Malaysia’s Largest Cocoa Processor
November 14, 2020
Guan Chong Berhad is Malaysia’s largest cocoa processor and the world’s 4th largest cocoa grinder. Started by two cousins in 1983 with a factory to process cocoa beans in Muar Johor, current Managing Director and CEO, Brandon Tay Hoe Lian and Tay How Sik, Executive Director and Chief Operating Officer, have in the last 5 years reaped the biggest rewards of their more than 35 years of being in the cocoa grinding business. It has not been a smooth and easy ride with the vagaries of the commodity market for cocoa beans, but they have weathered the storms well. Revenues exceeded RM2 billion since 2015 and has been steady till the highest mark was achieved for financial year ended 31 December 2019 (RM2.94 billion). Profit before tax followed the same pattern. In 2015 Guan Chong recorded pre-tax profit of RM36.3million, 2016 was RM52.2 million, 2017 was RM113.44 million, 2018 was RM208.7 million and 2019 was a record RM266.8 million.
Brandon Tay, 55, holds a Bachelor of Business Administration degree from the University of Toledo, College of Business Administration, USA (1993). He has been in the cocoa business since graduation. Cousin Tay How Sik, 60, has been running the cocoa grinding factories since they started out and continues to be the Chief Operating Officer of the business. In key management positions at Guan Chong are also Brandon Tay’s sister, Tay See Min, 48, who holds a degree in Bachelor of Information System from Monash University, Australia, and cousin, Tay How Yeh, 54, who graduated with a degree in Bachelor of Business Administration from University of Toledo USA. Tay See Min joined the family business in 2010 and is currently in charge of expanding Guan Chong’s business in Japan. Tay How Yeh has been on the production and planning side and procurement of raw materials. He is currently the Director of Supply Chain of Fuji Global Chocolates (M) Sdn Bhd and a director of GCB Singapore Pte Ltd and GCB Cocoa Malaysia Sdn Bhd.
As at 17 April 2020, Brandon Tay Hoe Lian and his spouse, Yap Kim Hong, beneficially control 50.58% of Guan Chong Berhad’s issued shares. Another substantial shareholder is Guan Chong’s Chairman, Dato Dr Mohamad Musa bin Md Jamil who holds a stake of 5.77% via Misi Galakan Sdn Bhd. Dato Dr Mohamad Musa holds a PhD in Mycology and Plant Pathology from Queen’s University, Belfast, Northern Ireland. He has been with the board since 2005.
Expansion & Strategy ahead
Guan Chong has a combined cocoa grinding capacity of 250,000 metric tonnes (MT) per annum supported by its facilities in Pasir Gudang, Johor as well as in Batam, Indonesia. In addition, it has two facilities in Delaware and New Jersey, USA that undertake cocoa cake grinding, cocoa liquor and butter melting as well as cocoa butter deodorizing. In 2019 Guan Chong began construction of a new cocoa processing facility in Cote D’Ivoire or Ivory Coast, West Africa. The factory when completed in the second half of 2021 will have add an initial grinding capacity of 60,000MT to Guan Chong’s current capacity. The expansion into Ivory Coast will bring the group closer to the largest raw material source for cocoa beans.
In January 2020, Guan Chong acquired one of the key manufacturers of industrial chocolate in Europe. SCHOKINAG Holdings GmbH (SCHOKINAG) which is located in Mannheim, Germany was established in 1923 and has been involved in chocolate manufacturing for close to 100 years. It has an annual industrial chocolate production capacity of 90,000 MT and cocoa liquor production capacity of 7,000 MT. The acquisition would not only grant GCB entry into the largest chocolate consumption market, Europe, but also provide its currently-under-construction cocoa processing plant in Cote D’Ivoire with a ready market. SCHOKINAG will take up half of the cocoa ingredients produced once commissioned.
Guan Chong faces competition from major international players with better market access, greater financial resources, and a more integrated value chain from manufacturing and trading of cocoa ingredients to the branding and retailing of chocolate and cocoa-based consumer products. Its growth strategy of increasing production capacity with the Cote D’ivoire new cocoa processing plant and the acquisition of a key industrial chocoate producer in Europe will hopefully help the group to gear up to meet the competition ahead. The pandemic has caused disruptions in logistic and supply chains globally and has shrunk the demand for chocolate consumption but Guan Chong said that for 2020 it has secured a substantial quantity of sales contracts that needs to be fulfilled.
- Guan Chong Berhad Annual Report 2019. Management Discussion & Analysis. Analysis of Shareholdings as at 17 April 2020. https://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=200128&name=EA_DS_ATTACHMENTS
- Guan Chong Berhad. Investor Relations. Word from Management. Malaysia’s largest cocoa processor. http://www.gcb.net.my/index.html
- The Star. StarBiz Special. 5 October 2020. Daljit Dhesi. Guan Chong looks for sweet success in Europe. The Star Media Group Publications.