Feeding Penang

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From international players to small cottage enterprises, our food manufacturing industry is thriving and getting more diverse.

Penang – food haven par excellence. And it goes without saying that its people are a proud lot, fiercely defensive and boastful of their hybrid cuisines.

And we don’t even mean the street food. Indeed, behind the popular dishes lies a food manufacturing industry that is taken for granted, and that is unknown. It does not only feed Penang’s many hungry mouths and its endless stream of tourists; it supplies and distributes to the world as well – with goodies from seafood and meats, to fruits and herbs.

Whatever Penang does not produce, it imports – either for local use, or for re-export.

Seafood

Surrounded by water and having had a robust aquaculture sector for quite a while mean that Penang has easy access to fresh, local aquatic produce. And it can easily export its excess – by land, by sea and by air. Good connectivity is crucial.

The state’s food industry takes in tens of millions of ringgit in investments – the average investment per project in 2017 reached RM24.2mil. Aquaculture alone raked in another RM811mil the same year.

Penang’s food manufacturing comprises to a large extent, perhaps unsurprisingly, of seafood. And there is one particular player that is rather humble and keeps a low profile despite enjoying an enviable global presence. Even if you have never heard of Pacific West, chances are you have sampled their products before. The company’s wide range of products – over 700 at last count –includes their signature fish fillets, tempura prawns, calamari rings and squid chunks.

A look inside Pacific West's manufacturing plant. Pacific West has very stringent protocols and procedures in place, complying with Global Food Safety Initiative standards.

“Most people don’t realise that we’re Malaysia-based,” says Kylie Saw of Golden Fresh, brand owner of Pacific West.

Golden Fresh’s parent company, Butterworth Iceworks, was founded in 1965 by Saw Eng Chong, Kylie’s grandfather. “After the ice plant came cold storage, then prawn processing; but that soon proved to be a sunset industry. My father came into the picture and he started off Golden Fresh, moving into value-added seafood. Eventually he was introduced to a partner in Australia, and that was how Pacific West was born: it was first registered in Australia and is wholly owned by Golden Fresh as well as this one partner there. It’s a Malaysian-grown brand.”

Over five decades, the company grew from one plant with around 200 workers producing about 1000 tonnes a yearto now four plants with 600 workers producing 12,000-14,000 tonnes a year at their five-acre site. “It’s a huge growth – mostly owing to investments in automation. We have an international corporate chef who heads the product development team of culinary executives and food technologists – all based in this facility. They brainstorm on new and innovative ideas; have regular sessions with the ingredient houses that we work with, and our customers, of course, to gauge the market; as well as do market visits. We also have a processing facility in Myanmar – that specialises in the more labour-intensive items such as our prawn and pastry products.”

The economic ripples generated by the food manufacturing industry are remarkable – packaging and transportation alone causes positive spillover effects on our printing and logistics industries. At the same time, due to the nature of the products, most of the raw ingredients are imported: “We source our seafood from all over – from Alaska, Argentina, New Zealand, Russia, Norway. We don’t use much locally sourced seafood mainly due to the volume we require, the difference in species and as they are mostly farmed, our market generally is in favour of wild caught seafood.

Sustainability is Golden Fresh’s mantra. “We always prioritise well-managed fisheries when sourcing for suppliers and provide them with a supplier code of conduct to adhere to – this does not apply to our seafood alone, but even in the oil we use. We’ve actually now switched to sustainable palm oil and canola; we’re also looking at the Forest Stewardship Council for our packaging materials. In the future we are sure that all these aspects will come together.

Golden Fresh's business development manager, Kylie Saw.

We establish our specifications with the suppliers; bring the raw material, ingredients and packaging in; they go through quality assurance; then off to our processing line to be value-added, frozen, stored; all while being checked regularly for quality control before being shipped out.

We do about 15 outgoing containers and we bring in about 10 incoming containers a week. That’s a lot of movement,” says Kylie.

