News

Food Empire Holdings' Holds Strong Brand Value In Maccoffee

Singapore Brand MacCoffee Assigned Value of $92.9 Million By Interbrand

Singapore, 26 February 2003 - SGX-listed Food Empire Holdings (FEH), a leading food and beverage manufacturer, is pleased to announce that it had commissioned international branding consultant Interbrand to study and measure the value of its main house brand MacCoffee.

The study, using Interbrand's brand valuation method, was concluded last week and the MacCoffee brand was assigned a value of S$92.9 million. The study was conducted in three of MacCoffee's key overseas markets in Russia, Ukraine and Kazakhstan.

This assigned value is testament to Food Empire's well-established position in its key markets and to the strong potential of Singapore-owned brands in the international marketplace.

Mr Tan Wang Cheow, Chairman and Managing Director of FEH said: "We embarked on this valuation study as we firmly believe in the power and value of developing strong brands. The value assigned to MacCoffee reinforces our stand to continue investing in our own brands as they are important economic assets which create significant value for our business, for the company's future growth and for our shareholders."

Food Empire Holdings had created MacCoffee in 1994 around the time when its management decided that it would be more strategic to manufacture and market its own brand of instant beverages. Over the years, MacCoffee, with its distinctive white bald-head eagle icon, has become one of the most popular and best selling brands of 3-in-1 instant coffee in FEH's core markets of Russia, Eastern Europe and Central Asia.

Interbrand Managing Director Andy Milligan said: "MacCoffee is a unique brand owned and grown by a dynamic Singapore company. MacCoffee has become almost synonymous with the 3-in-1 beverage category which it dominates in its key markets. The brand is a major asset for the business. Aggressive local marketing, wide distribution and a consistent offer by Food Empire have been the foundations of its success so far in a highly competitive sector."

As a result of FEH's investments in creative and active marketing, advertising and promotions, the company has succeeded in building MacCoffee to be a bestseller within a relatively short span of time. In recent years, independent polls by international agencies such as Gallup Polls have consistently ranked MacCoffee 3-in-1 instant coffee among the most recognised leading coffee brands in Russia despite strong competition from other major international and local brands.

FEH investments in brand building also include creating innovative and quality products accompanied by eye-catching packaging and designs. Both its products and designs have won numerous awards over the years including nine awards in recognition of the high quality of its products at the 2002 World Selections of Quality organised by the prestigious Monde Selection in Belgium.

Mr Tan said: "For a brand to succeed, there must be good brand management which would include strong marketing, effective distribution networks and establishing good relationships with our partners and customers. This well integrated brand management strategy has played a key role in helping Food Empire to maintain a steady growth path through good and challenging times."

Valuation Methodology

Interbrand measured the value of MacCoffee brand using its proprietary brand valuation method that has been used to value over 3,500 brands worldwide.

The premise behind brand valuation is that brands are economic assets because they represent a security of demand and therefore of earnings. This represents a clear on-going economic value to the ownership of the brand which can be quantified as the net present value of the earnings that the brand is expected to generate and secure in the future for its owner.

Brand Valuation comprises three key elements: Financial Analysis, Market Analysis and Brand Analysis. Financial analysis was conducted to quantify earnings generated by the intangibles of the branded business in its key markets.

Following that, market analysis was carried out to identify what proportion of these intangible earnings related to the brand as opposed to other intangible assets in the business e.g. distribution network, patents etc. Finally, a brand analysis was undertaken to identify the discount rate to be applied to forecast brand cash flows to obtain a brand value figure.