Singapore Food Industries (SFI) is one of the country's largest food companies with sales of S$714.9m (US$518.5m) in 2007. It is also a company with both an international profile and further aspirations overseas. Rupert Sutton met with chief operating officer Philip Lim to find out more.

New Covent Garden Soup Company sounds just about as quintessentially English as a brand could be, but given the global nature of the food industry it should be no surprise to find it is owned by an international food group. However, it may be slightly surprising to find that the owner is not a Kraft Foods, Nestlé or Sara Lee but the rather less familiar Singapore Food Industries (SFI).

However, while SFI may not be a household name, the company is arguably as representative of the internationalisation in the food industry as any of those three giants. While its US$518m turnover may be dwarfed by the global food behemoths, SFI has a clear and focused international expansion strategy, based on the acquisition of local knowledge and expertise, sharing best practice between its international operations, innovation and brand development.

Arguably the company's chief operating officer himself epitomises that international outlook and its focused approach. Philip Lim studied at both the Harvard Business School in the US and the Cranfield Institute of Technology in the UK. He joined the company in 2007 after a 25-year military career, where he specialised in logistics, having risen to the rank of Brigadier General.

Currently close to 60% of SFI's sales are in the UK, where it owns the Daniels chilled food business, which markets New Covent Garden, International Cuisine, a supplier of chilled ready meals to UK supermarkets, and Farmhouse Fare, a Lancashire-based pudding brand, and the company sees further growth potential there. "The UK businesses are performing well and management there still sees significant upside potential," Lim says. "Processed food is probably our biggest opportunity looking forward."

While the market for such prepared foods in Asian countries is smaller than the UK, Lim believes changing lifestyles in emerging markets offer huge growth potential. "In Asia consumers are cash rich and time poor, for example in Singapore over 50% of households are dual income, so there is clearly a great scope for significant growth in the fresh, ready-to-eat category." In addition to operations in Singapore, SFI has food businesses in China and Australia.

Moreover, Lim believes SFI's experience in convenience and prepared foods in the UK will greatly help in its bid to expand in markets closer to home. "Here, whilst we are starting from scratch, we can leverage learnings and best practices from the UK. Product development and sourcing will however be done locally."

The company also sees higher margins in the processed food business compared to its food distribution and catering divisions, with consumers prepared to pay more for good quality, fresh, nutritious and convenient meals.

"We can explain where the meat comes from, guarantee that the animal has not been fed on unauthorised antibiotics, growth hormones or steroids and so give a strong quality assurance message," Lim enthuses, "plus we can add value by showing people how to cook and use the product."

SFI's success in processed food has not been all one-way however. Cresset, is the company's chilled business in the Republic of Ireland, which remains a loss maker. Lim would not go into detail about the precise problems at Cresset, other than to say that they were "multi-faceted". But he was optimistic that the difficulties could be overcome. "This operation will take time and good, capable management to turn around, and our UK management team are confident that it will be an asset to SFI."

Another challenge has been the company's Shanghai frozen food business which has not performed to expectations. Lim attributes this firstly to Avian flu which severely impacted consumer demand and secondly the decision of Singapore's Agri-Food and Veterinary Authority to ban poultry imports from China. The company is currently looking to restructure this business. "We are doing a major review of our business in China," Lim explains. "That doesn't mean we are exiting the China market, but we are behind the curve there and need to make fundamental changes."

According to Lim, in Asia the company's top two priority markets are China and Vietnam. Interestingly the list does not include India. But this also underlines the focused and targeted nature of the company's international expansion strategy.

"Meats are our core competency," Lim explains, "and consumers in markets like China, Vietnam, Taiwan, Korea have a meat culture, especially pork. In China the rural to urban migration rate is about 20m people a year, a trend that bodes well for processed foods. Vietnam is similar. In addition both countries have been open to FDI [foreign direct investment] and can implement what they promise. This is important to us. If we were in the dairy business, I'd be much more focused on India, but unfortunately dairy is just not our thing."

Much of SFI's growth has come through acquisitions, and the company makes no secret that it is actively looking for further investments, and has the financial resources for more acquisitions.

Once again, the international strategy is simple and methodical. Acquiring local knowledge and expertise is a pre-requisite. "We start by looking for a partner," Lim says. "We do not consider 'greenfield' start-ups in new countries as we do not have sufficient local knowledge. The partner should have some existing processing capabilities and needs to be a good strategic fit.

Philip Lim, chief operating officer, Singapore Food Industries

"We look for synergies and we go carefully, often by investing a smaller amount to learn the business, see the relationship build and get some quick wins, before making a bigger commitment. That's what happened in the UK with International Cuisine where initially we bought around 20% of the company."

The other key planks in SFI's growth strategy are innovation and brand development. "It is vitally important as we need to de-commoditise our business and move more into selling brands. We used to be organised just on the basis of customer groups but now we are starting to change our structure to formalise the design and marketing of brands."

In Asia, SFI is focused on building its Farmpride chicken and Tenderfresh pork brands. Although the latter was only launched in 2007, results to date have proved encouraging, says Lim.

SFI has also innovated in other areas; a new IT system has been introduced to improve supply chain management; in HR the company has a proactive policy of hiring older workers as they have proven more stable and loyal than many younger employees; in production there have been innovations in meat cutting to optimise revenue. 

But like everyone in the food industry, SFI has not escaped the chills of commodity price inflation. "This problem will be with us for a while," Lim concedes. "In some commodities we have even seen buyers offer advance bookings with a retainer and no fixed price; the dynamics are feverish."

Like most manufacturers, SFI is also faced with the delicate challenge of absorbing or passing on price increases. "This is not easy and we have seen some customers want to switch products as a consequence. However, this can also present opportunities too, so we have been able to persuade some to buy more frozen foods instead of chilled and retain their custom."

Lim believes the focus of management on core businesses and the constant refinement of existing practices stands the business in good stead to withstand the current challenges. "In 2007 we were firing on all cylinders," he says, "and we have no plans to slow that down."

Rupert Sutton is president of Exigo Marketing, an international management consultancy specialising in consumer products.