as an supplier with well-marketed, innovative products since arriving on the scene four years ago, and the company’s Sekar Shanmugam and Dr Chan Ying Kwok presented on the Lushious line of pre-packed vegetables and its iconic Paiola papaya respectively. While the company has made swift advances and sizeable investments in both sectors, it still faces challenges in its overall mission to propogate global standards among local producers and forge integrated supply chain management systems. Many of these hurdles centre on farming and managing the supply base. Nevertheless, Paiola papaya looks destined to ramp up its profile, with production forecast to reach 24,000 tonnes by 2013, Dr Chan noted.  

Increasing sophistication drives demand for new products

At the same time, increasing modernisation and sophistication in Malaysia’s production sector, driven by the likes of MAFC and the country’s growing supermarket retail trade, are also creating increased demand for new supply chain technologies, which were the focus of the final session of the conference. For instance, Tracy King of Sinclair International highlighted the benefits of new labelling technologies in terms of premium presentation and branding, product differentiation and accurate retail pricing.

Market segmentation was also a theme that came through strongly in a session dedicated to discussing newer products and supplying countries to Malaysia’s large and growing fresh produce import market, which was worth around US$800m last year. Berries are one of a number of higher-value products taking off in the Malaysian market, delegates heard, and health trends among consumers are a key driver of demand for newer lines. Korean strawberries in particular have been a rising star, according to Andre Loo of importer Euro-Atlantic, who noted that imports have increased from 12 tonnes to 186 tonnes in just two years, with significant potential for future growth.

Delegates were able to witness first-hand the growing demand for higher-end produce in Malaysia on an organised visit to Aeon/Jusco and Cold Storage supermarket outlets in Kuala Lumpur’s Mid-Valley Mall shopping centre on Day 3 of Fresh Produce Malaysia.   


A full report on Fresh Produce Malaysia will feature in the May edition of Asiafruit Magazine.

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