Golden Fresh exports to an impressive number of regions: North America, Europe, the Middle East, Africa, and Australia and New Zealand. “Each country has its own wants and needs. We have a few offices globally: Australia, UK, France, Singapore and South Africa – where our partners regularly provide us with feedback on the latest product and flavour trends.

People are now moving towards a healthier lifestyle – the feedback we get is that people do not want to eat so much fried stuff. And so, we too are making the shift to lighter coatings, rubs, glazes; we’re looking at a new plant by the end of 2019 and that will no longer have a frying line. We’re potentially looking at an assembly line – whether it’s offering seafood with sauces or pairing it with other proteins and carbohydrates.

Exporting to different regions around the world can be tricky, especially when it comes to maintaining food safety and quality. “We have very stringent protocols and procedures in place. As a minimum, we comply with Global Food Safety Initiative (GFSI) standards,” says Kylie, “and within this year alone we would have had about 20 audits – these are either by government authorities or certification agencies as required by our end customer.

“Nowadays, customers are not just going by the usual standards; they want a say, they want to have their own standards. Each one that comes in has a criteria of their own which we have to abide by if we want the business. This can be very taxing on us in terms of resources and time. It depends on the area of focus – food safety and quality or social and ethical aspects or sometimes, both.”

“While we do what we can to remain competitive, our neighbouring countries have a lot of advantages. For example, China receives tax incentives and rebates when they export, of which the latter were just raised to 16% as of November. It’s a huge leap for us to make in targeting the same customers, especially when our own government is at the same time imposing a lot of costs on us – importing, exporting charges and even export bans on occasion. We are actually the chairman of the Malaysian Frozen Foods Processors Association; we bring the issue up constantly for dialogue. Currently, our only advantage vis-à-vis China is in the lower cost of labour but with the minimum wage increasing year on year alongside rising costs associated with hiring foreign workers, we don’t see this lasting long.

Moving Food

In essence, food distribution entails a complex supply chain stretching from growers, producers and factories to a network of wholesale food distributors and grocery store distribution centres, from which the products are ultimately delivered to store shelves.1 And what is Penang if not a re-exporting hub. That has always been in its DNA, except that now, new innovations are being undertaken, and new value-adds are being achieved – and the market is global, not local and not regional.

CTG's distribution centre at Bukit Minyak.

Fruits

Chop Tong Guan (CTG), founded in 1929, is Malaysia’s leading specialty distributor of fresh fruits. “CTG is a third-generation family business; both my grandfather and father first nurtured it to become a major egg importer and trader. But in the 1970s, local poultry was encouraged by the government, and the business of egg importation started slowing down. My father then decided to change the nature of the business by importing fresh fruits instead. He observed that Malaysians were getting more affluent, and that they wanted a wider selection of imported fruits,” says managing director Koay Swee Aik.

CTG has since evolved to form global partnerships with exclusive cultivars the likes of Zespri Kiwifruit; Sunkist; Envy and Rockit apples; and others. “We assist them to develop special fruit varieties, to work out marketing strategies, promotions and education structures to expand the Malaysian market. Over the last 20 years, we have also become a major fruit supplier for supermarkets, hypermarkets, wholesalers and traditional markets.”

To ensure the quality and freshness of the produce, CTG invests heavily in state-of-the-art infrastructure. It now boasts two cold rooms and distribution centres in Penang and KL which are fully insulated and segregated according to produce variety.

Ozone generators are installed to remove unwanted fungi and bacteria in the coldrooms.

Koay Swee Aik, managing director of Chop Tong Guan at the repacking facility.

Stringent temperature controls are observed in all departments, from inbound, storage and repacking, to outbound. “The fruits must be kept at an optimal temperature. For example, apples at 0°C and citrus fruits at around 5-6°C; and they must be stored at individual compartments to avoid cross-ripening. When different types of fruits are stored together, the natural gas ethylene is produced and this hastens the ripening process, which we do not want. To counteract this, we installed ethylene absorber systems to purify the air, as well as ozone generators to remove unwanted fungi and bacteria.”

