Here's a million-dollar question:
Can a kacang putih manufacturer become a RM100million company?
An Evergreen Industry
Perhaps other Malaysian snack companies can serve as our benchmark of how huge the snack business can be.
Oriental Food Industries Holdings Bhd (OFI), a Bursa-listed company that manufactures snacks (e.g. Super Ring), has a market capitalization of RM190mil today. OFI went public in 2000 when they had a revenue of RM60mil and a net profit of RM6.7mil. In their financial year 2019, OFI posted a net profit of RM14mil on revenue of RM287mil.
Mamee Monster and Mister Potato are now present in over 80 countries. The brands are owned by Mamee-Double Decker (M) Sdn Bhd. The company was a public listed company from 1992 and 2012, delivering impressive earnings before it was privatized by its major shareholders who felt its stock was undervalued. Mamee continued to grow in terms of revenue and net profit after the privatization exercise. Based on a company search, its revenue and net profit are over RM700mil and RM28mil respectively in the financial year 2018.
Snack is one of the most resilient and promising FMCG categories in the next 5 years, according to various global industry researches. Snack companies often start with humble beginnings but grow exponentially in the long term.
This is true for WelNuts too. Started since 34 years ago as a small spice producer that evolved into the leading kacang putih manufacturer in Perak, Welnuts has gone from strength to strength. Now, the company's second-generation owner, Surentran, has big dreams for the company.
At the age of 28, Surentran had already built and sold a few profitable businesses. He was shortlisted for a scholarship to pursue Harvard Doctorate in Business Administration (DBA) in the United States. However, after thorough consideration, Surentran decided to stay in Malaysia to manage his family business, his "first employer" since 7 years old. With massive actions and consistent results, Surentran earned his father's trust. Surentran, now the sole shareholder of WelNuts Sdn Bhd, is ready to commit his entire life to unleash the potentials of kacang putih and create another Malaysian snack legacy.
Transforming the World Through Kacang Putih, One Bite at A Time
Kacang putih is a truly Malaysian traditional snack. Emulating the success of Old Town White Coffee, WelNuts aspires to transform the way we perceive kacang putih, starting with freshness. WelNuts wants the highest-grade kacang putih to reach every customer when it is fresh. How fresh, you may ask? From oven to mouth, within 48 hours. Alongside the customers' changing tastes, WelNuts continues experimenting with new products and production methods to offer something innovative and refreshing. This resulted in onion chips, sesame curry nuts, spicy fish murukku, and most recently fried bitter gourd.
WelNuts, which means "Nuts about Wellness", is determined to promote wellness with fresher snacks and create more stable jobs for the locals, especially single parents, fresh graduates and vocational students, as the business grows.
As a visionary leader, Surentran knows that he cannot do this alone. Hence he is diluting 14.89% of the company shares in exchange for RM7mil to grow the company. Via this crowdfunding exercise on pitchIN (Malaysia's ECF industry leader), the public will get to share the success of the well-established and cash-rich business. The company will also form a Board of Directors comprising seasoned business leaders (including Sam Shafie) to allow for proper corporate governance, safeguarding all stakeholders' long-term interests.
Bright Future Prospects
The continuous success of WelNuts is due to the following merits:
- Deep industry experience, product knowledge, established distribution channels (online and offline) and secured sales orders 3 months ahead
- Highly-defensible moat with unique value propositions and unfair advantages
- Result-oriented management team and advisory team with proven track records
- Branding exercise and concrete growth strategies to capture new markets
- In-house R&D capability with a focus on efficiency
- SOP and sound internal control system for risk management
- Alignment of interests with all stakeholders
WelNuts has applied for MTDC's facilities. They are also qualified for MATRADE and SME Corp’s grants. Moreover, they are eligible for and working on MIDA’s Pioneer Status for 5-year tax exemption. Coupled with the crowd's funding to execute the business plan, the company that is now generating monthly revenue of RM200k with a 20% net profit margin is confident of growing its top and bottom lines by 500-1000% in the next two years.
By then, WelNuts would have built its edge with more exciting products and a streamlined supply chain, thereby strengthening its position to become a valuable household health snack brand.
We welcome investors looking to diversify their portfolio into the booming FMCG/ snack industry to become part of WelNuts.
Inconsistent Taste and Quality
Sometimes your kacang putih tastes like heaven, and sometimes it does not. Even when it is tasty, you are unsure if it is processed heavily with MSG, preservatives, additives and harmful chemicals. The lack of a trustworthy brand to address these concerns prevents the consumers who love kacang putih to indulge in their favourite snack wholeheartedly.
Difficulty to Scale
Most, if not all kacang putih manufacturers are still operating using the traditional method. Due to limited innovation in the production line and the absence of modern management practices, kacang putih manufacturers cannot provide consistent supply to customers hence miss growth opportunities. Hence, we need to invest in R&D and Industrial Revolution 4.0.
