Fraser & Neave (F&N)
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Fraser & Neave (F&N) is a group with businesses in food and beverage, brewing, property development and publishing. Formed in 1883, F&N is one of Singapore’s oldest companies and a well-known brand. Its traditional business was the production and distribution of beverages from its F&N range and licensed international brands. In recent decades, property development and food and beverage have made up significant segments of F&N’s bottom line. Listed in Singapore, the group’s subsidiaries and associated companies include Frasers Centrepoint, Asia Pacific Breweries and Times Publishing. As of 2011, F&N had total assets of over S$13 billion and employed over 13,000 people in 20 countries.
In September 1883, John Fraser and David Chalmers Neave, two Englishmen already partners in a printing business, formed the Singapore and Straits Aerated Water Company. The company devoted the next two years to market research before starting production from a factory in Battery Road. It initially employed a staff of 20 and used pony carts to deliver its products. A 1892 advertisement listed the company as “manufacturers of soda water, seltzer water, potass water, lemonade, tonic, ginger ale” and suppliers to Singapore’s clubs, hotels and residences.
In 1898, a new public company was formed to take over the aerated water business, and the Singapore and Straits Printing Office. The two businesses were sold to the new company, named Fraser & Neave (F&N), for $290,000 in cash and shares. The new company had a capital of $350,000, $225,000 in shares and $125,000 in debentures. With 2,000 shares issued, 1,500 of which were offered to the public, the share issue was subscribed three and a half times. The formation of Fraser & Neave Limited had come about due largely to the retirement of John Fraser and David Neave from active management of the businesses they had set up. Neave, in poor health, remained on the board of the company.
At the turn of the century, F&N had 63 employees, making it one of the largest in Singapore. By 1913, it had branches in Kuala Lumpur, Malacca, Seremban, Ipoh, Penang, Bangkok and Saigon. It also had agents in Telok Anson, Delhi, Kelantan, Sandakan, Labuan, Sarawak, Port Darwin and Western Australia. After World War I, the company introduced new production techniques and new factories in Indonesia.
Diversification, franchising and restructuring
In 1931, Fraser & Neave ventured into the brewing business when they formed Malayan Breweries Limited in a joint venture with Holland’s Heineken. The brewery produced the popular Tiger Beer, and later acquired Archipelago Brewery, which produced Anchor Beer. In 1936, F&N acquired the Singapore, Malaya and Brunei franchise rights for Coca-Cola drinks, which later became a significant part of their business. Alongside its own range of F&N branded drinks, the company went on to acquire the rights to other brands like 7-Up, Fanta and Sunkist.
During the Japanese Occupation of Singapore and Malaya from 1942 to 1945, the company’s factories and breweries were seized by the Japanese and used to produce drinks for their armed forces. After the Occupation, F&N began to recover its assets and in the post-war years built new factories in Singapore and Malaya.
F&N had begun exporting its products in the early 1900s, and its export business grew greatly from the mid-1930s. In 1948, the company set up an export department to deal with the increasing demand. In the 1950s, Malayan Breweries grew its overseas businesses by acquiring breweries in Papua New Guinea, Port Moresby and Hawkes Bay in New Zealand.
In 1961, F&N went into a joint venture with Beatrice Foods of Chicago to produce sweetened condensed milk. F&N’s plants began to process condensed milk, evaporated milk and other dairy products. Two years later, F&N underwent restructuring that split the company into Malaysia and Singapore businesses under a holding company, Fraser and Neave Limited. New subsidiaries were also set up in the 1960s to manufacture cans, PVC containers and bottles for its drinks.
In the 1970s, the company focused on growth and research and development, and introduced automation into its operations. The company reorganised its management structure in the 1980s, creating new portfolios and independent profit centres to manage its diversified interests. It also enlarged its share capital through rights issues. By 1989, it had a turnover of S$1.16 billion and pre-tax group earnings of S$155 million.
Regional expansion, operational restructuring and property
F&N’s soft drinks operations in the 1990s were handled by F&N Coca-Cola, a joint venture 75% owned by F&N and 25% by Coca-Cola, and under the management control of the latter. During this time, F&N also opened operations in Vietnam, Cambodia, Pakistan, Sri Lanka, Thailand, Myanmar and China. The expansions cut into F&N’s profits, and in 1999, F&N sold its 75% in the venture, receiving a 5.63% stake in Coca-Cola Amatil in Australia.
In 1990, F&N ended a two-year partnership with Australian group Goodman Fielder Wattie, which controlled Cold Storage Holdings. F&N took most of Cold Storage’s property interests, and added Cold Storage Dairies to its dairy operations.
In the 1990s, the key drivers of the F&N group’s earnings were the brewery business, listed and renamed Asia Pacific Breweries (APB), and property arm Centrepoint Properties. In 1995, F&N’s earnings from property development exceeded its traditional drinks businesses for the first time, with Centrepoint recording a profit of nearly S$90 million compared to the S$77.6 million profit from APB.
F&N had recorded a net profit of S$218 million in 1996, but this fell to S$150.4 million the following year as Asia entered a recessionary period. Sharp falls in the profitability of beverage and dairy operations, and currency fluctuations continued to eat into F&N’s profits over the next few years. In the last three years of the decade, F&N’s share price plunged more than 60%.
In 1999, F&N purchased a 20% stake in Time Publishing before taking majority control of the company in 2000, with the entire acquisition costing around S$570 million. This put F&N into the printing, publishing, retail bookstore, sales and distribution, education, internet and conference organisation businesses. In 2001, F&N took both Time and Centrepoint Properties private.
F&N’s profitability and share price began to recover in the early 2000s, and the group was mooted as a possible takeover target for the likes of Malaysian tycoon Quek Leng Chan and the Philippines’ San Miguel Group. In 2001, after Quek raised his stake in F&N to 10%, F&N initiated a capital management programme. It bought back around 5% of its own shares, erecting a defence against a takeover. In 2003, F&N restructured its capital by buying back around S$317.7 million of shares, reducing its issued share capital by about 10%.
The property and brewery businesses continued to drive F&N’s profits and for the financial year ended September 2006, the group recorded net profits of S$319.5 million on revenues of S$3.8 billion. In 2006, the Singapore government investment company Temasek Holdings took a 14.9%, S$900 million stake in F&N, becoming F&N’s second-largest investor. Temasek’s entire stake was sold to Japan’s Kirin Holdings for S$1.33 billion in 2010.
In 2008, F&N reorganised its management structure after a strategic review. It appointed chief executives for three of its core businesses, food & beverage, property and printing and publishing. The following year, F&N regained distribution rights for its soft drinks in Singapore after the end of its agreement with Coca-Cola, but its distribution rights for Coca-Cola in Malaysia were ended in 2011. Subsequently, F&N introduced new products and invested in marketing and distribution infrastructure.
For the financial year ended September 2010, F&N had earnings of S$820 million on revenues of S$5.7 billion. During the year, the group had expanded its food & beverage operations with investments in Malaysian snack and biscuit maker Cocoaland, and acquired ice-cream maker King’s Creameries. F&N also made investments in new dairy plants in Malaysia and Thailand.
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The information in this article is valid as at 2011 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.
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