CTG’s engine of growth is made possible by its team of technical, marketing, sales and purchasing experts. “The hardware and software – my team – are key in encouraging synergy in all of CTG’s operations. We are always on the lookout for the best harvest; this is why we need good inspectors to track down the best fruits produced worldwide. Our global partners package and distribute their produce to established chain stores like Walmart, Tesco and Waitrose; we are empowered to package our fruits according to international standards as well.”

CTG is similarly helping local fruit growers to expand their market reach by offering packing services. “It’s nice to see that our local fruit industry is putting in a conscious effort to attractively package the fruits, especially our dragon fruits. Otherwise, you can’t sell them because the price of imported fruits is not more expensive than local ones. It’s like a chess competition – in the long run, even if you can’t beat your opponent, it’s important to remember that you’re never far behind. In a way, it encourages local players to step up their game and maintain a high standard for the export market, like our homegrown Tian Tian brand of mandarin oranges.”

The brand was created in 1995, when CTG contracted several orchards in Yong Chun County in China to grow mandarin oranges. In 2017 Tian Tian was listed as the only top local fruit brand in Malaysia in a survey conducted by Zespri Kiwifruit.2 “We are also the sole fresh fruits importer to be a certified organic distributor in Malaysia. It’s a new sector we’re looking into, and this motivates us more than ever to keep innovating,” says Koay.

Meats

Miami Butcher House (MBH) was formed in 1990 by three friends – all cooks in hotels – to produce and supply ready-to-eat delicatessen food for the local hospitality and catering industries. Having built itself a reputable name, MBH became a limited company four years later. The manufacturing arm Miami Food Products (MFP), a fully owned subsidiary company, was created in 2001, while parent company MBH became a trading company for food products, not only from its subsidiary but also from other manufacturers and suppliers.

“Part of MBH’s success is due to its reputation for supplying safe and quality products, and the brand loyalty of returning customers. Having come from F&B backgrounds, the founders decided from day one to produce only quality food to supply F&B outlets in the hotel and catering industries, rather than to the retail market. In that sense, we are very much dependent on the tourism industry,” says director Kong Kim Hock.

MBH obtained its halal certification as early as in 1996, and MFP followed suit a few years later. “The certification gave a further boost to our business and we have had no regrets to date. We see that the food industry has mostly embraced the halal food concept. Firstly, because the main markets – hotels, restaurants and retailers – have moved on to be halal-compliant; and secondly, the halal market is expanding day by day, not just locally but internationally as well. It is quite easy for us now to purchase halal-certified raw materials, from poultry and meats to spices.

The HACCP system has trained Miami Food Products employees to be responsible and accountable or their actions during the manufacturing process.

“We also cross-check halal meat suppliers against the database of Veterinary Health Mark certification of the Department of Veterinary Services of the Agriculture Ministry, and at the same time look for and give priority to suppliers who have either Good Manufacturing Practices or Hazard Analysis and Critical Control Point (HACCP) certifications. Over the past 20 years or so, the food industry has matured with suppliers meeting consumer demands for good quality and safe food on their table.”

The HACCP food safety management system is a systematic approach to food safety that focuses on preventing biological, chemical, physical and radiological hazards by using common sense application of scientific principles. This approach is used at all stages of food production, from raw material production, procurement and handling to manufacturing, distribution and consumption of the product. HACCP is reliant on facilities, equipment and good practices to keep the analysis and resulting control methods manageable.3

“Initially, our employees at the MFP factory found it difficult to adjust when the HACCP system was implemented. This was due to the large amount of documentation it entails. But it has trained them to be aware, responsible and accountable for their actions; and thankfully, we have managed to sustain our quality at all times.

“We have also evolved from being labour intensive to using more equipment to meet not only production demand, but also food safety requirements. We have tripled the use of machinery, with the major items being the bowl cutter and stuffer, and automatic slicers and vacuum packaging machines. We have also upgraded our Critical Control Point (CCP) control with a second metal detector to further ensure our finished products are free from metal contaminants.”

