Finally attending my first AGM after so many years of investing. Stayed there for an hour and these are my takeaways.
1. Both Chairman and CEO are straight talkers and they know what they are doing. Glad that they took time to answer to various queries.
2. CEO shared generally the strategy the company takes in exploring new market. An active approach including sending team in to find and try out new market is first year. Second year, they will refine their sales strategies and products. By third year onwards, they will decide if they will continue to pour in more resources to the market. A passive approach is to work with distributors and importer but normally passive approach seldom succeed but it gives them a rough feel of the market.
3. Business is in a competitive market and they need to put in a lot of investment initially to break into the market. For example, they were in Vietnam for more than 5 years to revive but only see results in the past 2 years.
4. Internal target for Vietnam market is about 10% and they achieved about 8% share.
5. Larger margin in Russia/Ukraine/CIS than Indo China as they are market leader. A lot of investment still needed in IndoChina as they try to gain market share.
6. Caffe Bene. They provide advice and try to change the way the management run the operation. These include simple suggestions like including sandwiches in the menu. They are hopeful that 2017 will be a better year.
7. Others market consist of Iran, UAE, China, Africa countries.
8. A shareholder talked about selling coffee in tea-drinking countries such as India/Russia/China. Interesting response from CEO, it is precisely they are tea-drinking countries that they can sell instant coffee to them.
9. Currently, not selling in India. The instant coffee produced in India is exported. Within one year, break-even. And it seems that this is the same region that Singapore government is working together with Indian government. It seems to be operating at 90%.
10. Next 3 years. Asia – specifically IndoChina, China and India (not this year). For China, they have got a veteran who was successful in Mongolia to drive the grow. Looking at selling coffee on-line.
11. Rented out 100% at a rent rate about 2 dollars. The buildings are necessary as they act as collateral when they want to take loan from the banks.