THE CREAM OF THE CROP

Fresh, preser­va­tive-free cow’s milk pro­duced by a Malaysian dairy brand would still be an un­fath­omable concept, were it not for Loi Tuan Ee, Man­ag­ing Di­rec­tor of The Holstein Milk Com­pany. Through Farm Fresh’s prod­ucts, he’s cre­ated a vo­ra­cious con­sumer d

The Peak (Malaysia) - - Contents - TEXT RENYI LIM ART DI­REC­TION PENNY CHEW PHO­TOG­RA­PHY KIM MUN / HOPSCOTCH PHO­TOG­RA­PHY

Fresh, preser­va­tive-free cow’s milk pro­duced by a Malaysian dairy brand would still be an un­fath­omable concept, were it not for Loi Tuan Ee, Man­ag­ing Di­rec­tor of The Holstein Milk Com­pany. Through Farm Fresh’s prod­ucts, he’s cre­ated a vo­ra­cious con­sumer de­mand for wholesome, purer milk and gal­vanised the country’s dairy in­dus­try into action.

Got milk? Loi Tuan Ee, the farmer-en­tre­pre­neur behind The Holstein Milk Com­pany, cer­tainly has – 1.5 mil­lion litres per month, if you’re count­ing. With a herd of 3,500 cows spread across three farms in Muadzam Shah in Pa­hang, and Mawai and De­saru in Jo­hor, it’s easy to as­sume there’s plenty of milk to spare. When Loi is asked to slosh some into a glass for The Peak’s pho­to­shoot, however, he does so ex­pertly with­out spilling a drop – milk is, after all, his com­pany’s white gold.

“Think of your ladies!” our pho­tog­ra­pher calls, elic­it­ing a smile from Loi (for the record, his dairy cows are af­fec­tion­ately re­ferred to as ‘ladies’ or ‘girls’) – and, of course, he has plenty to be pleased about. Not so long ago, the idea of pro­duc­ing fresh cow’s milk in Malaysia would have been deemed folly at best, which is es­sen­tially how we, as a na­tion, ended up be­ing raised on the taste of milk re­con­sti­tuted from milk pow­der or solids.

In less than a decade, Loi has managed to spark a local dairy rev­o­lu­tion, bring­ing truly fresh milk – mi­nus any preser­va­tives or ad­di­tives – from his farms to re­tail out­lets within 48 hours. It seems a sim­ple enough concept but, as Loi tells us, it’s taken a con­sid­er­able amount of ef­fort to re­alise his Farm Fresh dreams. THERE’S SOME­THING ABOUT DAIRY It helps that agri­cul­ture is in Loi’s blood. His par­ents were rub­ber tap­pers in Si­ti­awan and, as a child, he spent many an early morn­ing help­ing them col­lect liq­uid la­tex. “It was hard work – and smelly! – but it re­ally shaped me, so once I was re-ex­posed to agri­cul­ture later in life, it wasn’t some­thing com­pletely new.” Be­side train­ing him for early-morn­ing starts (dur­ing his farm vis­its, Loi typ­i­cally wakes be­fore dawn and is ready for action by 6.30am), fol­low­ing his par­ents around the plan­ta­tion im­bibed in him the value of a strong work ethic.

“My mother is an ex­tremely hard­work­ing wo­man, and that’s some­thing she forged strongly in me. That’s the sin­gle most important thing to suc­ceed – work­ing hard sim­ply can­not be taken away. Luck plays a part, to a cer­tain ex­tent, and in­tegrity is also cru­cial, but in essence it’s down to hard work.” And work hard, he did, though he didn’t plunge straight into farm­ing. Instead, Loi spent 20 years head­ing the mar­ket­ing side of a car­ton pack­ag­ing com­pany in Se­nai, cater­ing to big­name MMCs such as Sony, Pana­sonic and Mat­sushita.