Like all SME manufacturers, labour shortage is a perennial issue to contend with, says Kong. “SMEs are still dependent on labour; however, we are finding it harder to attract local workers to be our operators and supervisors, so we are forced to rely on foreign labour instead. With the government tightening on foreign labour intake, we fear that further growth will be difficult unless we adopt even more automation. At the moment, we are not financially able to do so, especially when our scale of production is relatively small compared to the major players.

“Even if we did offer relatively better salaries, the turnover rate is still very high. Job hopping is a persistent problem for us. This affects planning for MBH and MFP’s future expansion and capacity growth.”

On A Smaller Scale…

Beyond the big players, Penang is also famous for its small and traditional businesses as well. Those that have thrived have managed to do so by retaining the familial ties that are essential to their survival.

Nutmeg

Preserved nutmeg products.

In 1937 Cheong Pi Kim was spending a weekend at Kek Lok Si Temple. That was when he discovered raw nutmeg and brought home some from the farmers he was hanging out with. He brought some for his wife to preserve as titbits. He then went back and let the farmers have a taste of the preserved version, and they loved it.

Thus began Cheong Kim Chuan (CKC); the company has since grown to produce other items such as nutmeg ointment, concentrated nutmeg juice, preserved nutmeg products, biscuits, sauces, pastes and condiments.

Cheong Boo Chin, managing director of CKC.

Pi Kim's sons and grandsons worked hard to expand the business into a leading manufacturer of Malaysian local food products, and to make CKC a well-recognised global brand. CKC now owns three different entities, and is involved in manufacturing, distributing and retail. “From one retail outlet, we grew to six outlets on the island and began distributing to KL in 1993. With market demand being very high, we felt we needed our own factory, which we established in Bayan Lepas in 1996; today, we have 70 employees and we distribute to places such as Sydney, New Zealand, Vancouver and Singapore,” says Cheong Boo Chin, Kim Chuan’s grandson and the company’s current managing director.

To widen market reach, Boo Chin applied for halal certification, among other certifications such as HACCP and Good Manufacturing Practice (GMP). “We went through the whole procedure to get our premises and products certified. We live in a diverse society and we should share our products with people of all faiths.”

Throughout the year, CKC sources their nutmegs from their own plantation at Balik Pulau and from other local orchards. “Our challenges when it comes to sourcing include weather changes, fruit seasons and farmers replacing their crops with durians or rubber, which are highly in demand,” says Boo Chin.

According to him, through research and development, CKC seeks to improve product preservation methods and lengthen shelf life in accordance with Ministry of Health-approved regulations. The Cheong family also works hard to conserve, improve and promote indigenous Malaysian local foods. “We marry traditional goodness with modern food technology to produce great tasting, safe and nutritious products at fair and affordable prices. The nutrient facts and benefits of the nutmeg are documented in pharmacopoeia. We have our own food technologists to work on our nutmeg-based medicated products, in accordance with Drug Control Authority safety requirements,” says Boo Chin.

He hopes to churn out more marketable local products soon. With the motto “Tradition at Its Best”, he believes that customer satisfaction and confidence are what has kept CKC successful the past 81 years.

Pastries

Leong Kok Fei, managing director of Leong Yin Pastry.

In 1975 Leong Seng Yoon decided to learn pastry making in Hong Kong. He then came back to Penang to introduce Hong Kong delicacies to the local market and he started to produce his own lotus seed paste fillings. And so, Leong Yin Pastry was established in 1985.

Seng Yoon focused on making mooncakes and other seasonal Chinese candies before going into flavoured lotus seed pastes. “We realised that our paste can be used in breads, cookies and other pastry products. So instead of producing only seasonal mooncakes and candies, we started making pastes and experimenting with flavouring,” says Leong Kok Fei, Seng Yoon’s son and the current managing director.

Using only man-powered manual processes, Seng Yoon successfully introduced pandan flavoured mooncake paste into the local market, and within a few years it became noted throughout South-east Asia. “We operated from the back of our house, with my father and one relative. During peak seasons, we employed almost 120 workers to cope with the orders. Because of yearly increase in demand, my father decided to procure machines to increase the speed of production. It has been 14 years since we moved into this double-storey factory,” says Kok Fei.

