Global Chinese-sauce firm Lee Kum Kee to expand in S-E Asia

Singapore

AFTER more than a century climbing to and holding its position as one of the largest global producers of Chinese sauces, Hong-Kong-based company Lee Kum Kee is set to enter a new phase of transformation with its expansion in South-east Asia.

In an exclusive interview with The Business Times, May Lim, managing director of Lee Kum Kee South-east Asia, Middle East, Africa and India, revealed that the firm has plans to strengthen its foothold in South-east Asia - one of its fastest growing markets - by appealing to local palates.

"Solely from the South-east Asian perspective, I feel that we are at a transition," said Ms Lim, explaining that the firm had first entered South-east Asia via markets such as Singapore and Malaysia, which had a strong Chinese consumer base.

"So the next phase for us is to tap mainstream consumers who are not Chinese. So think Filipinos, think Indonesians, think about the Thai and Vietnamese. They accept Chinese food to a certain degree, but it's not their everyday food. So for us to achieve long-term growth and success in this region, we need to put efforts into addressing this, while not forgetting our Chinese roots," she said. "Our sauces need to be Asian, rather than Chinese."

Lee Kum Kee started selling oyster sauce in 1888 after its founder accidentally chanced upon its recipe. It currently markets over 200 sauces to more than 100 countries, and used to count the United States as its biggest market during the 1970s before China overtook it. Ms Lim declined to reveal the market size and growth targets for South-east Asia, but said that it has seen a "strong double-digit sales growth" year on year from 2011 to 2016.

For its South-east Asia expansion, Lee Kum Kee intends to focus on developing countries where its sauces are already sold, and increase its market share.

Ms Lim said the firm is working on developing new sauces that cater to local tastes. "For instance, we might be able to come up with a sauce for people to make adobo (a popular dish in the Philippines)."

Last year, the company set up an R&D base in Malaysia, shifting its South-east Asia R&D headquarters from Hong Kong. It has also embarked on varying its product packaging to suit the different income levels of consumers in developing countries. "For example, in the Philippines, we have always been selling big bottles of Lee Kum Kee oyster sauce. Then we found that we were only capturing the top end of the consumer market," said Ms Lim. To cater to consumers with less income, the company launched smaller 145g bottles of Panda Oyster Sauce in the Philippines and Indonesia, and 30g sachets of Panda Oyster Sauce in Vietnam.

Introducing the taste of Lee Kum Kee sauces to these consumers early will help cultivate their preference for it - a critical factor as the country develops and they become more affluent, shared Ms Lim.

And though Lee Kum Kee is a heritage brand, appealing to the needs of the younger generation is a priority for the company.

"In the last five to 10 years, we've seen how consumers change. The younger generation doesn't always know how to cook from scratch," said Ms Lim. The firm has rolled out "menu-oriented sauces" such as its best-selling pre-mixed cod fillet sauce; in the next three months, it will launch sauces targeted at university students and young working adults.

Meanwhile, digital marketing has helped increase the brand's visibility among younger people. Lee Kum Kee's two to three-minute cooking tutorials on YouTube can garner more than 50,000 hits.

"Globally, the population is ageing. But in South-east Asia, we remain relatively young," Ms Lim added. She also revealed that Lee Kum Kee entered the South-east Asian market in the 1980s through the food services industry. "In fact, most of our business in many parts of the world is driven by food service," she said.

In Singapore, however, 70 per cent of the business comes from household consumers, while 30 per cent stems from supplying to food providers. Ms Lim explained that the current product range is not sufficient to meet Singapore's dynamic food service scene.

"Singapore is becoming a food hub for South-east Asia. So our first burning desire is to introduce more products that meet the chefs' requirements," she said, referring to both convenience and subtlety in taste. Its most recent offering is the Yellow Bean Sauce, available to restaurants in Singapore but not yet for retail.

Said Ms Lim: "South-east Asia is one of our key regions, and there's a lot of investment in terms of human resources, marketing, sales and capabilities - all part of the plan. South-east Asia is very much in the spotlight for Lee Kum Kee."

And while Lee Kum Kee is charging ahead with expansion, there are currently no plans for the 129-year-old family-owned business to list on the stock market. "I think they are very happy to stay private," said Ms Lim.