Halal food is generally perceived as only for Muslims. It is basically food prepared according to strict Islamic guidelines and involves more than forbidding pork. Wirut Suppoj, managing director of IBF Halal Foods Co Ltd, is keen to stress that anyone can eat halal food.
AEC will benefit IBF business because Southeast Asia is home to more than 260 million Muslims
Rebranded in March 2008 before the young executive joined the company, IBF stands for International Business Food. Its initial investment is 80 million baht.
When his father, Samart, died in 2011, Mr Wirut had to take over the company although he was studying for a master’s degree in political science at Aligarh Muslim University in India. His eldest brother looked after the family’s property business while the younger siblings were still at school.
Back then, he saw the advantages and opportunities to expand the business as IBF was the only halal food company in Thailand owned by Muslims. Mr Wirut decided to continue his father’s halal food business for both Muslims and and general consumers.
“Being a Muslim entrepreneur is my advantage because it offers credibility to Muslim consumers,” said the 31-year-old Bangkokian.
Over the past few years, IBF sales have grown 5% per year. However, the prolonged political impasse has hit sales although the company still managed to make some profit, he said.
The company projects sales of 126 million baht this year, up from 120 million baht last year. The domestic market accounts for 95% of sales and exports to his Ban Thai restaurant in Saudi Arabia make up the remainder.
Wirut sees big growth in halal market.
Mr Wirut believes sales will grow significantly in coming years as the halal food market expands. The upcoming Asean Economic Community (AEC) will be a boon for business since Southeast Asia is home to more than 260 million Muslims.
According to the National Food Institute, 96% of Thailand’s halal food exports are shipped to Africa, Asean and the Middle East with the rest going to South and Central Asia as well as Europe.
Stats vary but there may be as many as 7 million Muslims in Thailand and the halal food market is worth around US$80 billion. It continues to have a high growth especially sales through modern trade operators.
With his belief in more dynamic growth in the near future, Mr Wirut said the company plans to build its own slaughterhouse within three years and its own farm within five years in order to ensure the quality of raw materials sourced in-house instead of buying from suppliers.
Moreover, it will take on an additional 60 employees. At present, IBF has 80 staff, half of whom are Muslims because in certain manufacturing processes only Muslims are allowed.
Mr Wirut’s goal is to reach 500 million baht in revenue with a larger number of employees. Despite the planned expansion, he wants IBF to remain a family venture and generate enough working capital without listing on the stock exchange. Yet, he does not worry about growing competition, both locally and across the border.
“Compared with entrepreneurs in Muslim countries such as Malaysia, they obviously have more credibility when it comes to halal food. However, they do not have sufficient manufacturing capacity and still need to rely on other countries to produce their food,” said Mr Wirut.
According to a 2013 report by the Export-Import Bank of Thailand, the Malaysian market has high purchasing power. This provides an opportunity for Thailand to expand its halal food business with a focus on ready-to-eat products for export to its southern neighbour.
Due to a lack of cultivatable areas in Malaysia, it has to import many raw materials. The Malaysian government supports many countries including Thailand to buy raw materials for the halal industry with zero tariffs under the Asean free trade agreement.
Realising the importance of the halal food market, Mr Wirut is trying to step up IBF’s research and development (R&D) team although it is not as big as other companies. With an annual R&D budget of 700,000-800,000 baht, the firm plans to launch new flavours of sausages and ready-to-eat products this year.
While the company’s maximum capacity is 3-4 tonnes per day, it only produces 2 tonnes per day on average based on orders. Its main clients are hotels, hospitals and airlines. IBF has two distribution centres, one in Hat Yai and the other in Yala.
Although he welcomes the AEC, Mr Wirut said that IBF will not move its production base to another country where costs are lower.
“Thailand is the kitchen of the world and raw materials are plentiful here. There’s no need to move. I’m sure that I can do more if I stay in Thailand,” he said.
Since he joined the company, Mr Wirut said he has overcome many obstacles. He started as a management trainee for three months, working side by side with his father before becoming vice-president.
“I’ve learned from every mistake and I’m determined to continue the business the same way my father did,” he said. “I think I will continue in this business until I die.”