If you are looking at the consumer staples space in Singapore, you might be limited to only a few names. Particularly, if you are looking for such coffee-related companies in Singapore, it seems that you might only have a choice between the fast growing Super Group (SGX: S10) and the less familiar Food Empire (SGX: F03).
Introducing Super Group
Super Group is well-known for its Super-branded instant coffee. The company also owns other brands of instant beverage products and altogether, Super Group has a strong presence in Thailand, Malaysia and Singapore.
The company also has a food ingredients business which has strong capabilities in research and development. In addition, Super Group has multiple opportunities for growth and they are described in detail by my colleague, Sudhan P.
Next up, Food Empire
Meanwhile, Food Empire had started out as an owner and distributor of instant coffee brands in Russia. The company got listed in Singapore’s share market in 2000 and actually managed to grow both its revenue and profit by the mid-to-high-teens for the greater part of the decade prior to the Global Financial Crisis of 2008-09.
Since its early days in Russia, Food Empire has expanded both its product range and markets. It is now distributing instant beverages, frozen convenience food and other snacks to other countries in Eastern Europe and Central Asia; the company’s main market continues to be Russia though. Interestingly, Food Empire’s market share for the instant coffee space in Russia is actually larger than global giant Nestle. Ukraine and Kazakhstan are two other countries in which Food Empire has a strong presence.
It’s a marathon, not a sprint
Although Food Empire has not managed to grow as fast as Super (between 2000 and 2007, profits at the latter had grown at a compounded annual rate of 46%), a fellow investor in the former explained to me that Food Empire plans to walk the distance while Super Group is actually running; the problem with running though, is you can easily trip and hurt yourself.
Difficulties at both
Despite one being a walker while the other’s a sprinter, both companies are faced with challenges currently. Super Group has been struggling to maintain its growth rate and had suffered a rise in costs recently. Food Empire meanwhile is faced with twin terrors: 1) a crisis in Ukraine and Russia due to the ongoing conflict between the two countries; and 2) a falling Russian currency (the ruble) that has caused the company to suffer losses.
For investors who are choosing between the two, it’s important to realize this: Although both companies are in the same industry, they actually have very different characteristics and market-exposure. It thus all depends on each investor’s personal preference.
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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 owns Food Empire.