The milkman has a long history of supplying an essential component of daily life by satisfying a customer’s thirst for milk and beginning a family’s day with the best form of nutrition for both adults and children. Today, Loi “The Milkman” has embodied the role of delivering fresh and nutritious milk to his fellow citizens to start their day on the right foot. Loi has proven himself as a leading entrepreneur by building, scaling and listing Farm Fresh for an IPO size of RM1 billion marking Malaysia’s largest IPO since June 2021.
In this episode, we explore how Loi has come to be known as “The Ethical Entrepreneur” through his mission to create a generational impact on customers' health through his milk and becoming Malaysia’s market leader in all-natural and fresh dairy products.
What were some of the early struggles Farm Fresh faced during its beginnings in the Malaysian market and how did you overcome it?
First Round Of Funding
As Loi narrowed down his product offering and began to scale he found it difficult and expensive to adhere to the logistics he had hoped to fulfill such as transporting his goods from the farm into the city which signaled him to begin searching for monetary support to streamline Farm Fresh’s logistics which led him to seek help from a government incentive program by Khazanah. “As the business began, I was quite fortunate that Khazanah and the government were actually promoting agriculture as a business which gave me an opportunity to get a backing to purchase another 500 acres of land,” says Loi.
Big Fish, Little Equipment
One of the biggest challenges Farm Fresh faced in its early years was competing with the multinational brands that had decked the shelves of supermarkets for the longest time as Loi points out that the perception of any dairy product lined up on a chiller is perceived as ‘fresh’. Loi describes that in the early days of Farm Fresh its products were unrecognizable and nearly unacknowledged as its products were laid at the bottom of the shelves as he explains “You wouldn’t find it from a quick search at the supermarket, you would really have to browse through the isle until you find a bottle of Farm Fresh right at the bottom.”
Like many other businesses, Loi explains how he didn’t have the best equipment to work with which made the product life span in supermarkets quite short, “Our products had about 12 to 14 days shelf life in thesis and due to logistics there would only be 10 days left once we got it to the shelves, and if within a week the customer doesn’t spot the product you would need to pull it out of the selling floor and discard it.” says Loi. This motivated Loi to spend his early days on the selling floor which gave him the reassurance that his product’s definitely had demand and the right product market fit for his customers. Loi would spend his weekends in the supermarket, and he could recognize that there were returning customers to buy his milk which gave him a real comfort that the business was going somewhere positive.
Stay Close To Your Competitors, Stay Closer To Your Customers
As Loi spent his time on the selling floor as a personal salesman for his brand he became familiar with his returning customers and he found a great number of them coming back for his product/milk, “I love it and my children love it.” many of his customers would say which brought real confidence to Loi in his brand and his product for the market. He expresses that a customer is always willing to try a new product which gives significance on how impactful a brand’s first impression must be. In any case, Loi tells us that he was able to quickly and confidently scale his business because he knew first hand about his customer retention rates.
What is your advice to fledgling brands who are targeting the mass market?
Stay True To Your Brand Promises
In today’s market with its abundance of choice for consumers, young brands must identify their core values as it's important that your brand promises take center stage in making key decisions. As for Loi, he places his customers first, “I think to build a brand where the customer loves you, your core values are to please the customer’s wellbeing and interest first.” says Loi. He continues to express that he’s seen many brands start-up and fail to scale because they didn’t keep to their brand promises, “If you begin to sway, it is only a matter of time when the customers who supported you and your values will no longer hold any value.” says Loi. Loi’s words demonstrate the importance of keeping your brand promises to successfully retain the audience your business has been able to acquire to maintain the longevity of a brand to survive in the market.
“Better Diary, Stronger Communities and a Healthier Planet” - Farm Fresh’s Promise
With prices going up across the board due to inflation and now having multiple cornerstone investors in your portfolio after going public. How do you manage your promises to your shareholders as well as stay true to your customers?