The golden-era boom of the 1980s and early 90s saw sub­stan­tial business flood­ing in from elec­tronic multi­na­tion­als, but the slow­down that fol­lowed was the push fac­tor that sent Loi back to­wards agri­cul­ture. The ini­tial public of­fer­ing of the com­pany prompted him to sell his shares, exit the business and pur­chase a plot of land in Kota Tinggi – by then, he’d al­ready set­tled in Jo­hor with his wife and chil­dren. “Now that I had an op­por­tu­nity to make a change, I fig­ured agri­cul­ture was prob­a­bly one of the best things I could do, and that I’d en­joy do­ing it.

“Cre­at­ing a business and actually look­ing for­ward to spend­ing time with the farm’s green pas­tures, water ponds and an­i­mals make a lot of difference. Plus, I was con­vinced that when you go into the food business, you can’t go too wrong.” Armed with 83ac of land, Loi ex­per­i­mented with grow­ing dragon fruit, breed­ing Arowana fish and rear­ing Nu­bian goats to pro­duce fresh goat’s milk – the lat­ter of which found suc­cess amongst a niche con­sumer mar­ket and pro­vided an ideal in­tro­duc­tion to Malaysia’s dairy scene.

Feel­ing that he was ready for a big­ger ven­ture, Loi de­cided to branch out into cow’s milk – even if it seemed a bizarre move at the time. “Malaysian land costs are highly dis­torted and, un­for­tu­nately, it’s only oil palm that’s considered a good cash crop. If you’re a farmer and you ap­proach a bank, they’ll be ex­tremely re­luc­tant to fund you if you’re grow­ing any­thing else. When you say you’re buy­ing land so you have enough pas­ture for cows, peo­ple think you’re crazy: ‘How can you pay so much and just plant grass there’?”

Nei­ther did the ap­par­ent vast­ness of the ex­ist­ing cow’s milk mar­ket – mostly dom­i­nated by multi­na­tion­als – de­ter him be­cause, as Loi ex­plains, it’s a fa­cade that’s eas­ily dis­man­tled. “With fresh cow’s milk, how do you stand out? Which con­sumer would want to try a brand new prod­uct – and a local one, on top of that? Ini­tially, fam­ily mem­bers like my sis­ter warned me, ‘Are you sure you want to do this? The choice of fresh milk on the su­per­mar­ket shelves is un­be­liev­able. I can’t even de­cide which one to buy.’

“In a sense, her point was valid, but when we be­gan sam­pling other brands’ prod­ucts to bench­mark against our own, we re­alised they didn’t taste the same. It wasn’t fresh milk – it was re­con­sti­tuted from milk pow­der or milk solids. It doesn’t mat­ter if you’re com­pet­ing against 15 or 20 brands. When you drink our milk, you’ll no­tice there’s a very dis­tinct difference – and with that in mind, I forged ahead.”

MOOVING ON UP

Seal­ing the deal on his move to­wards dairy de­vel­op­ment, Loi pur­chased 60 Holstein Jersey cows in 2009 and had them air­freighted to Malaysia – “They all trav­elled in business class!” he jokes. (He also had the fore­sight to in­vest in an­other 500ac of land nearby, know­ing full well that his new herd re­quired plenty of grass­land to graze on.) The ini­tial year, which he de­scribes as be­ing more stress­ful than his en­tire ca­reer in car­ton pack­ag­ing, saw him wran­gling with is­sues con­cern­ing live­stock and sup­ply chain.

It wasn’t just that the Aus­tralian cows were un­used to Malaysia’s high hu­mid­ity and heat, but they had to be pro­tected from blood par­a­sites as well. “When cows are un­com­fort­able and stressed, they won’t eat and that’s where the level of milk pro­duc­tion gets com­pro­mised. Pro­duc­ing milk draws all the nu­tri­ents from their bod­ies, and if they’re not re­plen­ished, the cows be­come thin and de­plete them­selves to con­tinue pro­duc­ing milk.” Even when the farm had reached an ad­e­quate level of milk pro­duc­tion, there was the chal­lenge of get­ting it to po­ten­tial con­sumers – in more ways than one.

