Malaysia’s major dairy producer, Farm Fresh has unveiled its RM83.9 million (US$18.6 million) acquisition of the country’s largest homegrown premium ice cream chain, Inside Scoop, marking its expansion into the downstream business.
The move paves the way for Farm Fresh to expand vertically and diversify its risk by no longer depending on a single income stream. For Inside Scoop, the acquisition by Farm Fresh opens new opportunities for the boutique ice cream chain to expand and add to its list of 37 outlets nationwide.
One of the major plans is to venture into the fast-growing consumer packaged goods (CPG) market, which means consumers will soon be able to purchase Inside Scoop’s ice cream from retail outlets across Malaysia. This will also mean Inside Scoop competing with major multinational players like Nestle and Unilever. Managing Director of Farm Fresh, Loi Tuan Ee said, “For so long, Malaysia’s ice cream market has been dominated by the big multinational brands. We are excited about bringing the artisanal ice cream into the retail market.”
As part of the plan, ice cream production will be housed in Farm Fresh new manufacturing hub on a 3.2 hectares plot in Negeri Sembilan. The new facility will be completed in 2 years’ time with an investment of RM90 million (US$20 million).
In addition, Farm Fresh hopes to increase the number of Inside Scoop stores by one every month for the next 3 years to tackle the lucrative US$250 million domestic ice cream market which has been growing at 4% annually.
The acquisition by Farm Fresh will create synergies to accelerate the growth of Inside Scoop in both the retail (CPG) and food services sector.
Tuan Ee said that Farm Fresh will allocate RM10-15 million (US$2.2-3.3 million) to increase the number of Inside Scoop stores while another similar amount will be allocated to establish the downstream business.
Inside Scoop currently boasts of more than 70 ice cream flavours, with Valrhona chocolate and durian being its best-selling flavors, and dairy (milk ingredients) accounting for 35% of its ingredients.
With the acquisition, Inside Scoop will be 65%-owned subsidiary of Farm Fresh while the Tan family holding the remaining 35% stake.