Processed Food To Malaysia

In 2008, Malaysia has an overall growth in dried, chilled and frozen processed food. Dried processed food value sales grew by eight per cent to reach RM2.2 billion, chilled processed food value sales grew by four per cent to reach RM 243 million and frozen processed food value grow by five per cent to reach RM463 million.

The Malaysian food processing industry is fragmented and largely dominated by small to medium enterprises, many of which are family-owned. There are a small percentage of large companies such as Yeo Hiap Seng, Nestle and F&N.

Although exports have improved greatly in recent years, Malaysia remains a net importer of processed food. The key problems faced by the industry include shortage of raw materials, lack of technology and limited research and development.

Urbanisation and the concentration of wealth in cities, combined with an increasingly ‘Westernised’ society have changed consumer behaviour and desires. Consumers are now more discreet in their spending and will shop around for ‘bargain’ buys and cheaper alternatives.

The Malaysian packaged food industry has also become increasingly competitive with more manufacturers embarking on aggressive marketing activities from television advertisements to in-store promotions. In addition, the presence of imported products from neighbouring South East Asian countries also improved.

Growing urbanisation has also altered consumers’ taste and lifestyle, which have become more open to new innovative products. This is because urbanites have greater exposure to various types of packaged foods and they are more willing to spend money than the rural populace.

Malaysia’s current population is 26.8 million and comprises of Malays (66.1 per cent), Chinese (25.3 per cent), Indians (7.4 per cent) and others (1.2 per cent). The distinction between these groups needs to be appreciated in order to understand the difference in eating preferences of each group. Generally, Malaysians tend to enjoy sweets and spicy foods.

Racial composition will also change with the pre-eminence of Malays (who are Muslims) from just over 50 per cent in 1980 to around 66 per cent of the total population. This is important, as food consumed by Muslims has to be halal (permitted under the Islamic Law).

Malaysia also has a relatively young population with 33.1 per cent of the population being under 14 years of age and 42 per cent between 15–39 years old (Third Outline Perspective Plan). This sector of the population will have significant impact upon the market for consumer food products due to changes in perception:

• Pre-prepared convenience meals or frozen food products may not be deemed to be unhealthy as perceived by most of the older generation.
• Changes in taste, eg. having cereal for breakfast in replacement of bread or other traditional cakes.

Fresh produce food is still preferred but purchase of frozen and chilled processed food has increased with economy growth. Increased ownership of microwave ovens and refrigerators has led to an increase in consumption of pre-prepared convenience meals and frozen food products.

Growing affluence and the increase of women in workforce have contributed to the frequency of dining out. Dine-out options available range from cheap roadside food stalls to exclusive restaurants.

The market for most of the processed foods in Malaysia is at the mature phase, making it difficult to achieve high sales growth. In pushing for higher sales growth, companies try to take away competitors’ share and by launching new products.

Opportunities

The key opportunities in the Malaysian processed food industry include:

• Flour based products such as pasta, biscuits, pre-mixes, frozen pastries and chocolate confectionery
• Cereal-based products such as breakfast cereals, muesli and rolled oats
• Pure fruit juices, orange juice concentrates, frozen vegetables, edible nuts and canned fruit
• Condiments, seasoning and sauces
• Nutritional snacks such as fruit rolls and yoghurt bars
• Health foods and bars
• Halal-processed meat such as corned beef

Competitive environment

The 1990s saw the entry of major international retailers and there was tremendous growth in this sector. International retailers such as Carrefour, Dairy Farm International (consists of Cold Storage and Giant outlets) Tesco and Jusco dominate the retail market. Peninsula Malaysia currently has about 400 supermarkets.