Olam’s business model is based on four elements which set our future direction:
The agricultural commodity complex from a farm gate production value of US$6.1 trillion complex is growing at approximately 2.0 to 2.5 per cent. a year. We believe that although growth is modest, it is a significant and a very steady and predictable growth opportunity.
To build and maximise long term intrinsic value for continuing shareholders, by opening up capital spreads between the rate of return and the cost of capital, increasing the rate of profitable growth, and sustaining the growth for as long a period as possible.
We have redefined a new purpose for the Company in 2017 and further refined it to be “Re-imagining Global Agriculture and Food Systems” in 2019. Our new purpose is to support and double the production of food, feed and fibre (crop basis) to feed a growing world population estimated to be between 9.5 billion and 10 billion people by 2050 without destroying the planet and with less resources. It is also to transform the food system to produce more healthy food and reduce food wastage.
To be the world’s most differentiated and most valuable global food and agri-business by 2040.
Portfolio strategy: Olam has a uniquely shaped portfolio, having developed a portfolio of speciality agri-products and food ingredients with global leadership positions and is not in direct competition with major peer group companies. These speciality agri-products and food ingredients also serve today’s consumer preferences for healthy foods. In some select mainstream bulk commodity categories, Olam has adopted a defensible and differentiated strategy that is focused on destination processing, such as wheat milling in Africa, where we have achieved strong leadership position. Our portfolio is well-balanced, with selective integration in the value chain – a diversified supply chain presence across more than 60 countries as well as upstream and midstream/downstream presence across selected products and countries – plus a unique Africa footprint and operating capabilities across 25 African countries.
Competitive strategy: Olam has established strong relationships with customers in destination markets, many of which are well-known food multi-nationals. The strength of our marketing capabilities in destination markets is a result of our ability to provide customers with various value-added solutions and services based on our strengths and the key industry trends, such as health and wellness, sustainability and digitalisation. Concurrently we have developed strong origin management skills in identifying origination opportunities, setting up and managing procurement and distribution infrastructure and institutionalising field operating systems effectively. We therefore have a distinct sustainability advantage by driving it from source and is today one of the leaders in sustainability in the industry. We are now making significant investments in digitalising our Company – the goal is to digitise the highest value supply chains end-to-end, both to drive cost efficiencies and to capture additional value across the supply chain. Read more about Digital Olam in the making.
Organisational advantage: We have built a global leadership and talent pool with deep specialist expertise as well as product, market and origin expertise underpinning our business model. Olam has been building an inspiring and high performing organisation by developing a satisfied, engaged and inspired talent base; institutionalising “the Olam Way”, the blueprint for success in our business model; developing leadership and capability; and managing performance and rewards. We are supported by a strong, diversified base of long term, well-established and reputable investors – our shareholding structure today reflects the long-term tenor of our strategy with key shareholders being Temasek Holdings (53.6%), Mitsubishi Corporation (17.4%), Kewalram Chanrai Group (7.0%) and the management team (6.3%). Our ability to attract these investors has provided us with funds to finance our growth and contributed to narrower spreads on our bank borrowings.
Our six-year strategy to create value from tomorrow’s consumer landscape.
Our strategic plan for 2019-2024 capitalises on key trends shaping the sector.
Driven by consumers and advances in technology, these trends include increasing demand for healthier foods, traceable and sustainable sourcing, e-commerce and the rise of “purpose” brands.