Difficulty in Increasing Average Selling Price (ASP) due to a Lack of Brand Identity
Kacang putih has long been stereotyped as the low-value street snack, just like how people used to perceive white coffee and bubble tea. Moreover, traditional food culture, if not preserved properly, will slowly hollow out. A lack of brand identity is doing an injustice to this all-time national snack and damaging all kacang putih market players' marketing results. Besides, there are unfulfilled gaps in the Health Food market using Food Tech innovation & research. This will be major breakthrough Global market like US, Euro where they are going for healthy food and snack. There is massive value within kacang putih ready to be unlocked and given a new lease of life.
Committing to Freshness and Quality Control
The quality of the snack is determined by its ingredients. WelNuts produces its own spices, grinds its own flour and carefully selects the freshest ingredients from trusted upstream suppliers, mixes the ingredients into dough in-house (instead of buying the ready-made dough), then completes the entire production process in their factory, which is cleaned and organized every day.
Rather than buying machines from the local and foreign suppliers, WelNuts leverages their in-depth product knowledge and engineering expertise (another 2 siblings have engineering backgrounds) to build their machines used in the production line. The machines cost 50% lower than those provided by local and China machine suppliers. Moreover, the machines are tailored to WelNuts' unique production method to maximize efficiency.
In terms of logistics, WelNuts produces according to confirmed sales order and does not hold excess stock. All kacang putih are packed fresh and leave the factory fresh within 48 hours after they are packed. In the future, WelNuts will replace all plastic packaging eco-friendly packing materials to further retain the kacang putih's freshness and go green sustainably.
Adopting Modern Management Practices to Maximize Efficiency and Effectiveness
As an MBA graduate, Surentran continuously applies his knowledge to WelNuts to eliminate the common issues plaguing most traditional family businesses. It took him 3 full years to implement the management practices, but his persistence is worthwhile as it gives the company a sustainable edge over other industry peers.
WelNuts' internal operations are guided by SOP developed by Surentran and the team, who have been involved in every function of the company. There is a clear segregation of duties. Not only does the staff take ownership of their work, but it also provides checks and balances. Besides, WelNuts sets objectives and key results, then monitor them with a reporting system.
Last but not least, decisions are made based on facts and figures. Surentran personally conducts various industry analysis (e.g., SWOT, PESTEL and Porter's 5 Forces) before making any strategic move.
With the right system in place, WelNuts is ready to scale up its production capacity, process larger orders and acquire more customers, locally and internationally.
Building a Sexy Brand
WelNuts aims to connect with consumers at a deeper level by building a strong brand identity. Think Ramly Burger, the street food brand accepted by all walks of society in Malaysia regardless of religion, race and rank. With a startup capital of RM2000 in the 80s, Ramly Burger became a household brand which recorded revenue of RM1bil in 2019.
WelNuts' products have long been on the streets in Malaysia's major cities, presenting significant upside potential to the business if there is a unified brand. After the capital injection, WelNuts will allocate RM500k for branding and marketing to strengthen its position as Malaysia's leading kacang putih company.
WelNuts will strive to engage people who value quality in everything they do by educating them about the stringent process WelNuts undergoes to bring them the freshest kacang putih.
The most important thing is traceability, the fact that you know precisely where your kacang putih is from and when it is produced. The acknowledgment that the kacang putih is processed in a controlled setting, while different flavours possess unique characteristics of its origin.
Such branding effort and customer experience will translate to higher average selling prices (ASP) for WelNuts products, especially in international markets.
WelNuts manufacturers and sells more than 35 types of kacang putih products, from Muruku, coated nuts to chips. All kacang putih do not have MSG, additives, preservatives, colourings, flavourings and harmful chemicals. They are 100% vegan, cholesterol-free, natural and rich in fibres. Above all, they are loved by all generations.
Proven Local and International Demand
WelNuts has long been supplying kacang putih to customers in Perak, Selangor, Penang, Johor, and other Malaysia cities.
To validate the demand for their products internationally, WeNuts participated in the Malaysia International Halal Showcase (MIHAS) in April 2019 at Malaysia International Trade and Exhibition Centre (MITEC). MIHAS 2019 was organized by Malaysia External Trade Development Corporation (MATRADE) and congregated over 1,000 exhibitors from 44 countries and attracted trade visitors from 80 countries.
During the 4-day event, WelNuts received RM50mil worth of sales orders from 70 local and foreign customers, including those from Japan, the Philippines, Australia, Indonesia, Singapore, China, Pakistan and the UK. WelNuts decided not to proceed with the orders due to the limited production capacity at the time. Nowadays, WelNuts is only shipping 1 container of kacang putih to Australia every month due to production capacity limitation. However, it proved that there is a strong demand for WelNuts products internationally.