“Reach­ing Kuala Lumpur was a ma­jor night­mare for us, but Klang Val­ley con­sumers were an essential tar­get mar­ket, so we had to be there. We started small, sell­ing 300 to 600 litres, which wasn’t enough to cover the ex­pense of trans­port­ing our milk by chill truck – so we sent it from Jo­hor by ex­press bus, pack­ing the milk into poly­form boxes and pay­ing the driv­ers to ship them to KL. Our team would wait at the Sun­gai Besi toll to col­lect the milk and dis­trib­ute it to the su­per­mar­kets. It was un­be­liev­ably tough – you’d get se­ri­ously de­mor­alised when you re­alised it was so dif­fi­cult. We did that for six months un­til we gained enough trac­tion that our chill trucks could fi­nally start ship­ping one to 1.5 tonnes of milk.”

Many of Loi’s week­ends were spent at var­i­ous su­per­mar­kets in Jo­hor and Kuala Lumpur, where he would per­son­ally try to pro­mote his brand, Farm Fresh, and in­tro­duce it to cus­tomers dur­ing their usual gro­cery runs. “I re­alised no one trusted us be­cause they didn’t know what the brand was all about,” he says. “At one point, I lost count of how many pro­mot­ers we’d sta­tioned at ma­jor re­tail­ers, con­tin­u­ously pour­ing milk to en­cour­age cus­tomers to taste the difference.

“It worked be­cause we kept our prod­uct ba­sic and traditional: it’s nothing but plain, fresh milk drawn from healthy, happy cows – that’s it. Con­sumers started to un­der­stand

“MY CONVICTION IS THAT FOOD IS BECOMING FAR TOO PROCESSED AND THAT’S A REAL PROB­LEM – IT LASTS LONGER BUT WITH AB­SO­LUTELY NO REGARD FOR CON­SUMERS’ HEALTH.”

the difference and, from there, we inched into the mar­ket share.” It’s no longer inches so much as leaps and bounds now: by April last year, Farm Fresh had al­ready net­ted 39 per cent of the mar­ket share for fresh milk in Malaysia. The brand’s prod­ucts (which in­clude nat­u­ral yo­ghurt, yo­ghurt drinks and choco­late milk) can be found in stores from Alor Se­tar to Sin­ga­pore, and all signs point to con­sumer de­mand out­strip­ping sup­ply.

In the face of early lo­gis­ti­cal com­pli­ca­tions and, now, the urge for rapid ex­pan­sion, has Loi ever had dif­fi­culty stick­ing to his pledge of keeping his milk preser­va­tive-free? “In the early days, I was quite tempted to ex­tend the shelf life as peo­ple weren’t fa­mil­iar with our prod­ucts and, after two weeks on the shelf, they’d have to be thrown away. But if we couldn’t dis­tin­guish our­selves through our core val­ues, it would have been dif­fi­cult for the com­pany to move for­ward.

“My conviction is that food is becoming far too processed and that’s a real prob­lem – it lasts longer but with ab­so­lutely no regard for con­sumers’ health. What ben­e­fit do these preser­va­tives, colour­ings and ad­di­tives bring? I feel sorry for the peo­ple who buy processed food and for their chil­dren. Yes, our com­peti­tors’ prod­ucts last longer and they’re more sta­ble, but that’s a chal­lenge we can learn to live with. De­spite get­ting hit with sour milk from time to time, a lot of cus­tomers stay with us be­cause they ap­pre­ci­ate what we’re do­ing for them. Old-fashioned food is still the best.”

UDDERLY BRIL­LIANT IDEAS

Kazanah Na­tional’s early in­volve­ment as an in­vestor in The Holstein Milk Com­pany has pro­vided it with enor­mous pos­si­bil­i­ties for fur­ther growth, leav­ing Loi with an lengthy to-do list that he’s doubt­less keen to plough on with. Keeping his ‘ladies’ happy is still his first pri­or­ity, which is why he’s in the midst of con­struct­ing a fan-cooled tun­nel barn that will re­duce tem­per­a­tures to around 20°C at night. He’s also con­sid­er­ing play­ing clas­si­cal mu­sic at milk­ing sta­tions for the cows to en­joy, though he draws the line at cat­tle mas­sages.

