ST

SMU478

SENG HUA HNG FOODSTUFFS: CRACKING THE CAMEL NUT

FOR GROWTH, USING DATA ANALYTICS

PO
Colin Chin, head of Group Finance at Seng Hua Hng (SHH) Foodstuffs Pte Ltd, Singapore, was
pleased with the report he was reading. Harnessing the power of data analytics, the May 2018 report
presented visualisations of the company’s historical data to date, and predictions for the future -
something which had been nearly impossible before the era of big data.

Data analytics was the process in which state-of-the-art technologies such as artificial intelligence
and machine learning were used to process big data, which consisted of massive volumes of highly

R
complicated information, to identify patterns and draw conclusions from them.

It was more than a year before, in early 2017, that Colin had joined the management team of the

O
snack producer under the brand name Camel. As a new member, he had to make sense of what was
behind and what lay ahead–the company’s history and its future. He explained, “We need to know
the past to understand the present and to plan for the future.”
PY
As a traditional family business, SHH had in the past relied on ballpark estimates, rather than hard
data from scientific calculations, to make key strategic decisions. Supply of products for the current
year was generated based on past demand; what had worked in the previous year would be repeated
in the following year, and that practice had continued throughout the years. One of the key challenges
was the lack of accurate demand forecasting on a periodic basis.
O

Colin instinctively knew data analytics could be the solution. In late 2017, he commissioned a team
of accounting students from Singapore Management University’s (SMU) SMU-X initiative1 to build
a financial forecasting model with both analytical and predictive capabilities. Introducing data
C

analytics to the company was attempting to marry data science and the art of entrepreneurship. Colin
explained,

Data analytics is like trying to put science into art. Doing business is an art. So far we have
been ‘artists’ for the last 40 years.
T

As the leading nuts manufacturer in Singapore, SHH had sought to be progressive and growth was
always on the mind of its management board. An ambitious goal had been set to achieve S$100
O

1 The SMU-X initiative offered a powerful curriculum which motivate students to master new leadership skills and apply their knowledge
in solving real-world problems. SMU-X is an experiential learning framework with which students tackle real-world opportunities by
N

taking on projects from companies and community organisations. https://x.smu.edu.sg/, accessed August 2018

This case was written by Professor Gary Pan, Dr. Cheah Sin Mei and Lipika Bhattacharya at the Singapore Management
University. The case was prepared solely to provide material for class discussion. The authors do not intend to illustrate either
effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying
O

information to protect confidentiality.

Copyright © 2019, Singapore Management University Version: 2019-02-10

D
 SMU-18-0040 Seng Hua Hng Foodstuffs: Cracking the Camel Nut for Growth, Using Data Analytics

million (US$72 million) revenue, presence in 100 countries and S$10 million (US$7 million) profit
by the year 2020 – referred to as ‘100-100-10’. It was a highly challenging target, and to this end,

ST
Colin pondered,

How can we grow our existing markets, both domestically and overseas? By how much can
we grow? What are the new markets we could enter? What is the potential cannibalisation
of existing products if I introduce a new product?

PO
SHH Foodstuffs

Founded in 1974, SHH was the company behind the brand name, Camel Nuts. Started by Poh Ah
Seng, his wife and a family friend, a home backyard was its humble beginning. The small setup
initially produced only peanuts and hired fewer than 10 employees.

R
In 1992, the acquisition of a 10,000 square metre factory marked a turning point for the company.
SHH gradually expanded into the production of a variety of nuts and eventually established itself as
the largest nut manufacturer in Singapore, with a market share of 36% in 2014 (refer to Exhibit 1

O
for SHH’s share of savoury2 snacks market in Singapore).3 As at 2018, the company had grown to
a staff strength of about 170 employees.

The main line of business of this small-and-medium enterprise (SME) was the manufacturing,
PY
processing and packaging of nut snacks. As the market leader of the nut snack industry in Singapore,
SHH’s competitive positioning lay in offering quality nut products at affordable prices. Simply put,
its target was the mid-market consumers.