WelNuts has obtained the MeSTI certification, and will apply for the Halal, HACCP, GMP and ISO certifications in the 2nd quarter of 2021.
After this fundraising exercise, WelNuts will expand production capacity by 500% within 6-9 months before reconnecting with the contacts obtained during MIHAS. WelNuts will also be more confident to fulfill other clients’ requests.
Growing eCommerce Segment
Since the beginning of MCO, WelNuts started selling kacang putih on Shopee under various brand names and receiving encouraging results.
Monthly revenue from Shopee:
Until their recent venture into e-Commerce, WelNuts has been distributing to wholesalers and retailers as an Original Equipment Manufacturer (OEM). Their customers would then label the products with stickers and price tags before reselling the kacang putih.
For example, WelNuts mass-produced for notable clients such as Upin & Ipin and Khee San Bhd.
WelNuts is committed to serving their existing regular customers while diversifying the business risks with a total 7 revenue streams, namely:
- e-Commerce: the highest-margin, steadily-growing segment
- Wholesale: large volume, recurring orders, lowest margin
- Convenient shops and Petrol Stations: medium volume, high-margin segment, brand growth
- Distributorship and Retail: recurring, medium volume per order, but offers a decent margin
- OEM: large volume, mostly recurring orders, but low-margin
- Corporates (e.g. hotels and restaurants): medium volume providing a decent margin and brand equity
- Export: large volume providing a high margin and recurring orders
WelNuts continuously mitigates its risk by implementing cash terms with e-Commerce customers, distributors and retailers. For bigger, reputable customers, WelNuts collects 50% upon delivery (ex-factory) and the balance amount within 30-60 days. WelNuts monitors all their outstanding receivables closely with proper documentation to smoothen the collection process.
Besides, WelNuts does not commit to orders with long payment terms demanded to ensure healthy cash flow. WelNuts sells to hypermarkets (e.g. MyDin and Tesco) via 3rd party during the festive seasons when they need kacang putih the most and are more flexible on the terms. (Thankfully, Malaysia celebrates festive seasons all year round!)
WelNuts has started talking with more convenience stores and petrol stations to understand their requirements.
To meet the sales and profit targets for all business segments, accountability is crucial. Therefore, WelNuts has at least 1 dedicated person-in-charge for each segment to drive results according to the agreed action plan and report progress regularly. Surentran has been personally involved in all 7 segments so he could oversee the operations effectively.
Coupled with the MeSTI and Halal certifications that opens up to global opportunities, growth is expected.
According to Statista,
- Revenue in the Malaysia snack food segment amounts to US$2,331m in 2020. The market is expected to grow annually by 8.3% (CAGR 2020-2025).
- In global comparison, most revenue is generated in the United States (US$101,100m in 2020).
- In relation to total population figures, per person revenues of US$72.02 are generated in 2020.
- The average per capita consumption stands at 13.4 kg in 2020.
In another studies conducted by Markets and Markets,
- The global extruded snacks market is estimated to account for USD 48.3 billion in 2019 and is projected to reach USD 65.2 billion by 2026, recording a CAGR of 4.4% during the forecast period.
- The market is primarily driven by the increasing disposable income and changing lifestyle among the millennials.
- The market for snacks across the globe is dominated by snacks made from wheat.
- The wheat segment in the snacks market is estimated to account for the largest share in 2019.
- Wheat is low in fat and carbohydrates compared to potato and corn, and high in dietary fibers. Wheat is gaining popularity as a healthy snack option, and manufacturers have been developing products in a wide range of flavors.
- Companies are also marketing their products by targeting consumers who prefer such healthy snacks and are providing healthier alternatives by replacing conventional raw materials.
What Do These Trends Mean?
Kacang Putih is riding the wave of international healthier snack trend as it is made from various legumes, spices, herbs and wheat flour (as substitute for rice and tapioca flour).
There are currently a few big market players, namely Tong Garden, Mamee and Oriental Food Industries (OFI). These companies have strong R&D capabilities, extensive distribution networks and sophisticated production facilities.
However, we deem that consumers are always on the lookout for alternatives with deep cultural values. If investors are looking to invest in a snack business, the windows are closed for well-established companies. However, there is significant upside potential in investing in a smaller, but growing company positioned in the right industry.
In Malaysia, a new famous snack brand is Signature Market. It is noteworthy that Signature Market operates with a different business model as the company is essentially a trading business, whereas WelNuts is a manufacturer and product brand owner.
Welnuts is seeking RM7mil in funding to:
- Expand Production Capacity (60%). WelNuts needs to automate the production line to process larger orders for local and international markets.