Leong Yin's pastes.

Leong Yin's first packaging.

But why lotus seeds paste? According to Kok Fei, lotus seeds are rich in protein, magnesium, potassium and phosphorus. It is also high in fibre and natural flavonoids, which have other nutritional values and prevent inflammations. With a better research and development team, Leong Yin Pastry was soon producing over 200 flavoured pastes.

With his eye on the halal market, Kok Fei invested in research to produce mooncakes without lard. After a few years, he was successfully halal-accredited, and received key certifications such as ISO 22000:2005 Food Safety Management Systems.

In those 40 years of operations, Leong Yin Pastry faced several challenges. “My father’s belief is to produce the best end products. We have to use the best ingredients. So we sourced our lotus seeds directly from Hunan, China. We were cheated many times by the supplier, who provided us with low quality lotus seeds. Through experience we learned to discern between suppliers and to better recognise lotus seeds. We decided to self-pick the seeds before we imported them back here for production,” says Kok Fei.

“With the halal platform, I managed to collaborate and work with Middle Eastern markets and to widen distribution,” he says. Leong Yin Pastry has succeeded in exporting to both regional and multinational clienteles in South-east Asia,China, the US, Australia, the UK and the Middle East.

Surinder Kaur.

Coconuts

Looking for flexibility in managing her family and her career, Surinder Kaur started her own company, Kudrat Coconut. She got the idea to turn coconut water into 3-in-1 sachet drinks because she thinks this type of drink can fit our busy lifestyles. “If coffee can be made into 3-in-1 sachets, why not coconut water? It’s healthy and packed with nutrients,” says Surinder.

With some basic knowledge about coconut water nutrients, Surinder did some comparisons with powdered milk and other powder-based products. Convinced of the idea, Surinder attended biotech exhibitions and talks to learn more. “I came across TPM Biotech at one of the expos I attended and managed to share my idea. Fortunately, they are a government-linked company and they have the technology and machinery to help entrepreneurs like me kick-start our ideas,” Surinder adds.

Research and development cost money and time, and Surinder had to sell her second house to invest in her dream. After almost a year and a half of experimenting, Kudrat Coconut was introduced to the local market in 2017. Production and packaging are done in the TPM Biotech factory at Raub, Pahang, thus saving a lot in manufacturing costs.

“Our product is manufactured using the spray drying process to turn coconut water into powder form. One sachet is equivalent to one fresh coconut. Even though coconut water is not clinically proven to cure fever or any other diseases, it is known to hydrate the human body and functions as an isotonic drink. To produce one batch, we need 300 litres of coconut water. Malaysia does not have enough coconuts, so I have to source them from Indonesia too.”

Innovative 3-in-1 coconut water drink sachets.

Surinder is working with only one administrative staff and 17 factory workers. “I do not have a marketing team and I rely on distributors to place my product in hypermarkets and local convenient stores. I need to go into some aggressive promotion before Kudrat can become well-known among consumers.”

Local market demand is rather slow compared to the export market, so she focuses on exporting to countries that do not produce coconuts or coconut water. She currently concentrates on South Korea, Singapore, Thailand, South Africa, China and Indonesia. “I am the only one in Malaysia who produces and exports 3-in-1 coconut water. My plan for the future is to collaborate with Tabung Haji and hotels so that I can supply this drink to haj tour groups and have the product placed in hotel rooms.

“Our lifestyles are changing fast, and this product has as much potential as other instant 3-in-1 products. There are also many other things we can do with the humble coconut, for example coconut mocktails, flavoured coconut drinks and cosmetics, which are part of my future research and development plans.”

1https://www.handshake.com/blog/food-and-beverage-distribution
2https://www.thestar.com.my/business/sme/2014/01/11/from-eggs-to-oranges-previously-an-egg-trader-company-now-a-major-importer-of-fruits/
3https://www.rentokil.com.my/food-safety/haccp/



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