In spite of supply chain and communication challenges, the industry there is rebounding through digital pivoting (D) and transformation (X)

Since Mar 2020, when Malaysia first took notice of the COVID-19 pandemic, many businesses have stayed resilient and adapted by finding new methods to stay afloat, realizing that digitalization is one of the few options to sustain their business.

This is also evident in the local food and beverage (F&B) industry, which faced its own unique set of challenges. In an ecosystem where business deals were traditionally carried out physically, the food supply chain was severely disrupted due to restricted operation hours, logistical difficulties, and communication hurdles with suppliers, buyers, and end-consumers.

This is also in addition to the challenge suppliers faced in reaching out to retailers, and vice versa. For example, on one end of the food supply chain, several farmers in the Cameron Highlands were forced to give away their farm produce due to the perishable nature of the produce, whereas, buyers were flocking onto online marketplaces, only to find limited options available for their choosing.

This is a clear reflection that the pandemic has affected the mode of communication, even between buyers and suppliers, thus impacting the source of revenue for all parties within the industry.

Digital solutions to the rescue

The shift in communication habits has forced F&B businesses in the country to pivot and adopt digital solutions to sustain and identify new revenue streams for their business.

Going into the digital space has given the F&B businesses an increased interest into digital marketplace, which allows them to connect with businesses within the F&B industry. For instance, Saladplate, an online marketplace, was launched to bridge the gap between suppliers and buyers, making it easy to discover new products and services digitally, through an innovative sourcing solution.

Another example of a digital F&B platform that helped to bridge communication gaps is Food Market Hub, a procurement and inventory system for F&B businesses. The hub streamlines all operational data from procurement to inventory and eventually into the accounting systems. It then churns the data and consolidates the cost of goods sold, ultimately allowing F&B business owners to make smarter decisions for their business.

Embracing F&B digital transformation

Okinawa Trading, a Japanese company in Malaysia that specializes in exporting fresh meat to countries in East Asia and Southeast Asia, is one of the brands that has embarked on a digital transformation journey. Having pivoted to the online marketplace through the help of Japan External Trade Organization (JETRO), the firm has seen an increase in inquiries from buyers, opening doors to more business opportunities. Furthermore, since pivoting to digital, the number of website visitors on the the firm’s website has seen a 414% increase, with buyers spending an average of three minutes on the page.

Another beneficiary of digital pivoting in Malaysia is Din Tai Fung, an upscale Taiwanese restaurant chain. The brand saw a 31% increase in year-on-year growth result in 2020 through going digital, which has helped streamline communications between the central kitchens and outlets, enabling it to weather the pandemic.

With many more digital solutions and platforms available to make digitalization more accessible, more F&B businesses can use adapt to the current pandemic while exploring other possibilities for growth.

Challenges such as communication hurdles, low sales volumes and mismanagement of inventory and expenditure can be then be resolved, allowing businesses to remain resilient and scalable during tough times—now and even in future crises.

Paving a new future for F&B

As digitalization becomes a key fixture during the current pandemic and even thereafter, online purchasing, digital consumption and average online basket sizes have risen substantially, as indicated by a Bain & Company report. This trend is expected to continue to grow at record-setting rates.

The report also indicated that around 83% of respondents were likely to continue their increased spending online even after lockdown restrictions are lifted. This will provide an opportunity for traditional businesses, large marketplaces, and disruptive business models to thrive.

Echoing the importance of digital transformation, the Malaysia Digital Economy Malaysia (MDEC) recently launched a SME Digital Guidebook and Quick Guide to help the F&B and retail industries to reassess their digital opportunities and readiness.

The current slate of government initiatives and market trends potentially indicate a rebound for the Malaysian F&B industry should they pursue and consistently work towards transforming their business digitally.