New flour mill in Wuhan, China.

This segment comprises the processing, branding and distribution of a wide range of edible food products. These food products are sold in either consumer and medium packaging or in bulk.

We are the largest producer of consumer pack edible oils in the world, with leading positions in China, Indonesia, India, Vietnam, Sri Lanka and several African countries. We also have increasing sales of rice, flour, noodles and condiments under a diverse brand portfolio. Our range of high-quality essential food products have enabled us to build leading sales and distribution networks in many countries. Our consumer brands are well-established and renowned for their quality, having won numerous product awards in their respective markets.

Market Trends

As Covid-19 lockdowns eased in many countries in 2021, there was a reversal of the trends seen in 2020. As more consumers dined out, demand for medium pack and bulk products supplied to hotels, restaurants and catering (HORECA) businesses picked up whilst demand for consumer packed food products dropped.

The pandemic brought about a new normal as consumer buying behaviours evolved, driving an uptake in e-commerce and modern retail channels. Anticipating and adapting to these changes, we have embraced new sales channels such as community group buying and online live sales. At the same time, we are also communicating with consumers through updated brand communication methods.

In 2021, we experienced tightness in vegetable oil supply driven by lower production along with sustained demand due to recovery of the economy and rising biofuel demand. This, in turn, resulted in higher raw material prices.

Our Performance

In 2021, the Food Products segment was impacted by high raw material cost, resulting in a 41% decline in pre-tax profit to US$680.9 million.

Due to the relaxation of Covid-19 restrictions globally, there was a change in consumer consumption trend which saw consumer products sales volume decline 9% to 8.5 million MT while medium pack and bulk sales volume increased 11% to 19.7 million MT. As more people dined out, we saw stronger demand from the HORECA and food processing industries. We also focused on our rice and flour expansion plans, leading these businesses to record strong volume growth during the year. The lower rate of decrease in consumer products sales volume in 2H2021 compared to 1H2021 reflected the improvement in our sales activities in the second half of the year.

Outlook & Strategy

We will continue to leverage our existing distribution networks, prominent brands and research and development capabilities to develop new products to widen our range of food products. Over the longer term, as the consumers in various developing countries where we operate in become more affluent and place greater emphasis on food safety and health, we see increasing demand for better quality and healthier products. Through research & product development, the Group continues to develop new products tailored for the individual markets. We are also developing higher margin, superior quality products to improve our profitability. However, in the short term, high commodity prices are expected to impact overall margins.

In China, we expect sales volume to grow as we expand our plants and into central kitchen businesses. We have four projects under construction in Langfang, Xi’an, Chongqing and Zhoukou and our first central kitchen in Hangzhou is currently in the trial production stage.

In India, we expect to see higher demand for branded consumer products in the rural areas as increasing household income results in rising level of brand consciousness and growth in modern retail. For our sugar business, we will continue to expand our leading consumer pack brand “Madhur”.

In Indonesia, while demand is expected to remain strong, price caps on cooking oil products are expected to limit the profitability of our consumer products business there this year. 

As Covid-19 restrictions gradually ease in more countries, we foresee further recovery in the demand for our medium pack and bulk products as HORECA businesses improve.