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Opportunities in Increasing the Export of Food Products Based on the Consumer Preferences in Middle East 15 August 2008 Pr Dr Mad Nasir Shamsuddin Prof.

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Presentation on theme: "Opportunities in Increasing the Export of Food Products Based on the Consumer Preferences in Middle East 15 August 2008 Pr Dr Mad Nasir Shamsuddin Prof."— Presentation transcript:

1 Opportunities in Increasing the Export of Food Products Based on the Consumer Preferences in Middle East 15 August 2008 Pr Dr Mad Nasir Shamsuddin Prof Dr Jinap Selamat Dr Roselina Karim Prof Madya Dr Jamil Bojei Dr Rosli Saleh Dr Tan Chin Ping 1 MAHA 2008

2 Business Environment 2

3 Market Size and Growth of The Malaysian Processed Food Exports to Middle East, 2002 –

4 4 Strength 1.Malaysia has a good image as a modern Islamic country. 2.Malaysian Halal Certification is perceived as more valid compared to non-Muslim countries. 3.Malaysian products are perceived as safe and better quality vis-à-vis other ASEAN countries. 4.Labour productivity is relatively high compared to other ASEAN countries. SWOT ANALYSIS

5 5 Weakness 1.Problems faced dealing with Malaysian exporters – lack of professionalism, such as lack of follow-up, seriousness, lack of correspondence, and very slow in response. Very short-term perspective. SMI entrepreneurs lack legal/social/cultural environment in the importing countries. 2.No consistent supply. 3.Malaysia is weak in understanding and adapting local flavor. 4.Sea transportation is not efficient 5.Branding is not well established. Too many brands. Each entrepreneur markets its own brand. Do not have branding which is unique for the country. 6.Although packaging is good, some products have the choices of color which are not attractive. 7.Packaging does not guarantee long shelf-life. SWOT ANALYSIS

6 6 Weakness (cont..) 8.Cost of production is high. Analysis from the survey indicates that the prices of products from Thailand are below the Malaysian cost of production. In general, the Malaysian products are about 20% more expensive. 9.Malaysian food products. 10.No strategic alliances like importers or distributors. No private agents to market the products due to the lack of entrepreneurial skills. 11.Entrepreneurs do not have enough capital to effectively export their products. 12.Not able to identify consumer needs in terms of taste and preferences. 13.Almost all the local processed product type and categories do not follow market labeling requirements. 14.Some of the ingredient list do not specify the percentage the ingredients, nutritional facts, serving size, customer service information. SWOT ANALYSIS

7 Opportunities 1.60% of the Saudis consumers are youth (< 35 years) and thus indicating a growing consumer markets and willing to try new products. 2.Saudis consumers have purchasing power. 3.GCC is a growing region. Average GCC (8%); Saudi Arabia (10%). 4.Rising costs of production in EU & USA. 5.Tourism industry in Malaysia contributes to developing awareness among Arab consumers who have been to Malaysia. 6.Strong government supports for SME development in food processing 7.Strong government support in halal products and halal-hub centre FAMA-UPM Program 4: Project 27 SWOT Analysis

8 Threats 1.Stiff Competition of the Malaysian food products from Thailand, Indonesia and the Philippines. The prices of the Malaysian products are generally higher due to the higher production costs. 2.Subsidized tariffs for air transportation by Thailand. 3.Chinese products invading the markets, translated into cheaper prices. 4.With declining USD, the products from Malaysia are more expensive. 5.Weak R&D that match SME requirements FAMA-UPM Program 4: Project 28 SWOT Analysis

9 General Electric Model 9

10 Ranking Based on Overall Acceptability of Products by Respondents in the ME NoProduct NameCategoryOverall AcceptabilityWillingness to Buy 1Sri KayaJam and Spread Pineapple JamJam and Spread Starfruit JamJam and Spread Almond and Ginger CookiesCookies Filled ChocolateChocolate Black Pepper Tapioca ChipsSnack Pink Guava JuiceBeverage Roselle JamJam and Spread CoffeeBeverage Sesame BallSnack Almond and Tiramisu ChocolateChocolate Butter CookiesCookies Carambola JuiceBeverage Tamarind JuiceBeverage Sos Cili PadiSauce