Besides producing snacks under the Camel brand for the retail market, SHH also provided private
label packaging for local house brands and contract manufacturing for the service industries, such as
O

hotels, airlines, event organisers and food caterers.

The Camel Nuts Brand

C

The Camel brand covered an extensive range of over 40 product lines, including peanuts, green peas,
pistachios, macadamias, cashews, almonds and broad beans. Cashews and pistachios had
commanded a loyal customer following over the years and were among Camel’s bestsellers.
T

Occasionally, the company would introduce new products to their existing offerings. Muruku
crackers, a favourite snack for the Indian community, and cassava chips, were two examples.
O

Camel enjoyed a prominent brand presence in both local and overseas markets. In Singapore, the
Camel brand was a household name as its snack products lined the shelves of major supermarkets
and retail stores (refer to Exhibit 2 for Camel’s brand share of savoury snack market in Singapore).
N

In 2002, after securing a strong foothold domestically, the company began to export its products

2 Savoury snacks include a variety of products including potato crisps, corn chips/tortillas, puffed and baked snacks, crackers, pretzels,
savoury biscuits, popcorn, meat snacks, peanuts and other snack nuts.
O

3 Euromonitor International, “Seng Hua Hng Foodstuffs Pte Ltd”, via Passport database, accessed 28 May 2018.

2/17
D
 SMU-18-0040 Seng Hua Hng Foodstuffs: Cracking the Camel Nut for Growth, Using Data Analytics

overseas; and as at 2018, Camel could be found in 29 countries, particularly in Asia and the Middle

ST
East.

In recognition of its outstanding achievements over the years, Camel Nuts was conferred the
Singapore Promising Brand Award by Singapore’s Association of Small-and-Medium Enterprises in
2003 and 2005, as well as the Singapore Asia Pacific Brands Award by Singapore’s Trade and
Industry Association in 2012. Camel Nuts was a Tasty Singapore endorsed brand, and one of the

PO
brand ambassadors under a government initiative to bring Singapore’s F&B brands to the
international stage.4

The camel had been chosen as the brand’s mascot as it symbolised resilience and embodied a fighting
spirit to survive in harsh weather conditions. The founder of SHH hoped his business had the same
tenacity to be able to weather through storms and stay afloat amidst increasing competition. Indeed,
the company with more than four decades of history had survived major crises, such as the economic

R
recession in 2008.

Hailed as the worst ever financial crisis to hit Singapore, the recession in 2008 left many small
businesses struggling to survive. SHH was no exception and its performance suffered a dip (refer to

O
Exhibit 3 for SHH and the savoury snacks industry’s performance for the period from 2009 to 2016).

Data Analytics in Food Manufacturing

PY
Singapore’s Food Manufacturing Industry

The food manufacturing industry was a prominent sector in Singapore, contributing US$2.75 billion
(S$3.8 billion5, approximately 1% of the country’s GDP), and employed about 30,000 workers.6
More than half of the industry’s annual output was exported to other countries, such as China and
O

Japan.

The industry had been performing well even during difficult times. In 2017, many businesses,
C

particularly SMEs, were affected by a sluggish economy due to a lower sales turnover and a crunch
on foreign labour, which formed a sizeable proportion of the local SMEs’ workforce.

Despite the short-term optimism, the economic climate in the long-term remained challenging, both
domestically and internationally. On home ground, SMEs had to grapple with a tightening labour
T

market, rising operating costs and infrastructural restrictions; globally, markets remained turbulent
and uncertain. The question then arose as to how SMEs could compete under such market dynamics.
O

The opportunities for businesses in the food industry to tap on data analytics were numerous. For
example, the Dansk Supermarket Group, a retailer in Denmark operating a chain of grocery stores,
N

4 Tasty Singapore was an initiative of Enterprise Singapore to promote Singapore food products, with an emphasis on the high level of
quality and safety, to the world. https://ie.enterprisesg.gov.sg/Assistance/Industry-Partnerships/Tasty-Singapore/What-is-a-Brand-
Ambassador, accessed 28 May 2018.
5 US$ 1 = S$1.38, annual average for 2017, www.oanda.com, accessed August 2018
6 Enterprise Singapore, “The Food Manufacturing Industry in Singapore”, https://spring.enterprisesg.gov.sg/Developing-
O

Industries/FM/Pages/food-manufacturing.aspx, accessed 28 May 2018.

