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5 Things You Should Know About Super Group

Ser Jing - Super Group First Quarter Results, Strong Brew of Profit (pic)While many of us enjoy a cup of freshly brewed coffee in the morning, few actually have the time to make one before rushing off to the office.

Kopitiams (coffee shops) aside there is a speedy solution – those ubiquitous 3-in-one sachets of coffee, creamer and sugar that just need boiling water, many of which are produced by the modestly named Singaporean firm, Super Group (SGX: S10) run by David Teo and family.

Printing

Mr Teo, the oldest of nine children, lost his father at the age of 18, and was left the family’s coconut candy factory. However, poor business encouraged him to close it down and open a noodle stall instead, before setting up a business printing price tag stickers with a friend of his father’s.

Fuji Offset Plates Manufacturing Limited

The printing firm proved a success and after a chance connection got him a meeting with Fuji of Japan, the company became Fuji Offset Plates Manufacturing Limited – a leading regional supplier.

Speedy coffee…

However, in 1987, Mr Teo had another idea – he believed busy Singaporeans would appreciate a faster option for getting their cup of coffee in the morning. Instead of measuring instant coffee, creamer and sugar separately into a mug, why not combine all three in one handy sachet?

However, the idea didn’t take off and sales for the new Super Group were slow.

Undeterred, Teo and his wife Te Lay Hoon realised they could adapt the ingredient ratios to suit the Singaporean palate and tested their concoctions on family and friends. With some fine-tuning and heavy marketing this perseverance paid off and second year sales of their 20-gram Super 3-in-1 CoffeeMix sachets reached almost S$3m.

Malaysia, Thailand and Myanmar

Once Singaporeans were hooked it was time to make their mark further afield. Teo realised that his coffee-mix ratios could be further tuned to suit different palates across South East Asia.

However, this took time and patience. With barely any retail “chains” and a plethora of “Mom-and-Pop” (small, family-owned, independent) stores, shops had to be approached individually and shopkeepers persuaded to sell their product.

Tailoring sales

Another factor was price. In a country like Myanmar where the average daily wage is about $2 per day, coffee is an unaffordable luxury for many.

Super tackled this by selling its Coffeemix in Myanmar, the Philippines and Thailand in perforated strips. This way single sachets could be torn off and sold for a more manageable 10 cents apiece from shops, pushcarts and motorcycles and helps to explain Super’s rapid expansion across these relatively untapped markets.

But did you know…

  1. In 1993, a second-hand car-parts dealer from Myanmar was on a working trip to Singapore. After discovering Super CoffeeMix in the supermarket,      and enjoying the taste he foresaw it being a hit in Myanmar – and called into Super’s office to ask for 50 cartons to import. However, after being advised to “buy them from NTUC (Fairprice)” by Super’s sales manager he headed out of the door. Fortunately, Teo had observed this exchange and raced after him – and the two were soon working out ways they could introduce Super Coffeemix to the Myanmar market. Today, Myanmar is Super’s second-biggest market, selling about 650m sachets of 3-in-1 coffee mixes to the country annually – and is the country’s number-one instant coffee retailer.
  2. David Teo appears at position 37 in Forbes’ 2013 listing of Singapore’s 50 Richest – reckoned to be worth a cool $505m.
  3. Coffee arrived in Singapore and Malaysia in the 1800s via British Colonialists. Locals proceeded to adapt the process to suit their tastes – creating the thick and sweet versions of “kopi” we know today. Coffee is still one of the most traded commodities in the world today.
  4. Super Group is the exclusive manufacturer of Pringles potato crisps outside the USA, having cut a deal with its parent company Procter & Gamble back in 2004.
  5. David Teo is an expert chef and can whip up anything from char kway teow to lobster thermidor.

Super Group continued to expand and added many other products to its repertoire. Today, it produces more than 300, 3-in-1 mixes for coffees, teas, as well instant cereals, rice, oats, chocolate and even cup noodles at its 15 factories throughout Asia.

In addition, it makes non-dairy creamers and other food ingredients in bulk for ice cream makers and bottled drink companies – which have all helped it to grow from a humble coffee mix producer into a S$2-billion food processor.

Ten-bagger

Indeed, Super Group has gone from strength to strength and has earned itself “ten-bagger” status – meaning the value of its stock has increased ten-fold in four years.

Advertising

Super also believes strongly in advertising – spending a generous 10% of its revenue annually on promotion in an effort to build its brand in consumers’ minds, as well as recently sponsoring Myanmar’s largest film awards ceremony in a bid to appeal to younger customers.

This has certainly had one positive outcome – Super Group stands at position 40 in the 2013 ranking of Singapore’s most-recognized brands.

Future Plans

With business in China growing rapidly, the company is currently setting up a plant in Mongolia and has its sights set on India.

David Teo’s biggest headache is no doubt deciding who will take over his position when he retires.

While he is in the fortunate position of having three, eminently capable children already working in the family firm, none have any sense of entitlement, knowing that the “throne will not be passed down on the basis of who’s closest to the chairman but who is most capable”.

As for the future, who knows – by producing its own ingredients, benefitting from such a strong network in countries such as Myanmar, as well as the huge potential to increase its presence in countries such as China, Singapore’s Super Group could be well on the way of achieving David Teo’s goal of being Asia’s answer to Nestle.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.

Motley Fool Singapore contributor Alison Hunt doesn’t own shares in any companies mentioned.