Greg Harvey, Interflour Group: “We’ve doubled our size in the last decade, from five mills in Indonesia, Vietnam, and Malaysia, to now operating 10 flour mills across these countries as well as the addition of the Philippines and Turkey. We have been pushing into new markets as well as expanding our capacity and footprint in existing markets such as Vietnam and Indonesia.”
Interview: Kemal PARLAK-SINGAPORE
Interflour is one of the largest mills in Southeast Asia with its daily milling capacity of over 7,300 metric tons. The company has expanded its facilities and operations in the region expeditiously. Greg Harvey, Interflour Group CEO & Managing Director, tells us about the successful investment strategies of the company. “The biggest factors behind the growth rates in South East Asia are the population growth, wages increasing and a switch to wheat-based products,” said Harvey. Harvey, an Australian national with extensive experience in wheat trading, considers new opportunities to expand the company. “We have been pushing into new markets as well as expanding our capacity and footprint in existing markets such as Vietnam and Indonesia.” he pointed out.
Here are Interflour Group CEO Harvey’s answers to our questions:
Interflour is one of the largest flour millers in Asia. Your company has expanded in the milling business in a short time. Could you tell us how Interflour has come to its current position?
The Interflour Group was established in 2005 with the purchase of 5 flour mills in Indonesia, Malaysia, and Vietnam. Over the last 12 years, it has acquired and built mills to double its footprint in Southeast Asia and Turkey as well as diversifying into malt production as well as grain storage and trading. We’ve doubled our size in the last decade, from five mills in Indonesia, Vietnam, and Malaysia, to now operating 10 flour mills across these countries as well as the addition of the Philippines and Turkey. We have been pushing into new markets as well as expanding our capacity and footprint in existing markets such as Vietnam and Indonesia.
This is an industry that runs on the scale and we have continued to add to Interflour’s through acquisition and also a number of greenfields projects over the last few years. Now our network breadth gives us even greater opportunities to find supply chain efficiencies. The construction of the malt plant and port operations in Vietnam has seen Interflour diversifying from flour production but continuing to use the scale, logistics and grain processing expertise within the Group.
How many mills do have all over the world and where are they located? How many people do you employ?
The Interflour Group employs around 1,500 people across Southeast Asia and Turkey. It has 10 flour mills, a malt plant (Vietnam) and a port facility (Vietnam).
Can you give us some information about your milling capacity and technologies you use? Which kind of products do you produce?
Our mills have a daily milling capacity of over 7,300 metric tons per day. We have taken the best of a number of technologies to run and expand our mill, to drive efficiency and quality. We currently sell five bread flour products, a noodle flour, and over 10 special application flour products that suit a variety of uses such as flat bread, baklava, patty, desserts and pizza. These 25-kilogram flour bags are sold throughout Turkey with the help of a number of distributors as well as exported to Singapore, Philippines, Thailand, Indonesia, Middle East and Africa.
Where do you import wheat for flour?
The Interflour Group has a centralized commodity procurement and freight team who works to source the best quality grains at the lowest prices from across the globe. Predominantly the wheat used in our Southeast Asian operates is purchased from Australia, Northern America, and the Black Sea. Interflour’s strategically located mills through Southeast Asia enables the central team of logistics specialists to efficiently organize the freight effort to reduce supply chain costs.
Where do you export your products?
Interflour exports flour throughout Southeast Asia, Middle East, and Africa from its various mills in the region. Export markets for our Intermil Un operation are to Singapore, Philippines, Thailand, Indonesia, Middle East and Africa.
You export your products to many countries. You have mills all over the Asia and distribute your products in a large area. It needs integrated wheat buying, flour milling, and marketing. It needs a solid supply chain. How do you manage this?
A solid supply chain and an efficient and coordinated approach to procuring wheat and freighting to our mills are absolutely critical in keeping costs competitive for our customers. The cost of purchasing wheat is the single biggest element of our production expense but of course scrutinizing supply chain costs the whole way along is vital to our business. Our centralized wheat procurement team are headquartered in Singapore and do just that – they look for value along the supply chain from freight and logistical efficiencies like combo loading.
Increased freight rates make shipping wheat from origins outside our region, like the Black Sea and Argentina much more expensive relative to Southeast Asia. So, Australian wheat will have very notable freight advantages into the SEA market when freight rates move higher.
Interflour’s product range caters to all needs from 1kg consumer packs, 25kg, and 50kg bags as well as bulk orders delivered by container, tanker or ship.
We sell directly to large institutional buyers as well as small to medium-sized businesses, while also using an extensive distributor network in each of our markets for general market wholesale and retail distribution.
Consumers can purchase our 1kg packs from wet markets, modern markets and supermarkets in Malaysia, Indonesia and Vietnam.
The acquisition is a key factor in your growth and strength in Asia. Is there any acquisition plan in the near future?
We are always looking for opportunities to add strength to our presence in the marketplace but no concrete plans just yet.
You have also invested in Turkey. Could tell us your operations in Turkey?
The Interflour Group, through our subsidiary Intermil Un, operates a 540 metric ton per day flour mill in Ankara. We also have a sales office in Istanbul to help us service customers throughout Turkey.
Have your expectations for investing in Turkey met? Do you have any investment plan in Turkey or surrounding region?
During the last 5 years, we have achieved our expectations. It perhaps took us longer than we hope however with good team work and strong support of our local partners, our business in Turkey is now very stable. Interflour is always looking for acquisition opportunities to grow. We have looked at some possible opportunities but passed them up due to price. We believe that over time some of our industry colleagues may wish to exit the industry and we are willing to look at possible purchases.
Historically there is a high demand for rice in Southeast and Southern Asia. Is there any change in this pattern? Could tell us consumption patterns in that regions?
The biggest factors behind the growth rates in South East Asia are the population growth, wages increasing and a switch to wheat based products. Two of the strongest factors that we use to predict flour consumption growth are the existing per capita flour consumption and the urbanization rate. The lower the current consumption of flour per person the higher the expected flour production growth. As more people move from rural to urban areas, the higher the flour demand growth. So as you would expect, the fastest growing flour markets are in emerging countries. Emerging economies in Southeast Asia like Vietnam, Indonesia and Philippines are expected to have an average annual growth rate of around 5% for the next few decades.