David Teo became an accidental coffee pioneer in Singapore in the late 1980s. His wife Te Lay Hoon’s clothing store had failed, and she was at loose ends. Teo had a business of his own supplying plates for printing presses but got the idea that busy Singaporeans might want an easier and faster way to get their caffeine kick. Soon Te and two of her siblings were set up in a 2,000-square-foot instant coffee packaging operation.
Instant coffee was then mostly sold in jars, and consumers needed their own creamer and sugar. Teo’s inspiration was to package the three ingredients into 20-gram sachets and brand it 3in1 Coffee. That wasn’t enough, however. Sales were slow, and he was prepared to write off the $55,000 venture.
Instead, he tinkered with the coffee’s ingredient mix to better appeal to the Singaporean palate. “I tested it, gave it to my wife, my friends, everyone,” he says. He also spent heavily on a big marketing push. In the second year, sales in Singapore reached nearly $3 million, and the bigger picture came into focus: Asia’s coffee market was experiencing double-digit growth, and his coffee-mix formula could be adapted to fit different tastes. While Singaporeans prefer a thick, aromatic coffee, the mix could be made sweeter for Thais, for example, or milkier for Chinese. Convinced it would work, Teo began to export. “After the sachets became a hit in Singapore, my dad immediately moved into Malaysia, Thailand and Myanmar,” says Teo’s son, Darren, the corporate strategy manager for the family company, Super Group. “That’s why in all of these markets, we have the first-mover advantage.”
Today, Super is the second-biggest seller of instant coffee in Singapore and the number one seller in Myanmar, which is the company’s second-largest market (see box). It also ranks near the top in several other Southeast Asian markets, though Swiss food-and-beverage giant Nestlé—which began selling Nescafé 3in1 sachets in the 1990s—is the region’s leading brand by far.
Convenient coffee won’t sell itself. Teo spends a high 10 percent of revenue on advertising and promotion. One payoff: Super moved up to No. 40 on the 2013 ranking of Singapore’s most-recognised brands worldwide, according to Brand Finance, a UK consultancy.
It’s a long circle from the family coconut-candy factory, where as a youth David Teo, oldest of nine, worked in Johor Bahru, just to Singapore’s north. He was 18 when his father died, leaving him in charge of a business that wasn’t making any money.
He closed the factory and opened a noodle restaurant before a friend of dad’s helped him set up a business printing price-tag stickers. He kept evolving, and in 1981 a chance connection got him a shot with Fuji of Japan, and the result, Fuji Offset Printing Plates Manufacturing, became a leading regional supplier. Teo remains its executive chairman, and his one-quarter ownership is worth $2.1 million.
Coffee, meantime, begat a portfolio of more than 300 instant beverage and food products. Super’s fastest-growing segment is now the food ingredients unit, which sells in bulk to food and beverage producers and last year, just five years since it started, racked up nearly a third of Super’s $425 million sales.
Revenue has almost doubled since 2008 and should reach $478 million this year, according to an average of estimates collected by Bloomberg Finance. Net income soared 32 percent last year, to $65 million. The company has earned “ten-bagger” status, with the value of its stock increasing a good tenfold over the past four years. Super now owns and operates 15 plants throughout Asia, employs 2,800 workers worldwide and does business in 52 countries.
Super’s move into the food supply business had its roots in a lesson in controlling costs that Teo learned when a supplier for Super’s 3in1 cereal pushed up its price. In 1993, he invested in a production line for cereal flakes and before long was building his own plants to produce coffee-mix ingredients—including soluble coffee powder and nondairy creamer—so he could manage quality and supply.
Those plants initially were only for Super’s own products. After Darren joined Super in 2007 as an economics grad of the National University of Singapore, he won his father over with an idea: Why not supply other companies? The launch came shortly before the 2008 milk scandal in China—at least six babies died after drinking infant formula tainted with an industrial compound—and big food-and-beverage companies started to shy away from China-made ingredients.
“A lot of big brands saw what happened to [Chinese dairy products company] Sanlu, which collapsed overnight,” says Darren, 30. “They didn’t mind paying a slight premium for reliability and safety.”
Demand for its ingredients, including a bottled nondairy creamer that David developed and marketed to milk-tea makers in Taiwan and China, quickly outstripped supply, and it took time for Super to ramp up capacity.