3/17
D
 SMU-18-0040 Seng Hua Hng Foodstuffs: Cracking the Camel Nut for Growth, Using Data Analytics

analysed consumer buying preferences from past sales trends, and used the insights derived from the
analyses to stock its inventory level such that it matched demand in a timely manner.7 As a result,

ST
the retailer overcame the twin problems of understocking and overstocking, thereby increasing
customer satisfaction and minimising wastage.

The other areas where data analytics supported the making of critical business decisions included
new product development, investigation of supplier or production issues, formulation of product

PO
pricing and promotion strategies, to name a few.

Challenges and Opportunities towards Data Analytics Adoption

Many SMEs were operating as traditional, non-digital businesses, and they perceived data analytics
as ‘mumbo jumbo’. SME business owners felt intimidated about using data analytics capabilities due
to lack of knowledge. They simply did not know how they could leverage their existing data to make
better decisions. Another obstacle that impeded data analytics adoption was the low priority of

R
allocating budgets in SMEs for long-term planning and data analysis.

Recognising the difficulties they faced, the Government of Singapore had implemented initiatives

O
aimed at helping SMEs understand and acquire data analytics capabilities to potentially increase sales
and grow revenue. Additionally, in 2016, the government had introduced a national plan to develop
the country into a food and nutrition hub in Asia by 2025.8 A Transformation Map was built for the
food manufacturing industry as part of the plan, under which food manufacturing companies could
PY
tap on schemes to accelerate their technology adoption. Companies could also leverage the ‘Go
Digital’ programme, launched in 2017, to strengthen their digital capabilities, particularly in the area
of data analytics.9 The programme aimed to assist SMEs adopt digital technologies to automate and
streamline their operations by providing off-the-shelf digital solutions that were pre-approved by the
government for funding support.
O

SHH’s Data Analytics Journey

C

The Quest for Growth

SHH’s commitment to produce high quality nuts for the mass market was the foundation of the
company’s growth to become the domestic market leader. Leveraging on its strength, the firm aspired
to continual growth, hoping to capture larger market shares and make debuts in new markets.
T

In 2016, SHH made a strategic decision towards global expansion and formulated a vision map for
their ‘100-100-10’ growth target, which included concrete goals with specific timelines.
O
N

7 Hewlett Packard Enterprise, “Developing a Taste for Big Data”, October 12, 2017,
https://www.hpe.com/us/en/insights/articles/developing-a-taste-for-big-data-1710.html, accessed 2 July 2018.
8
Enterprise Singapore, “Food Manufacturing”, https://spring.enterprisesg.gov.sg/Developing-Industries/FM/Pages/food-
manufacturing.aspx, accessed 28 May 2018.
9
Infocomm Media Development Authority, “SMEs Go Digital Programme”, https://www.imda.gov.sg/smesgodigital, accessed 28 May
O

2018.

4/17
D
 SMU-18-0040 Seng Hua Hng Foodstuffs: Cracking the Camel Nut for Growth, Using Data Analytics

In the same year, the board made a bold decision to transition SHH into a professionally-managed

ST
company after four decades of operating as a family-run business. Professionally-managed
businesses were widely believed to be capable of achieving higher performance and better
governance than their family-managed counterparts. The board had hoped the change would help to
accelerate growth from within.

The move also sparked a restructuring of the company’s business units. Four critical business

PO
functions were reorganised as groups – finance, human resources (HR), sales and marketing, and
operations. Colin’s appointment to head the Group Finance in January 2017 made him one of the few
people outside of the family to hold a senior management role in SHH.

A Giant Pile of Data: The ‘Mini Monster’

The initial few months on board the SME were a mixture of surprise and confusion for Colin. He

R
recalled,

When I first joined, the biggest challenge was that I did not have a tool to help me understand
our data.