11 11 Ranking Based on Overall Acceptability of Products by Respondents in The ME

12 Analysis of Acceptance FAMA-UPM Program 4: Project 212

13 Middle East 13 Beverages Snacks

14 Middle East FAMA-UPM Program 4: Project 214 DMG Butter Cookies Norainis Ginger and Almond Benns Almond Tiramisu Dazzle Filled Cookies Chocolates

15 Middle East FAMA-UPM Program 4: Project 215 FAMA SerikayaFAMA Jam FAMA Chilli sauce Sauces Jam & Spreads

16 FAMA-UPM Program 4: Project 216 Demographic – Consumers Gender

17 FAMA-UPM Program 4: Project 217 Demographic – Age of Consumers

18 Demographic – Country of Origin FAMA-UPM Program 4: Project 218

19 FAMA-UPM Program 4: Project 219 Demographic – Occupation

20 Consumer Acceptance - Snacks *Overall Acceptability denoted by appearance, aroma – Smell,flavor – Sweetness, texture – Body or viscosity and aftertaste. (5= Like Extremely and 1 = Dislike Extremely) ** Overall Packaging denoted by packaging design, color, size of Pack and Overall (5=acceptable and 1=not acceptable)

21 Consumer Acceptance - Snacks

22 Consumer Acceptance - Beverages *Overall Acceptability denoted by appearance, aroma – Smell,flavor – Sweetness, texture – Body or viscosity and aftertaste. (5= Like Extremely and 1 = Dislike Extremely) ** Overall Packaging denoted by packaging design, color, size of Pack and Overall (5=acceptable and 1=not acceptable)

23 Consumer Acceptance - Beverages

24

25 Consumer Acceptance - Cookies *Overall Acceptability denoted by appearance, aroma – Smell,flavor – Sweetness, texture – Body or viscosity and aftertaste. (5= Like Extremely and 1 = Dislike Extremely) ** Overall Packaging denoted by packaging design, color, size of Pack and Overall (5=acceptable and 1=not acceptable)

26 Consumer Acceptance - Cookies

27 Consumer Acceptance - Chocolate *Overall Acceptability denoted by appearance, aroma – Smell,flavor – Sweetness, texture – Body or viscosity and aftertaste. (5= Like Extremely and 1 = Dislike Extremely) ** Overall Packaging denoted by packaging design, color, size of Pack and Overall (5=acceptable and 1=not acceptable)

28 Consumer Acceptance - Chocolate

29 Consumer Acceptance – Jam / Spread *Overall Acceptability denoted by appearance, aroma – Smell,flavor – Sweetness, texture – Body or viscosity and aftertaste. (5= Like Extremely and 1 = Dislike Extremely) ** Overall Packaging denoted by packaging design, color, size of Pack and Overall (5=acceptable and 1=not acceptable)

30 Consumer Acceptance –Jam/Spread

31

32 Consumer Acceptance – Sauce *Overall Acceptability denoted by appearance, aroma – Smell,flavor – Sweetness, texture – Body or viscosity and aftertaste. (5= Like Extremely and 1 = Dislike Extremely) ** Overall Packaging denoted by packaging design, color, size of Pack and Overall (5=acceptable and 1=not acceptable)

33 Consumer Acceptance – Sauce

34 Preference Test in Jeddah FAMA-UPM Program 4: Project 234 Product CategoryType of product Local brandCompetitors brand Jam Pineapple jamAgroMasHalwani Bros Beverage CoffeeAnggerik 3-in-1Nescafe 3-in-1 Cookies Butter cookiesDMG Royale Danish Americana Cookies Ginger & almond cookies NorainisJules Destrooper

35 Almond Cookies Coffee 3 in 1 Vs Preference Test in Jeddah (cont..)

36 FAMA-UPM Program 4: Project 236 Agromas VS Halwani Bros Pineapple Jam DMG Royale Danish VS Americana Butter Cookies Preference Test in Jeddah (cont..)

