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5 Things You Should Know About Etika International

EtikaWhile Singapore’s food is much lauded internationally, little is said about its traditional drinks. But while some may take some getting used to (Durian smoothie, anyone?) there can be few who would turn down a refreshing Barley drink, Chrysanthemum tea or sour sop juice.

Teh Tarik and Kopi

Singapore has a number of traditional hot beverages, too – simply watching an expert make a cup of hot, frothy Teh Tarik (which literally means “pulled tea” in Malay) by skilfully pouring it back and forth between two vessels from a height can be entertainment in itself – and the hot, sweet local “kopi” (coffee) available from any hawker centre can be quite addictive.

But one crucial ingredient that Singapore’s hot drink industry would struggle without are the ubiquitous tinned condensed and evaporated milks – which are produced by companies such as Etika International Holdings Limited (SGX: 5FR).

Datuk Kamal YP Tan and his brothers Datuk Jaya JB Tan and Tajuddin JH Tan founded Etika back in 1997, following the take-over of their family’s stockbroking company “Pengkalen”. 

The brothers decided to invest into a casino venture in Australia for quick returns. However, after being introduced to some of beverage manufacturer F&N’s (SGX: F99) former top executives, they also started to look into something completely different – condensed milk.

Milk  

Having run the condensed milk operations of F&N, Mah Weng Choong, Khor Sin Kok and Ronnie Kwong were looking for investors to start a condensed milk factory.

The Tan brothers joined them and the new company, originally known as “Clarity Valley Sdn Bhd” (soon to be renamed Etika) was formed to manufacture and produce milk products in Malaysia – predominantly condensed and evaporated milk, as well as dairy creamers and instant coffee and tea.

Land was bought in Meru, Malaysia and the new factory was built from scratch. Thanks to the extensive product knowledge and market experience the company became profitable within two years of the factory being built and was soon one of the condensed milk market’s biggest players.

Mamak Stalls  

With market leaders Nestle and F&N saturating the market, Etika chose a different tactic, using 1,000 small distributors to help it target some of Malaysia’s biggest condensed milk consumers – its traditional mamak (Tamil Muslim food and drink) stalls. With little or no advertising required Etika could keep costs low and undercut the big players – and had soon dominated the market.

But did you know…

  1. Condensed milk is Etika’s money-spinner, with its dairy division contributing 71% to the group’s total revenue in 2010
  2. In 2000, Etika Dairies and the Association of Muslim Restaurants Malaysia won the “Largest Teh Tarik Cup in Malaysia” award, and were listed in the Malaysia Book of Records.
  3. The Tan brothers’ father, Datuk Mohd Ali S Tan was a prominent timber merchant and banker in Sabah, Malaysia.
  4. Dairy Champ co-packs the condensed milk sold in Giant hypermarkets under the Giant brand.
  5. While the Tan brothers lost their stockbroking firm Pengkalen to a hostile takeover by the MUI Group in 1996, some might say this was fortuitous. The Asian Financial Crisis proceeded to hit one year later – and Pengkalen’s new owners watched the stockbroking industry go into a tailspin.

Today, Etika International as an investment holding company is a food and beverage (F&B) group that continues to manufacture and distributes milk products. Its brand names include Dairy Champ, Goodday, Mr Farmer and Sky Fresh.

However, the company doesn’t just deal with all things dairy. It’s Trading and Food Division imports and distributes frozen/chilled beef products, seafood, vegetables and bakery products. It also manufactures European bread under the brand names Daily Fresh and Family.

Etika’s Nutrition Division produces the Air Champ energy drinks and Power Champ isotonic drinks as well as drinks under the Polygold brand name.

What’s more, the company also produces the popular instant noodle brand Salam mie and operates the franchise for the fried chicken fast food chain Texas Chicken restaurants throughout Malaysia and Brunei.

Etika continues to operate in Malaysia, South East Asia, Africa and internationally.