O
SHH had accumulated a voluminous amount of data over its four decades of operation. On product
information alone, the company had to keep track of more than 40 varieties of retail products in
different packaging designs and weight. The nuts came in resealable and single-use packs, small cans,
PY
bottles and gift boxes during the festive period, for example, Chinese New Year. The packs were
available in retail stores as small party packs of 40g, handy packs of 125g, 130g and 150g, standard
packs of 300g and 400g, bigger family packs of one kilogram and so on (refer to Exhibit 4 for a
selection of Camel’s products and retail packaging).

In addition to the various retail packaging formats were the customisations for private labelling, again
O

in different packaging, weight and quantity. Colin explained,

Every customer had his own requirements. We emphasised on customer service and became
so accommodating to all our customers that it created a problem for us. We had too many
C

SKUs to manage. We also had to hold so much raw materials and packaging materials.
Different customers wanted different ways of packaging, and it led to wastage. It became a
really big headache.

These complications underscored Camel’s spiralling data volume over the years. Managing the stock
T

keeping unit (SKU) for each product became a phenomenal task, so much so that Colin referred to it
as a “mini monster”. However, he soon realised that taming the monster may lead to insightful
O

discoveries from data buried deeply in silos. Remarked Colin,

If you don’t have the correct tool to help you understand where you are going and what you
will need to get to it, you will never succeed.
N
O

5/17
D
 SMU-18-0040 Seng Hua Hng Foodstuffs: Cracking the Camel Nut for Growth, Using Data Analytics

Colin decided to engage with SMU’s UOB-SMU Asian Institute for their data analytics platform
design and implementation.10 By January 2018, work on the data analytics project had begun.

ST
Looking Back at the Tried-and-Tested Path

SMEs typically had limited financial resources, and when it came to allocation, strategic planning

PO
was often made the sacrificial lamb and received the lowest priority, despite it being a critical process
towards achieving the firm’s goals. For SHH, never before had the board set aside funds to carry out
financial planning towards accomplishing long-term goals. Hence, it was highly unusual when in
2017, strategic planning rose to prominence for the first time in the company’s history of over 40
years, and the financial budget included expenses for a data analytics project.

Traversing the tried-and-tested path had worked well for SHH and there seemed to be little

R
motivation to step outside of the comfort zone. After all, why rock the boat when it was smooth
sailing? Colin reasoned,

O
What we did last year, we do again this year. What we do this year, we will do again next
year. We did not go into unchartered waters. The mindset was - we did the same thing because
we only wanted the same result.

However, that mindset contradicted SHH’s desire for growth. He remarked,

PY
As Albert Einstein said, insanity is believing that doing the same thing day in day out will
give you a different result.

Ideas of venturing into new and different markets had surfaced before, but they did not materialise.
The big deterrence to further global expansion was the absence of important supporting information,
O

such as operating costs, return-on-investment, production quantity, and so on. This information was
a must to assess the potential risk of investing in different foreign markets, and its absence ultimately
determined the overall expansion strategy. Thus, a key value proposition of data analytics was that
it could help SHH visualise what the future held, and hence justify decisions made. Colin said,
C

Data analytics can give us some light into the unchartered way. The beauty about data is that
it showed us what we had been doing all this while, and going forward, we won’t do it the
same way. The data can also tell us what will happen next.
T

The aim of the model was to support SHH in its decision-making process towards strategy planning,
drive brand awareness for new products as well as maintain customer loyalty for existing ones.
O

Uncovering Historical Trends

N

10 UOB-SMU Asian Enterprise Institute (UOB-SMU AEI) is a tripartite partnership between UOB, SMU and other local enterprises. Its
Board of Governors and Executive Committee comprise representatives who are entrepreneurs, UOB senior bankers and SMU
academics. Its activities focus on helping SMEs become more systematic and scientific in their approach to business and management,
and at the same time enhance the education experience for SMU students. A team of seven SMU students, working on their final year
O

capstone project were attached to Group Finance at SHH.