37 ProductCategory No. of respondentsJamBeverageCookies Pineapple jam Coffee(3-in-1)Butter cookiesGinger & almond cookies Prefer Malaysian product 26 AgroMas 34 Anggerik 3-in-1 7 DMG Royale Danish 10 Norainis Prefer competitors product 34 Halwani Bros 27 Nescafe 3-in-1 36 Americana 16 Jules Destrooper Total no. of respondents Min. no. to show sig. difference at P< Notes:No significant difference Significant difference No significant difference Paired Comparison Test for Preference of Malaysian Products Versus Competitors

38 Techno-Quality-Economic Matrix for Export Ready and Product Potential by Product Category FAMA-UPM Program 4: Project 238

39 FAMA-UPM Program 4: Project 239 Techno-Quality-Economic Matrix for Export Ready and Product Potential by Product

40 40 ME – Ready Bumi Hijau Black Pepper Jalen Chilli Black Pepper & Spicy Flavoured FAMA Nani Fried SesameKart Food Steamed Bun Muslim Best Salsa Sauce ME - Potential

41 Way Forward

42 NoStrategyAction PlanRemarks 1.Identify relevant market segment 1.Introduce food products that are more appealing to younger generation (e.g. trendy packaging) 2.Target the promotion to younger generation (e.g. associated with sport activities, school children) 1.The younger generation tends to be more open & willing to try new products 2.Promote products which are produced by SMEs that have sufficient capacity to meet importer demand 1.Encourage SMEs to collaborate, form a consortium to achieve the size needed to meet importers demand. 1.Most SMEs are under capacity to venture into export markets 42 Way Forward

43 NoStrategyAction PlanRemarks 3.Improve the professionalism of the Malaysian entrepreneurs 1.Training in Entrepreneurship Development especially in export market promotion, ethics, and legal-cultural environment 1.Lack of professionalism among Malaysian exporters (communication and promises) 4.Develop structured human resource in terms of functionality 1.Restructure human resource to have staff that are competent (e.g. export activities should undertake by export manager, quality control personnel to ensure consistent product quality) 1.Most SMEs do not have structured functions in the human resource set-up 43 Way Forward

44 NoStrategyAction PlanRemarks 5.Upgrade processing technology 1.Upgrade the processing technology of SMEs through government incentive schemes (e.g. soft loan, tax deduction, technical support) 1.About 50 % of SMEs surveyed still use manual or semi-automated processing technology. 2.SMEs must utilize relevant processing technology in order to be competitive. 6.Develop a systematic raw materials procurement system 1.Establish contract farming for raw materials supply 2.Train SMEs entrepreneurs in price forecasting 1.SMEs are facing inconsistent supply and quality of raw materials as well as fluctuation of in the price 44 Way Forward

45 NoStrategyAction PlanRemarks 7.Identify critical success factors of companies that are successful in exporting food products 1.Training in Entrepreneurship Development especially in export market promotion, ethics, and legal-cultural environment 1.Lack of professionalism among Malaysian exporters (communication and promises) 8.Promote strategic alliance between SMEs and LEs 1.Promote contract manufacturing between SMEs and Les 2.Promote joint venture to reduce cost 3.Joint promotion between SMEs and distributors in importing countries 1.In Thailand, food manufacturing SMEs aligned themselves with large Enterprises (LE) for exports market. 45 Way Forward

46 NoStrategyAction PlanRemarks 9.Formulate Malaysian food branding 1.Develop a unified brand for all Malaysian food products produced by new SMEs players 1.Food products presently marketed by the individual brands. Global brand helps to reduce the advertisement and promotion cost. 10.Identify a reliable private distribution agent for marketing purposes 1.MATRADE must develop database on marketing agents 2.MATRADE should develop criteria in selecting reliable export agent 1.Promotion by agents and product distribution was identified as the most serious marketing problem. 46 Way Forward

47 NoStrategyAction PlanRemarks 11.Position SMEs food products as premium products 1.Enhanced joint promotional effort by manufacturers and distributors to support product positioning 1.In general the production costs of Malaysian food products is 20 % higher than Thailand and Indonesia 12.Establish food products Distribution Centre 1.Establish a private trade representative in Dubai (as a gateway) by a consortium of SMEs 1.Need to establish a Distribution Center - acts as a distribution agent. 2.MATRADE needs to identify reliable distributors/importers as agents. 3.Strategic partnership as a pushing factor in marketing the products. 47 Way Forward

48 48 Techno-Quality-Economic Matrix for Export Ready and Product Potential by Product

