New tactics as tuna giant aims to focus more on consumer goods
Faisal Sheikh, head of global strategy and corporate business development at Thai Union Frozen Products, one of Thailand's few multinational corporations, explains to The Nation's Pichaya Changsorn why TUF has to be "obsessed with competition" and become more consumer-centric.
"What keeps [me] awake at night includes the 'category dynamic', as markets have become mature and profitability has come under pressure." - Faisal Sheikh
A former principal at consulting firm Booz & Company focusing on the consumer-goods sector, Faisal Sheikh is one of the many new executives who have joined Thai Union Frozen Products (TUF) during the past several months.
His position as the head of global strategy and corporate business development was a newly created one at the company, along with many other new heads of corporate functions and business units, including information technology, sustainability, corporate communications, safety and engineering.
Among the chiefs of other key new corporate crews is Supatra Kuratana, the former marketing director of American Standard B&K (Thailand), who is TUF's head of marketing for Asia.
At TUF's recent global management meeting, there were 70 top executives participating, with 20 per cent of them being new to the group.
The management reshuffle reflects a major overhaul at TUF, which has acquired many seafood brands and companies in the United States, Europe and Thailand over a period of many years. Despite its global reach, the company has only recently begun to ramp up its systems and build up teams to become a more globally integrated business.
Sheikh said TUF had achieved an impressive growth record since its foundation in 1977, driven by organic growth and acquisitions, especially during recent years.
He described the exceptional 50-per-cent drop in net profit registered during the first nine months of 2013 as a disappointment but not a surprise, since the firm had faced a "perfect storm" of a severe shrimp-disease crisis, highly volatile tuna prices and political crises in the Middle East, as well as a big loss at its pet-food subsidiary in the US.
"This [how TUF recovered] is impressive in its own right. Surviving and recovering fast, our third-quarter results were up 180 per cent compared [with] the second quarter, and the prospects for the final quarter continue to be strong," he said.
Key strengths, new strategies
Sheikh attributed TUF's success to four major factors: its customer-centricity; its good business partners; its expansion into new categories and value-added products; and its "smart" acquisition of brands and businesses, all of which were undertaken with good financial discipline.
At the global executives meeting, TUF drew up a strategic framework that comprises three major elements: continuing customer-centricity; being consumer-centric; and an "obsession with competition". Customers in this sense include retailers and traders, while consumers are the end-users of its products.
An obsession with competition means TUF has to build up its capability to anticipate changes and stay ahead of its rivals, since market competition has become very intense. Category maturity in some key markets has translated into lower demand growth, leading to demanding retailers who put more pressure on their suppliers' profitability, he explained.
Sheikh cited Bolton Group International's recent acquisition of stakes in Tri Marine International as an example of the ongoing consolidation of the world's tuna industry. Bolton Group is one of the largest branded tuna companies in Europe, while Tri Marine is one of the "big three" tuna traders, along with Taiwanese group FCF Fishery and Itochu, a Japanese trading conglomerate.
He said TUF was currently doing well on the "midstream" or the food-processing part of its business, thanks to its efficiency and ability to "mass-customise" its thousands of product items.
Meanwhile, the company has recognised the need to strengthen its "upstream" capability, and is therefore expanding its fishing fleets.
On the "downstream" or marketing side, it currently sees no imminent need to buy more brands, preferring to leverage more from the ones it already owns, such as through expanding sales coverage beyond their traditional territories.
Beefing up innovation and new product development are also among the key ingredients of TUF's new drivers for growth, although it is not easy to innovate with tuna, Sheikh acknowledged.
He said what kept him awake at night included what he calls the "category dynamic", as markets become mature and profitability comes under pressure.
Second, managing complexity has become a key challenge after the firm achieved phenomenal growth over the past couple of years, making it a large and complex organisation.
Third, global competition and the industry's consolidation amplify a need for TUF to find ways to stay ahead of the curve.
Fourth, solving the problems at its pet-food subsidiary US Pet Nutrition is still a challenge, although a turn-around plan is in place and progress is being monitored closely by headquarters, he said.
Meanwhile, early mortality syndrome (EMS), a shrimp disease that has been a major pull on TUF's profit this year - with the outbreak expected to halve Thailand's total shrimp output to about 250,000 tonnes - is no longer a big worry for the group.
"We think EMS is behind us. Now we know how to live with it," he said.
A Pakistani by nationality, Sheikh, 36, was born in Saudi Arabia and raised in the US, where he graduated with a Master of Business Administration from Cornell University in New York state. He later moved his wife and four daughters from Dubai to Bangkok.
Besides working for Booz & Company, he previously worked for a number of major fast-moving-consumer-goods companies, including Campbell Soup and Colgate-Palmolive.
Sheikh's work background echoes some analysts' reports that say TUF is in the process of transforming itself from being a food-processing company to being more like a consumer-products company.
Stephen Golsby, the former chief executive officer at Mead Johnson Nutrition, a global company producing and selling milk and other nutrients for babies and young children, has also joined TUF - as an adviser to the group.