6/17
D
 SMU-18-0040 Seng Hua Hng Foodstuffs: Cracking the Camel Nut for Growth, Using Data Analytics

Using SHH’s historical sales data, the analytical findings revealed seasonal buying patterns by local

ST
consumers. It also showed the products which were most responsive during those periods. For
instance, a spike in consumer demand was reported during the festive months of December to
February every year, which coincided with Christmas, New Year and Chinese New Year celebrations;
and cashews, macadamias and pistachios were the most popular snacks bought by Singaporeans
during this time.

PO
Acting on these patterns, SHH could manage the supply chain process more efficiently during the
festive period by adjusting the procurement of raw materials, and managing production, marketing,
distribution and warehousing suitably to cater to the increased demand.

Demand Forecasting

While little attention had been paid to demand forecasting in the past, it was believed that the

R
introduction of predictive analytics could assume an important role in influencing the way SHH
planned its production schedule. Colin had wanted to instil an understanding of customer buying
behaviour in his sales staff by observing trends in the sales data. In order to facilitate the active
tracking of actual sales, he devised a 12-week monitoring plan. He shared,

O
Since I look at my sales record every week, by the fifth week I would have seen it for the fifth
time, and I know what will happen thereafter. I can tell that we will get this certain amount
of sales for the coming week.
PY
With improved accuracy in sales forecasting, production would be more responsive to actual
demands. Eventually, it was hoped that SHH would be able to revise its production schedule from a
monthly to weekly cycle, as a shorter cycle could potentially increase production efficiency.

Leveraging Predictive Analytics for Growth

O

Aligned with the government’s continual call to SMEs to internationalise, SHH’s expansion strategy
was to ride on its current global export network. As early as 2002, SHH had stepped out of Singapore
and began competing in world markets. With its footprint deeply implanted in Asia and the Middle
C

East, SHH had set its eyes further this time - on Europe (refer to Exhibit 5 for global demand for
savoury snacks by regions).

Its strategy to grow overseas revenue was straightforward – to expand existing markets and to
T

penetrate new markets. Colin elaborated,

We are trying to target markets we are big in, and the markets we are not yet in. We have a
O

significant presence in Middle East and that is where we are big. We really want to go into
the European market, but we know it is very competitive.
N

Forecasting Performance of New Product Launches

Breaking into new markets, particularly saturated markets, would need special attention and a careful
evaluation of the financial impact of introducing new products. Added Colin,
O

7/17
D
 SMU-18-0040 Seng Hua Hng Foodstuffs: Cracking the Camel Nut for Growth, Using Data Analytics

We wanted to go to even more countries. However, some places are not easy to go. For
example, India. India is an exporter of cashews, so cashews are very cheap there. We can’t

ST
bring cashews into India. We don’t really have a competitive edge. So, we are trying to look
at a different strategy. Anything that is a special situation requires supporting data.

Using predictive analytics, SHH hoped that it would be able to calculate the likelihood of success
when introducing a new product in a new market. The predictive model suggested countries that had

PO
market potential for nut consumption, and based on the preferred manufacturing quantity, it would
also calculate the start-up costs, the sales volume that would enable SHH to break even, the return
on investment and the expected profit following five years of operations.

Estimating Product Cannibalisation

Launching new products into existing markets could prove equally challenging, given the plausible
risk of cannibalisation on the profits of current products in the same category. Colin illustrated,

R
In Thailand, for example, we are already selling roasted cashew nuts. If we come up with a
new tom yam flavour, and the customer likes it, he is not going to buy the roasted cashew.

O
Another capability of the predictive model was to manage the above challenge by quantifying the
potential reduction in sales and revenue of well-established products upon the market introduction
of a new product variant under the same family brand.
PY
A New Chapter: Taking Action on Data Insights

Beaming with satisfaction as he read the project report to the very end, Colin thought aloud,

The data analytics tool helped me to predict how long it takes to achieve my targets. Is 2020
O

a realistic target?