49 Opportunities (O) More preferable than established brand Next popular beverage in the after tea Strength (S) Overall acceptability score is high Treats (T) Compete with the established product in the market Weakness (W) Lack of coffee flavour and aroma Lack of bitterness (Jeddah) Low in viscosity (thin mouthfeel) FAMA-UPM Program 4: Project 249 Situational Analysis - Coffee

50 Strategy Product Improvement (flavor, aroma, viscosity) Improve product image to be at par with the established brand. (Incorporate health element ingredient such as Tongkat Ali and Conduct in-house promotion in foreign countries) Execute aggressive advertising and promotion (Participate in trade exhibition and Assign foreign agent for promotion) FAMA-UPM Program 4: Project 250 Action Plan - Coffee

51 Opportunities (O) No similar product in the market Highly acceptable by consumers Strength (S) Unique in taste Processing and packaging technology is readily available Brand new product The product is highly accepted Treats (T) Existence of indirect competitors Weakness (W) Unknown shelf life Critical food safety issue Lack of HACCP /ISO22000 Certification Lack of coconut flavour Lack of spreadability Inappropriate labeling design- picture of coconut on the label is disproportionate with picture of other ingredients 51 Situational Analysis – Seri Kaya

52 Strategy Implement product improvement (shelf life) Implement product improvement (flavor, spreadability) Improvement in product labeling Develop food safety management system (establish effort to obtain the necessary certification) Develop preemptive strategy Apply for registered trademark Introduce product promotion FAMA-UPM Program 4: Project 252 Action Plan – Seri Kaya

53 Opportunities (O) Preference of product equivalent to existing product. Product is highly accepted (in term overall acceptability and sensory attributes) Strength (S) Processing and packaging technology is readily available Availability of raw material The product is highly accepted Treats (T) Compete with similar product in the market Weakness (W) Lack of sourness Product is too sweet 53 Situational Analysis – Pineapple Jam

54 Strategy Implement product improvement (flavor) - optimum sourness and sweetness Execute aggressive advertising and promotion (participate in trade exhibition, conduct in-house promotion in foreign countries and assign foreign agent for promotion) Implement product differentiation Increase production for export FAMA-UPM Program 4: Project 254 Action Plan – Pineapple Jam

55 Opportunities (O) No similar product in the market Strength (S) Brand new product Highly accepted by consumers in term of sensory attributes Processing and packaging technology is readily available Treats (T) Nil Weakness (W) Consumers are unfamiliar with product Poor product uniformity (sesame seeds separated from the ball during frying) The filling is too sweet Texture is too chewy Fluctuation of quality due to improper cold chain management 55 Situational Analysis – Frozen Sesame Ball

56 Strategy Dough Improvement Widen the selection for the frozen snack in terms of filling Educate consumers on the product usage conduct promotion through a) in store promotion, b) infomercial promotion and c) professional chef cooking TV series or website. Upgrade product safety (develop and implement food safety management system (GMP, ISO 2200, HACCP)) Upgrade knowledge among staff dealing with cold chain management (conduct training in cold chain management) FAMA-UPM Program 4: Project 256 Action Plan – Frozen Sesame Ball

57 Opportunities (O) High market potential Willingness to buy is moderate (4.06 out of 5 scale for black pepper flavor) Strength (S) Sensory attributes of black pepper flavoured tapioca chips is quite acceptable (score out of 7 hedonic scale for black pepper flavor) Products with varieties of flavors Treats (T) Compete with established snacks such as potato chips and extruded products Weakness (W) Poor product quality (e.g.. broken into pieces) Lack of uniformity and consistency in terms of colour and shape. Shorter shelf life – rancidity, loss of crispiness Lack of processing and packaging technology Low quality of the lid opener as the opener easily broken and the strength of the metal lid is weak (easily torn apart). 57 Situational Analysis – Tapioca Chip

58 Strategy Develop promotional program to introduce tapioca chips (conduct promotion through in store promotion and infomercial promotion) Need for product improvement (using reconstituted technology) Upgrade packaging technology (adopt nitrogen-filled packaging technology) Upgrade processing technology (promote automated processing machinery among SMEs) Improvement in product shelf life (up to 2 years) Improvement on product quality (training on handling during transportation) FAMA-UPM Program 4: Project 258 Action Plan – Frozen Sesame Ball


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