Dairy International Holdings Ltd Shares 6 Important Milestones for the First-Half Of 2016

Dairy Farm International Holdings Ltd  (SGX: D01) released its results for the first-half of 2016 just last week.

During the earnings briefing, the company’s chief executive, Graham Allan, shared six important milestones that Dairy Farm had achieved in the first-half of the year.

As a brief background, the company is a retailer with around 6,500 outlets across Asia. It has four main business segments: Food, Health and Beauty, Home Furnishings, and Restaurants.

Here are the milestones:

1. Famous for Fresh 

2. First Singapore and then, Asia 

3. Going Online 

For the first three milestones, head here.

4. Increasing Corporate Brands

Dairy Farm is also making an effort to increase the amount of its own corporate brands that it has on its shelves. Early last year, Dairy Farm said that its private label brands are “well below 10%” of its revenue in the Food and Health and Beauty segments.

2016-08-02 Dairy Farm Corporate Brand
Source: Dairy Farm’s earnings presentation

In the latest earnings briefing and with reference to the slide above, Allan talked about how Dairy Farm is approaching corporate brands for the Food segment:

“On corporate brands, we have made some major advancements in both grocery and health and beauty. For groceries first, we have introduced in this half 532 new stock keeping units (SKU) and seven new brands, including a new Australian wine brand called Red Peak to complement the French Cellars brand that we shared with you previously that continues to do really well.

We always have an angle associated with our corporate brand. We have always got a reason for being, and a reason to create some connection with the consumers.

So, this kind of philosophy underpins everything that we are doing with our private label activity. We want to bring a real consumer benefit to consumers and create a point of difference versus existing products that are available in the market.”

2016-08-03 Dairy Farm Corporate Brand 2
Source: Dairy Farm’s earnings presentation

Allan also touched on corporate brands for the Health and Beauty segment. The approach here is somewhat different from the Food segment:

“We are doing similar things on Health and Beauty.

In this half, we have launched 648 new SKUs in Health and Beauty. A number of new brands, these brands are being used across our different markets in Asia. We are essentially leveraging the scale of Dairy Farm to provide this brands to all of our health and beauty businesses in Asia.

You can see on the slide [referring to the one just above], the core Mannings and Guardian brand which are, generally speaking, the entry level products. We have a number of different brands, all designed to target different consumer groups. As you move from left to right, there is increasing degrees of sophistication associated with the brands.”

5. Ready to Eat (RTE) convenience

2016-08-02 Dairy Farm Ready to Eat
Source: Dairy Farm’s earnings presentation

Convenience store staples such as tobacco and media products are on the decline. Dairy Farm is introducing ready-to-eat meals to counter this. Allan gave an update:

“RTE (ready-to-eat), I mentioned that this is a core part of our plan to build our convenience store business, to increase our penetration of our ready-to-eat product. Our participation, in this half, is up 100 basis points versus the same half last year.

We have lots of different products categorized around these different dimensions [referring to the slide above]. So, some international products, we have even introduced some Japanese private label products into our business in Singapore.

We’ve got healthy products for consumers, we’ve got a daily cafe range which includes an upgraded range of sandwiches and salads, and then we had some special promotion activity like the Euro 2016 football promotion.

All of this is working in Hong Kong and Macau, working in Singapore, and actually our higher participation is in our Southern China business in Guangdong where we really see it as a key part of our growth there.”

6. Future growth in restaurant formats

2016-08-02 Dairy Farm Maxim
Source: Dairy Farm’s earnings presentation

Finally, Allan talked about new restaurant formats that Dairy Farm’s associate, Maxim, is bringing in. He said:

“In terms of restaurants, the Maxims business is continuing to bring in new innovation into the market. This half, they completed an acquisition of a concept called COVA. It’s like a European patisserie and coffee concept and that’s doing well and being integrated into Maxim’s portfolio.

Maxim also has the license to the Cheesecake Factory and have opened the first Cheesecake Factory just outside the new Disneyworld in Shanghai. Just in the Disneytown immediately outside. That is is a very famous and well-performing brand in the US and we have high hopes for it in Hong Kong and China where Maxims has the right.”

The above six efforts highlight how Dairy Farm plans to position itself for the future. We will have to check in six months from now and beyond to have a feel of their progress.

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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 Chin Hui Leong owns shares in Dairy Farm International Holdings.