Keep To Your Brand Promise
One of the advantages of remaining as a private company is being only accountable to your chosen partners but as a newly listed company Loi has begun to feel the pressure of remaining accountable to Farm Fresh’s investors and keeping to his shareholder promises. One of his promises is to increase Farm Fresh’s share price for his shareholders to profit but the rise in inflation makes it difficult to continue without an increase in prices for his products. However, at the brand’s core he still values his customers and places significance on maintaining their loyalty, “We built a company from scratch whereby we acquire loyal customers who have supported us over the last decade which has brought us to where we are today.” says Loi.
He believes it is important to strike a balance between managing shareholders and keeping his customers happy. As Farm Fresh keeps to their brand promises it has caused them to trail behind their competitors in terms of price increases due to cost pressures from rising inflation, supply chain disruptions, and other macroeconomic effects. Farm Fresh has only managed to increase their prices once over the last 2 years whilst other competitors have managed to increase their prices 3 or 4 times. As of now, Loi plans to maintain his prices by absorbing the extra cost to ensure he holds his market share in which he uses to convince his shareholders to believe in Farm Fresh’s long-term potential, “I would hope that over the years I will be able to convince these big fund managers to look into Farm Fresh as a long-term investment because our yard stick here is that we don’t lose our customers which builds brand resilience.” says Loi.
Please explain your thought process in listing Farm Fresh? How does that set the tone for your succession plan and how can you continue to keep your brand promises?
Paying Back Our Supporters In 10 Fold
After gaining the undying support of their investors in Khazanah for over a decade, Loi believes in allowing his supporters to monetize their gains to accredit his investors with their continuous support, “IPO was naturally a good plan to give our investors an exit route.” says Loi. As Loi lists his company, he feels the pressure to accommodate his institutional investors yet he remains firm on maintaining his brand promises.
Gathering The Right Personnel
Loi in his experience has set his course on allowing his succession plan to be open to those who are capable rather than keeping his business within his family and giving control to his heirs as he had learned that lesson from his former company, “I don’t really believe in a family business. I wouldn’t want my children to run the company if they are not up to the task. I want Farm Fresh to be run by people with very high integrity and who are really high caliber because we’re not competing against small businesses, our competitors are giants!” says Loi.
Maintaining Your Promised Values
“So long as I’m around, those values will stay intact.” says Loi as he understands that it will be difficult to control the company’s agenda once he is out of the picture. Therefore, he places great emphasis on building the right team who will not depart from the brand promises he has instilled in Farm Fresh. He explains that one of his greatest values is keeping his customers and supporters first with good reason as Loi states, “The moment you don’t keep to your brand promises, yes, you will make gains in the short run but it will catch up to you over the long run.”
As you’ve grown Farm Fresh, you have developed a keen sense on improving the ESG (Environmental, Social, and Governance) market through your products. How are you tackling ESG to improve the social well-being of your customers and your industry?
Loi proudly claims that his company Farm Fresh is one of the only companies in the Malaysian market who voluntarily publishes their ESG report. He has been able to identify his footprint by undergoing a complete audit on his business to better understand his emissions output and in doing so, he is now able to consciously move forward to reduce his emissions over the next couple of years to ultimately reach a net zero emission statement. He emphasizes that he has been able to improve his ESG efforts by thoroughly auditing his company, being completely transparent with his customers and investors, and working mindfully towards reducing his company’s footprint.
Plucking At The Roots
Let it be known that the current infant formula market is to be seen as really unhealthy with its high content of sugar affecting the taste buds and well-being of young children. Holding himself at an extremely high ethical standard, Loi plans to branch into the infant milk formula industry to leave a healthy foundation for future generations. If asked by his investors about ESG compliance Loi would expound, “What about the social impact in terms of customer’s health? Why are we not fixing that? Imagine the health implications when someone as young as 2 years old grows up consuming all that sugar.”
