Fraser & Neave Holdings Bhd Annual Report 2020

055 ANNUAL REPORT 2020 03 md&a Dear Shareholders and Stakeholders, The last few months have been exceedingly challenging due to the COVID-19 pandemic, with movement restrictions impacting everyday life as well as economic activity. Amidst the containment measures and subdued outdoor activities, Fraser & Neave Holdings Bhd (F&NHB or the Group) maintained commendable top and bottom lines in the financial year ended 30 September 2020 (FY2020). More importantly, we made good progress in strategic plans set out for the year 2020 despite the unfavourable circumstances. This was mainly the result of years of focus on creating greater efficiencies as part of our transformation to become a sustainable beverage leader in the region. Our focus on three strategic priorities, namely Innovation, Cost Competitiveness and Excellence in Execution (I.C.E.) provided the clarity and purpose to navigate through these unprecedented times. The hard work and dedication of our people, as well as the strong relationship and collaboration with suppliers, trade partners and regulatory agencies have enabled us to emerge with better results than anticipated. Although the beverages markets in Malaysia and Thailand shrank by double digits, we either maintained or grew our leadership in key categories, indicating our effective route to market strategies and strengthened brand value among our customers and consumers. SERVING UP INNOVATION PRODUCTS THAT RESONATE WITH CONSUMERS During the pandemic crisis, while prioritising the availability of our core products, we pushed ahead with product innovation to deliver value choices that resonate with consumers. One natural outcome of COVID-19 has been the more apparent importance of health and wellness, and it is in this direction that we have been innovating on new products for several years. Half of the ten new products launched this year offer health benefits in different forms. In Malaysia, we launched three beverages with no sugar at all, namely 100PLUS Zero, F&N ICE MOUNTAIN Sparkling Water and OYOSHI Zero- Sugar Green Tea. We also launched Sunkist Pure in two premium variants, orange and lemon apple. In Thailand, we introduced Carnation Plus, a zero- fat sweetened condensed milk with 25 per cent reduced sugar boasting the highest milk content in its category. By financial year-end, the number of products carrying the Healthier Choice Logo (HCL) endorsed by the Malaysian Ministry of Health or Thailand’s Ministry of Public Health increased from 41 at end FY2019 to 47. Perhaps the most exciting innovation this year was our F&N ready-to-drink (RTD) Teh Tarik. It has not been easy to get the recipe right for this perennial Malaysian favourite. After years of testing different combinations of tea leaves with condensed and evaporated milk, our F&N Teh Tarik Ori and Teh Tarik Less Sweet taste like what you would get at mamak stalls or restaurants. Further underlining our spirit of innovation, we ventured into two new product categories. In Thailand, for the first time, we produced milk candy tablets under the brand Magnolia Milkies. In Malaysia, TEAPOT Sweetened Beverage Creamer squeeze tubes positioned as spread and topping entered the market, signalling our entry into the adjacent ready- to-eat category. We now also have an eco-friendly packaging option for F&N ICE MOUNTAIN Drinking Water using recyclable paper that is Forest Stewardship Council (FSC) certified, while the caps are bio-based, made from sugar cane. We made good progress in strategic plans set out for the year 2020 despite the unfavourable circumstances. This was mainly the result of years of focus on creating greater efficiencies as part of our transformation to become a sustainable beverage leader in the region.