The ac­qui­si­tion of an Aus­tralian ge­netic en­gi­neer­ing com­pany sev­eral years ago has en­abled the cre­ation of the Aus­tralianFre­sian- Sahi­wal (AFS) cow, which is more suited to the local cli­mate, but Loi is still work­ing on his dream cow. “What we want is a bal­anced an­i­mal that has the ge­netic po­ten­tial to pro­duce a rea­son­able amount of milk – be­tween 15 to 20 litres – won’t get stressed from the heat, has a nat­u­ral re­sis­tance to blood par­a­sites and boasts a good life­span. Within an­other six or seven years, I think we’ll have the ad­van­tage of a full AFS herd.”

He’ll need a size­able bovine pop­u­la­tion too: a third pro­cess­ing plant in Pa­hang, cre­ated in col­lab­o­ra­tion with the East Coast Eco­nomic Region De­vel­op­ment Coun­cil, is sched­uled to be op­er­a­tional by next Jan­uary (the com­pany will in­vest MYR18 mil­lion in pro­cess­ing equip­ment), while he plans to work with Univer­siti Pu­tra Malaysia on con­duct­ing fur­ther re­search into ge­netic de­vel­op­ment. It’s also a chance to set up a fully func­tional show­case farm on a 160ac plot close to the univer­sity, which Farm Fresh fans – espe­cially chil­dren – can visit for a spot of agro-tourism. Greek yo­ghurt and lac­tose-free milk are al­ready in the pipe­line, as far as ex­pand­ing Farm Fresh’s prod­uct line is con­cerned, while Loi has his eye on pro­duc­ing ha­lal- cer­ti­fied pizza cheese and sliced burger cheese – big-ticket items that will draw in con­sid­er­able business.

To his credit, he doesn’t view the di­verse op­por­tu­ni­ties of­fered by the dairy mar­ket as his alone to claim – on the con­trary, he wel­comes the par­tic­i­pa­tion of other in­de­pen­dent fresh milk pro­duc­ers: “We re­alise the de­mand for our prod­ucts is con­tin­u­ously grow­ing, so we’ve been work­ing with con­tract dairy farm­ers and pay­ing them a fair price of MYR2.80 per litre in the hope that we won’t just have to rely on our­selves to pro­duce more milk. Our fel­low farm­ers and friends can in­crease their pro­duc­tion and gain mar­ket share.

“We’ve changed the en­tire land­scape over the last five years by con­vinc­ing the gov­ern­ment that dairy is a sus­tain­able in­dus­try. They’ve even formed a na­tional dairy board for us, which means we can di­rect the gov­ern­ment’s at­ten­tion to­wards in­dus­try is­sues and work to­wards a greater al­lo­ca­tion within the agri­cul­tural bud­get.” As The Holstein Milk Com­pany con­tin­ues its evo­lu­tion in so many new, ex­cit­ing di­rec­tions, has Loi taken the time to pause and mar­vel at how swiftly Farm Fresh has cat­a­pulted him to suc­cess?

“I try to put it this way: in dairy, if you pro­duce a truly nat­u­ral prod­uct that tastes good and con­sumers know is dif­fer­ent, you’re in for the growth of your business be­cause they re­main loyal,” he as­serts. “We’ve given what we promised to our cus­tomers and stuck to our traditional val­ues, and for the past five or six years, we’ve had un­in­ter­rupted growth of be­tween 60 to 70 per cent each year. As we say in the dairy business, the cream al­ways floats to the top.”

“I TRY TO PUT IT THIS WAY: IN DAIRY, IF YOU PRO­DUCE A TRULY NAT­U­RAL PROD­UCT THAT TASTES GOOD AND CON­SUMERS KNOW IS DIF­FER­ENT, YOU’RE IN FOR THE GROWTH OF YOUR BUSINESS BE­CAUSE THEY RE­MAIN LOYAL.”

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