Supplying Milk & Opportunities
Farm Fresh today is able to create over 2000 hours of opportunity for home dealers to simply sell a highly demanded product to their neighbors and friends which allows them to make upwards of RM5000 per month. “If you can impact someone's life in such a positive manner through your business chain without government intervention is a means for every business to make possible.” says Loi. In addition to making his supply chain a sustainable practice, Loi is also determined to erupt a social impact to give his fellow citizens a means to live sustainably too.
Finally Loi adds, “Beyond our numbers, in terms of the value of our company, I think it is very important how we treat people, how we actually look after the customer’s health, and animal welfare should all add up to properly value a company’s worth.”
What do you believe are the main catalysts for Investors to buy into Farm Fresh?
Setting Up In Untraversed Waters
Although Loi has listed his company, he believes there are still opportunities for him to tackle which will attract investors. Unlike many of his competitors who are operating in massively populated markets such as Indonesia and Philippines, he believes that investors will see the underlying potential that Farm Fresh has to capitalize on expanding into untapped markets where they are not yet present.
Expanding Product Lines & Demographic
Similarly to expanding his geographical presence, Loi also wants to expand into different demographics to effectively target a larger audience who’re already using his product. One space he has identified is the 2 billion ringgit infant formula market that is currently monopolized by multinationals that step on the boundaries of the ESG market. “It’s not that the milk powder formulas are a bad product, it’s the amount of sugar in there that should be a cause of concern.” says Loi as he quotes “The next big shoe to fall in ESG is sugar!”
Creating Value Beyond Numbers
In addition to the countless opportunities that Farm Fresh has to expand their product lines and expanding into other regions, Loi hopes to attract institutional investors who wants to hold their invested company at a high ethical standard for greater welfare for the economy and people’s well-being as Loi states, “We have built a company where all the Malaysians and lots of mamas love and appreciate us. So we hope our fund manager looks to adopt the kind, loving Farm Fresh who really looks after their customers and really cares for the earth.” he further adds that fund managers also have the opportunity to drive these value into other companies, “I think you have to look at a company in totality and not just how much money it is making. Any company can make tons of money but are they responsible? That is the kind of company the people appreciate and the investment committee has the means to raise the bar to get business owners to behave in an ethical manner instead of just churning the company with growth and profit.” says Loi.
What is your advice to Entrepreneurs who are looking to scale their business to the size of Farm Fresh?
Prepare For The Long Hours
Loi has rekindled his passion in living the farm life through Farm Fresh and it has taken a lot of grit and hardwork for him to have reached the stage he is at now. The first piece of advice he offers to Entrepreneurs is to prepare for the long hours as Loi expresses, “For any company growing at this kind of pace, you must prepare for the long hours because there is no shortcut. There are a lot of details to pay attention to and you will need to rally the teams.” He further expresses that a company that is looking to have a similar growth rate needs to understand that there is a lot of adaptability that comes with rapid growth. He reminisces that in his experience, his business plans have a tendency to change every 6 months to consistently cater to his customers and the company’s growing pace.
People Make The Business
Loi accredits a lot of his scaling success to his teams who are able to continually work the long hours towards business goals and delivering on its brand promises. Similarly, Loi further emphasizes that without his team he wouldn’t be able to cater to key personnel who operate far down the company hierarchy, “The people are important and they make the key difference to the business. Farm Fresh has grown to a size where I can’t easily talk to the people down the line but my teams make it all possible by continuing to motivate all personnel and ensuring that they remember what the company is fighting for.”
Loi has grown Farm Fresh to become a market leader by organically cultivating an audience of extremely loyal customers who will continue to serve their children fresh and healthy milk for generations to come. From a humble farm to a successful IPO in 2022, Loi has definitely made a mark in Malaysia’s entrepreneurial ecosystem.
The content of this article is summarized from our ‘Thought Inspire Series’, a series of six exclusive physical interviews with world-class & established company owners highlighting their entrepreneurship journey organized in collaboration with CGS-CIMB. The series is aimed to inspire, entertain and motivate all aspiring and existing entrepreneurs in the Malaysian entrepreneurial ecosystem. Follow us on our social media pages to get the latest news on upcoming events and key learnings.