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
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.”