Please explain the history of TWPC and its business today
In 2015 TWPC was created through the merger of two companies, Thai Wah Food Products PCL and Thai Wah Starch PCL This merger is a historical milestone for Thai Wah Group which was founded 70 years ago. The reasons for the merger are twofold, firstly both the starch and the food businesses have a similar platform of distribution and export channels, secondly the DNA of the culture for both entities are the same with the focus on operational excellence and financial prudence. As a combined entity TWPC is a larger company with a stronger efficiency platform, financial strength and a diversification with the starch business being export driven to China and Taiwan and the vermicelli business that is more domestic focused in Thailand and export to USA, Europe and South East Asia .
How are both businesses operating and what are the plans going forward?
For our starch products we sell and distribute under the "Rose" brand which is a leading export brand in the overseas markets, particularly China and Taiwan. The applications for it are in foods such as snack and MSG, there are a whole range of applications for starch. Our vision is to continue being a leading producer and distributer of starch-products in the region and to explore new opportunities in ASEAN. For the food business, we have three brands, "Double Dragon", "Phoenix", and "Double Kilin" and our products are predominately vermicelli and rice noodles. In Thailand our market share is around 40% for vermicelli as there is brand heritage, trust by our key customers whom are food operators and restaurants. We see room for growth in both Cambodia, Vietnam, and Myanmar and with the continued consumption growth in those three countries, we feel that there are clear market opportunities. We have recently established new subsidiaries in both Cambodia and Vietnam to help facilitate our expansion efforts in the CLMV. Currently sales 90% of our food business is from Thailand but with these latest developments we are targeting for export in order to contribute to 20-30% within the next three to five years. It takes time to build and execute this strategy and are confident in pursuing and capturing the growth in the neighbouring markets.
What key decisions were taken that allowed TWPC to grow into the business it is today?
It is the culture of the team that has led the company to the position that it is today. The senior team has been with us for 20 years focused on operations and management discipline. We merged the two companies which were both in healthy condition thereby allowing TWPC to be financially and operationally healthy and with a strong platform to continue our growth. When you look at the past few years you will see that our asset efficiency, returns on capital, assets and so forth have generally been quite strong. This is because we maintained a focus on the business and will continue to going forward, we do have ambitious goals but will continue to adhere to the core principles.
How has technology impacted your business?
The core process is fundamentally the same which is buying the tapioca root, processing it and distributing the end of tapioca starch product. However the impact of technology has been positive with the manufacturing and operations processes where we do upgrade with new technologies as long as it is value added to our overall business. From a research and development perspective, specifically biotech, we are beginning collaborations with universities to innovation the different properties of starch whether it be physical or chemical that will hopefully lead to different types of food products in the coming years.
What impact does commodity prices have upon your business?
Tapioca is a niche crop that is primarily grown in ASEAN and therefore is less volatile to global events that impact commodities such as oil, soybean, sugar and others. It is important that we define ourselves as a premium branded export product providing our customers with a solutions application and not a commodity. Because of this we are able to maintain our margins at a level that is higher than pure commodity products.
What are the biggest risks facing your business?
I think that every CEO should be aware of the potential macro risks such as international trade, border adjustment tax changes, China's domestic consumption and so forth. But we have to be continuously prepared whether it happened or not and the more important is focus on building the team, the people, the company and the business to be more efficiency.
Where do you see TWPC in five years from now?
By 2021 we want to have one of a leading in ASEAN. The business expansion and the numbers are important aspirational goals but these goals are only achievable with a strong management team that will drive the business towards long-term sustainable growth and market leadership.