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| Kaneko: ‘We can compete with our competitors in terms of prices, but branding and communications are more important to us, not just offering lower prices.’ |
Ajinomoto (Malaysia) Bhd, long known as a stalwart among defensive stocks in Malaysia, does not intend to rest on its laurels.
Having already outperformed other stocks in Malaysia over the past ten years, the company says it is optimistic about doubling its sales and tripling its operating profit from present figures, by financial year 2020 (FY2020) ending March 31.
Ajinomoto aims to achieve its FY2020 vision by establishing an adequate business model to provide the right value to each cultural segment in Malaysia, developing the Middle East market, as well as providing value to the Asean region by leveraging the new technology from Ajinomoto Co Inc.
In an interview with StarBizWeek, Ajinomoto (M) Bhd managing director and CEO Keiji Kaneko said that the company is looking to expand its product line up within this year.
“It may be a new flavour or seasoning.
“Besides the product line expansion, we are also looking to venture into a new business area.
“I cannot say much yet, but it will be within the food industry,” says Kaneko.
Ajinomoto is a food and seasoning manufacturer which is well-known for its Ajinomoto Umami Seasoning, a world-renowned brand of monosodium glutamate (MSG).
Umami is described as savoury, and is the fifth basic taste apart from sweet, sour, bitter and salty.
Other brands under its belt are seasoning products Tumix, Seri-Aji, Aji-Shio, Aji-Mix, and sweetener PalSweet.
The group also produces seasoning variants for industrial use.
The consumer staples company’s shares have long been a favourite holding among institutions.
Its share price has tripled over the past five years, outperforming the FBM KLCI by a large margin.
Recently, US-based Fidelity Investments had begun accumulating shares in Ajinomoto, underscoring the renowned value investor’s optimism over the company’s long term prospects.
The affable Kaneko, who was appointed managing director last June, says that Ajinomoto’s business has grown tremendously in size as the company celebrates its 55th anniversary this year.
“We are proud to have been in Malaysia since 1961, it is a huge impact to us and we very much appreciate the society and people in Malaysia.
“Without population growth and the people here, we would not have been able to achieve this growth,” says Kaneko.
Ajinomoto shareholders have certainly benefited from this.
Apart from the high capital appreciation of the shares, the company dishes out dividends consistently every year.
Its net dividend per share grew from 17.25 sen in FY2011 to 20 sen in FY2015.
Ajinomoto’s current market share in Malaysia is more than 80%.
Its competitors are mainly house brands.
House brands are products repackaged under a supermarket’s brand name and tend to have much lower prices as compared to the other brands.
“We understand that customers are very particular about prices of the goods that they purchase.
“However, they have to understand that brand names that have been in the market for a long time guarantees quality and trust of the product.
“We can compete with our competitors in terms of prices, but branding and communications are more important to us, not just offering lower prices,” says Kaneko.
Domestic sales make up 65% of the group’s revenue.
What many may not know is that Ajinomoto employs a large sales team to deal directly with buyers, aside from the distributorship model.
Its direct sales employees deliver products directly to shop owners and the transactions are carried out in cash terms.
The company has eight sales branches in Peninsular Malaysia and two more in Sabah and Sarawak.
Kaneko says the group intends to increase its sales team to more than 10 this year in line with its domestic growth aspirations.
While the double digit growth is expected to be derived locally, Ajinomoto has seen encouraging signs from its export sales.
Equipped with the halal certification from Jakim, Ajinomoto has ventured into the Middle East market by introducing its Ajinomoto umami seasoning product.
Since this year, Ajinomoto sales in the Middle East has increased by 7%.
Furthermore, the group is targeting to introduce more products to the Middle East region this year.
In line with its motto “Eat Well, Live Well”, Ajinomoto takes pride in its Ajinomoto Shared Value, which is a culmination of economical and social value creation.
On top of pursuing profit and increasing profitability and competitiveness, Kaneko says Ajinomoto proactively helps to resolve global social issues through social contribution activities and corporate social responsibility.
For example, Ajinomoto promotes glutamate application in preparing appetising, balanced and low sodium diets for healthy living through its dietary education programme.
“These AJI (2650) - Ajinomoto’s Vision 2020programmes are targeted towards Ministry of Health officers, nutritionists, culinary experts and general public.
“We need to focus on correcting common misconceptions, such as Ajinomoto causing thirst or hair fall, and delivering the right information to consumers.
“Our collaboration with the Nutrition Society of Malaysia to publish a health book on Umami Seasoning is one of our activities which creates social value,” says Kaneko.
AJI (2650) - Ajinomoto’s Vision 2020
http://www.thestar.com.my/business/business-news/2016/04/16/ajinomotos-vision-2020/