- Develop Brand Identity (20%). Better branding & marketing will enable WelNuts to appeal to the mass market and reach out to more prospective customers.
- Cover Operational Costs (20%). WelNuts will need to set up more departments for better internal control and enhance their distribution network in light of a broader customer base. The team will need to be remunerated fairly.
To deliver fresh, healthy and great tasting products to people of all walks of life, on a daily basis.
Breakdown of vision:
3 core values and product philosophies:
- Fresh - without any preservations or additives
- Healthy - production process to ensure the retention of the nutrients
- Great Tasting - a memorable customer experience when eating our food
People of all walks of life - to make it affordable so that kids can buy, to make it rich in nutrients so that elderly can buy and too make it fun so that people of all age and socioeconomic can buy
On daily basis - to develop a comprehensive distribution channel and effective logistic to ensure products reach consumers within 48 hours for online and within 7 days for retail outlets, so that consumers always eat fresh snacks
- Internal Team - To develop and nurture a culture of people first and profit second to ensure we have joyful and balanced people to product happy foods
- External Team - To build a symbiotic relationship with our suppliers and stakeholders for a brighter joint future with shared values system
- Consumer - Give them the best experience when eating our foods and making sure they’re getting enough nutrients and stays healthy
- Environment - To be responsible from sourcing of raw materials, production process, factory waste, our carbon foot print, packing materials and water quality
Founder & Chief Executive Officer
WelNuts is Surentran's brainchild and newly set-up business entity after inheriting the family business. Kacang Putih is close to Surentran's heart as he has been helping out his father since he was 7 years old. It is Surentran's passion and burning desire to transform the 85-year-old kacang putih industry.
At 33 years old, Surentran is a serial entrepreneur who has successfully exited a few profitable businesses. Now, Surentran sets the overarching vision of WelNuts and leads the entire company towards achieving them. He has been humbly seeking mentorship from experienced entrepreneurs and industry experts to strengthen the business model. He regularly assesses the work of other core team members, so WelNuts is operating efficiently. At the same time, he maintains awareness of the competitive market landscape, expansion opportunities and industry developments to stay ahead of the game. WelNuts also identifies risks to the company and ensures they are monitored and minimized. Besides, Surentran communicates with all collaboration partners and external parties transparently. The onus is upon him to ensure that the company maintains high social responsibility.
Surentran holds a Bachelor in Applied Science (Analytical Chem) from USM and a Master in Business & Administration (MBA) from UniRazak-Babson.
Chief Operating Officer
Kohila, aged 36, is in charge of developing a comprehensive reporting system to support decision-making and performance review. She will also set the company budget, prepare management reports, and create business projections. A diligent and dependable team player, Kohila is confident that her 10 years of operational management experience and 5 years of accounting experience will enable her to successfully manage WelNuts's finances and facilitate the daily administrative tasks, which in turn realize the company vision and missions.
Kohila holds a Diploma In Accounting from University Selangor.
Chief Technology Officer
Kumaran, aged 30, possesses a real knack for building customized machines and figuring out effective production flows methods to maximize production efficiency. WelNuts' operation has been running smoothly due to his engineering expertise.
Kumaran holds a Bachelor in Mechanical Engineering from University Tenaga National and a Master in Business & Administration (MBA) from University Kebangsaan Malaysia.
Chief Compliance Officer
Thilagavaty, aged 29, is responsible for WelNuts' overall sales growth and market expansion due to her ability to build win-win relationships. Thilagavaty proactively communicates with the customers and regularly feedbacks to the team to improve the products and service quality.
Thilagavaty holds a Bachelor of Civil Engineering from University Tenaga Nasional and a Master in Mechanical Engineering (S.H.E.) from University Malaya.
Corporate & Funding Advisor (Board Chairman of WelNuts Sdn Bhd)
Technopreneur & Venture Builder with international ventures such as Mountain Partner and Fatfish Group. Recently appointed as Business Development Director with ACE Group.
Team Management Advisor
Team Building Specialist & Mentor from UniRazak & BinaPavo
Dr.Leilanie Mohd Nor
Branding & Strategy Advisor
Strategic Communication & Branding Specialist from BinaPavo & kCommerce
Edward Tan Juan Peng
Senior Strategic Advisor of Domestic and International Business
CEO of a public listed company
Known to many as Edward is currently the CEO of a public listed company, who was also an ex-banker for more than 20 years. His experience and domain is in new business acquisitions locally and internationally in the FMCG industry.
WelNuts is blessed to possess this elite team who lead by example, instill a great company culture and jointly run all aspects of its operations together with all 15 staff of the company.
Please login as an investor to see more information.
WelNuts Sdn Bhd doesn't have any updates to show yet.
Please login or sign up to see the discussions.