Armed with data insights (refer to Exhibit 6 for selected screenshots of the project deliverables), he
C

was more confident about conquering new foreign markets, as demand could now be predicted with
some degree of accuracy. He would share his new-found insights with the sales and marketing team,
and with the other group functions including HR and operations. With the newly acquired data
analytical capabilities, Colin foresaw it would no longer be business-as-usual for SHH. He mused,
T

This data analytics project allowed me to understand my business much better. I guess it’s
all about changing the business and getting it to the next level.
O
N
O

8/17
D
 SMU-18-0040 Seng Hua Hng Foodstuffs: Cracking the Camel Nut for Growth, Using Data Analytics

EXHIBIT 1: COMPANY SHARE OF SAVOURY SNACKS IN SINGAPORE

ST
Top 10 Savory Snacks Producers in Singapore (2017)

25

PO
20
Percentage

15

10

R
0

O
PY
Source: Euromonitor Singapore 2017, via Passport database, accessed May 2018.
O
C
T
O
N
O

9/17
D
 SMU-18-0040 Seng Hua Hng Foodstuffs: Cracking the Camel Nut for Growth, Using Data Analytics

EXHIBIT 2: BRAND SHARE OF SAVOURY SNACKS IN SINGAPORE

ST
Top 10 Savory Snacks in Singapore (2017)

25

PO
20
Percentage

15

10

R
5

O
PY
Source: Euromonitor Singapore 2017, via Passport database, accessed May 2018.
O
C
T
O
N
O

10/17
D
 SMU-18-0040 Seng Hua Hng Foodstuffs: Cracking the Camel Nut for Growth, Using Data Analytics

EXHIBIT 3: PERFORMANCE COMPARISON OF SENG HUA HNG FOODSTUFFS AND THE

ST
SAVOURY SNACKS MARKET FOR THE PERIOD 2009 TO 2016

Seng Hua Hng Foodstuffs vs the Savoury Snack Market in

Singapore
40

PO
35
Percentage Year-on-Year Growth

30
25
20
15

R
10
5
0

O
2009 2010 2011 2012 2013 2014 2015 2016
-5
-10

SHH Market
PY
Source: Euromonitor Singapore 2017, via Passport database, accessed May 2018.
Note: The dip in performance in 2009 could be attributed to the economic recession in the previous year.
O
C
T
O
N
O

11/17
D
 SMU-18-0040 Seng Hua Hng Foodstuffs: Cracking the Camel Nut for Growth, Using Data Analytics

EXHIBIT 4: CAMEL’S PRODUCTS AND RETAIL PACKAGING

ST
PO
R
Source: Camel nuts website at http://www.camelnuts.com, accessed May 2018.

O
PY
O
C
T
O
N
O

12/17
D
 SMU-18-0040 Seng Hua Hng Foodstuffs: Cracking the Camel Nut for Growth, Using Data Analytics

EXHIBIT 5: GLOBAL MARKET SIZE OF SAVOURY SNACKS BY REGIONS

ST
Regional Market Sizes of Savoury Snacks
60,000

PO
50,000

40,000
Millions (USD)

30,000

R
20,000

O
10,000
PY
0
2013 2014 2015 2016 2017

Western Europe Asia Pacific Australasia

Eastern Europe Latin America Middle East & Africa
North America
O

Source: Euromonitor Singapore 2018, via Passport database, accessed May 2018.
C
T
O
N
O

13/17
D
 SMU-18-0040 Seng Hua Hng Foodstuffs: Cracking the Camel Nut for Growth, Using Data Analytics

EXHIBIT 6: SELECTED SCREENSHOTS OF THE DATA ANALYTICAL MODEL FOR CAMEL

ST
PO
R
O
PY
Note: Actual revenue and percentage figures are masked.
O
C
T
O
N
O

14/17
D
 SMU-18-0040 Seng Hua Hng Foodstuffs: Cracking the Camel Nut for Growth, Using Data Analytics

ST
PO
R
O
PY
O
C
T
O
N
O

15/17
D
 SMU-18-0040 Seng Hua Hng Foodstuffs: Cracking the Camel Nut for Growth, Using Data Analytics

ST
PO
R
O
PY
O
C
T
O
N
O

16/17
D
 SMU-18-0040 Seng Hua Hng Foodstuffs: Cracking the Camel Nut for Growth, Using Data Analytics

ST
PO
R
O
PY
Note: Actual revenue and percentage figures are masked.
O
C
T
O
N

Source: Seng Hua Hng

O

17/17
D