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What Is Super Group Doing To Drive Growth?

This week, my colleagues and I at The Motley Fool Singapore got a chance to tour Super Group’s (SGX: S10) factory in Malaysia. It was a fruitful trip as I managed to learn something new about Super Group’s business in relation to the competitive advantages that the company has.

In addition, I also learnt about the new areas of growth that are currently in the making in Super Group’s chamber. Here are three of them:

1. Tea

Super Group has been eyeing the tea market for a few years now. In fact, the company is looking to launch a number of tea products very soon.

Asia, which is where most of Super Group’s revenue is derived from, is still predominantly a tea-drinking culture. For instance, China and India, two of the largest consumer markets in Asia, have had very long histories with tea.

If Super Group’s tea initiatives prove to be successful, it might be the company’s next big engine for growth. However, investors should also bear in mind that the bigger the market, the more competition there would be.

In China, for instance, the instant tea market is currently dominated by Tingyi and Uni-President China, two of the largest food & beverage companies in the country. To give some perspective on the scale of Tingyi and Uni-President China in relation to Super Group, check out the table below which showcases the three companies’ annual sales in their respective beverage segments.

Company

Annual beverage sales for last completed financial year

Tingyi

S$7.91 billion

Uni-President China

S$1.63 billion

Super Group*

S$365 million

*Branded consumer product sales for Super Group

Source: S&P Capital IQ; Company filings

2. Consistent launch of new products

According to Super Group’s Investor Relations Manager, Ms. Candy Chng, the company tries to launch at least one new product and five sub-products a year. That’s one new product every 2 months on average. With so many products in its pipeline, the company is not short on new business ideas.

3. New joint-venture business model

Super Group has also been trying to expand geographically using a joint-venture model. The company has successfully implemented strong JVs in the Philippines where it is partnering with the conglomerate, San Miguel Corporation. The partnership has worked out well so far: From a standing start, it has managed to push Super Group into becoming the fourth largest coffee supplier in the country.

Foolish Summary

All told, Super Group has growth engines that cater to an expansion in its product line as well as geographical reach. Although there are bound to be challenges and perhaps even some failures along the way, the first step to success is to have the willingness to try. In light of that, it’s perhaps heartening to know that Super Group has never been a company that is afraid to try.

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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 Stanley Lim doesn’t own shares in any companies mentioned.