to UK, their TLT in Malaysia will know exactly what the requirements are for the UK market. Once both offices are satisfied that the particular product meets their safety requirements, they will then start to look at the standards and later discuss its terms and conditions.
SUPPLY & DEMAND
Expressing his confidence that Halal products are very much in demand in the UK and the Halal industry is actually thriving over there, Azlam pointed out that they have done a similar program in 2004 where they stocked their shelves with Halal and ethnic goods. Through the many market research and customer questionnaires, they found that customers in UK actually wanted more Halal-certified products than the ethnic foods. “We first tested in one particular store in Slough where there were requests for Halal meat. So we opened a butcher shop selling Halal meat and that was an overwhelming success. Using that same concept, we extended our ethnic range by providing more ethnic foods and we also opened up a section on Halal food, and that too created a lot of interest and people started asking for more. Again, the success was overwhelming and that was when we realised there is this huge demand for Halal products. Now we are going ahead to sell in about 50 stores all over UK,” he said. “And now we are trying to see if we can help the government to fast track the Halal hub initiative by sending more local Halal products overseas. But it all depends on the quality, price, availability, and of course demand. At the end of the day, if the product is not sellable, there is nothing much we can do, regardless of how much instore promotions we carry out,” he added. That should be the challenge for local Halal manufacturers – to manufacture quality and sellable Halal products.
Azlam expects that the supply of local Halal finished products to UK will commence as early as 2007 when their RM50 million fresh distribution centre in Simpang Pulai is completed. Built on a 15-acre property, the centre will have 14,000 square metres of cold storage facility that will take in fresh produce from farmers around Cameron Highlands before re-distributing it back to all their 13 stores throughout Malaysia. In fact, Tesco has penned its commitment with the Perak state government to buy RM100 million worth of agricultural products over the next five years. Fresh produce does not only mean fruits and vegetables, it would also include poultry, meats and seafood. “As we speak, we already have three contracts that are in the finalising stage with some of the Perak suppliers to supply fish, prawns and poultry. We are also negotiating for some other products from local farmers,” Azlam added. According to him, Tesco currently does not own a fresh distribution centre in Malaysia except a temporary one in Balakong as it requires at least 12 – 15 stores to make it a cost effective exercise. Since they now have 13 stores, with their 14th store opening in Ampang by the end of July and another two sites pending for approval, Tesco is now ready to buy local agriculture produce on a huge scale. “As it is right now, suppliers are delivering directly to our stores, so it is a bit difficult for them, James McCaan, chief executive officer of Tesco Malaysia especially for smaller players. Once we have our distribution centre, end of the period, whoever is able there will be more opportunities for small holders to to deliver will survive,” said Azlam. supply directly to us. We are also working with the state government to identify other potential suppliers. As for the RM1 billion Halal They will grow whatever we want and we will teach exports to UK, the success of the them all the right methods in terms of making sure program will also depend upon the all of their products meet our standards,” he said. new fresh distribution centre, since He added that this is actually easier said than the centre will be responsible in done. Local farmers, by their very nature, need plenty ensuring that all finished products of training and Tesco uses a hands-on approach in meet the required BRC standards. educating these farmers. Tesco usually invites the To address this concern, they will be farmers to come to their stores, observe the back-ofworking with the Small and Medium house activities, how the produce are being handled Industries Development Corporation and cleaned. They are even asked to do the processes (SMIDEC) to ensure that the themselves, making sure they truly understand how suppliers meet their requirements. it works, from unloading right up to the shelves. “We are doing a three-pronged “But it is a long educational process. It took four to approach with SMIDEC. One is about five years in Thailand to come up with the level they are awareness and training to increase at now where produce are on the shelves in less than 24 level expertise of the suppliers. The hours after harvesting. Customers are very demanding, second is to open up export market they want freshness, and so do we. But some farmers do within Tesco where the suppliers are not understand, so we have to be transparent. We tell ready and have the products but them the price and the volume for one year, and they don’t have the market to supply. For must tell us whether they are able to deliver or not. At the
“TESCO IS EXTREMELY PLEASED TO BE ABLE TO OFFER THIS SUPPORT TO THE MALAYSIAN GOVERNMENT. THE EXPORT OF RM1 BILLION OF HALAL PRODUCTS TO THE UK WILL REALLY HELP MALAYSIA TO DEVELOP QUICKLY INTO A GLOBAL HALAL HUB,”
this, we will link them up with our international sourcing hub in Hong Kong. Aside from sourcing for viable companies, SMIDEC will also help us to build capacity and capability within the Halal industry,” he added. One of the key steps that have been undertaken by Tesco Malaysia is to develop a Supplier Guidelines Communication Pack for potential suppliers, as well as organising seminars and workshops for local suppliers on supplying to hypermarkets like Tesco. The most recent was in early May when Terry Babbs, head of Tesco’s TLT UK came over and gave a talk about supplying there. He later spoke at the inaugural World Halal Forum about a supermarket’s perspective on Halal food. Aside from the fresh distribution centre in Ipoh, Tesco Malaysia will also build an ambient distribution centre in the Klang Valley, which is expected to be ready by 2008. But they are not waiting for the new centre to start supplying Halal products to the UK. As it is, they will be pushing for some of their in-house labels that have met the BRC standard for exports to UK. “At the same time, we are also looking at some of the more established names in Malaysia which we think can penetrate the UK market, which are mostly within the ready-to-cook meal segments, and also some of the spices, herbs and sauces. We are also talking to a few interested parties to supply, so it will just be a matter of time,” he said.
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