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Appetite for food stocks in Taiwan
Publication Date : 11-06-2012
It was like Facebook, only much better.
The initial public offering (IPO) of Wowprime, Taiwan's leading food and beverage operator, on the Taiwan stock exchange on March 6, was oversubscribed by a record 800 times.
The company did not disappoint: Its stock rose more than 44per cent on the first day of trading to close at NT$492 (US$16), even as the bourse dipped 0.83 per cent.
The stock ended trading last Friday at NT$427.
Investors' appetites were not limited to the fast-growing company, which raised NT$1.98 billion *US$65 million) by going public. The IPOs of Gourmet Master, which owns the 85 per cent of the cafe-bakery brand, and An-Shin Food Services of MOS Burger fame, also caused a frenzy on the stock and over-the-counter markets.
Taiwan's F&B industry is catering to ever bigger appetites as rising domestic demand soothes the sting of weak exports amid the global slowdown.
The industry grew nearly 8 per cent last year, compared with 4.03 per cent for the overall economy.
Big names such as Wowprime, Sushi Express Group and Tai Tong Food & Beverage Group, the No. 1 Thai restaurant chain in Taiwan, have chalked up even more impressive growth of more than 30 per cent and even 40 per cent in the last two years.
"We have shown that the F&B industry can be as bullish as the high-tech sector in Taiwan," Steve Day, founder and chairman of Wowprime, told The Straits Times in an interview at Tokiya, a Japanese-style restaurant in Taipei.
Tokiya is just one of Wowprime's 11 restaurant brands, ranging from the Wang Steak premium steak houses to Sufood Italian vegetarian fare. The group's 215 shops sold a total of 17 million set meals in Taiwan and China last year for a combined revenue of NT$9.6 billion, 36 per cent more than in 2010.
This year, Day aims to open 100 more shops and expects sales to rise to NT$12.4 billion.
"The Taiwanese used to look down on the F&B industry, but no more. The amount of money generated by the industry is making people sit up," said Day, 58, a Chinese studies graduate from the top National Taiwan University. He said his family and friends tried to dissuade him when he was starting up the business in 1993.
The unassuming, mountain-climbing towkay is now revered as a self-made entrepreneurial whiz and management guru in Taiwan. He distributes as much as 33 per cent of the company's profits to its 10,000 workers.
Day's mountaineering expeditions for Wowprime workers to foster employee cohesion, including to the base camp of Mount Everest, are now the stuff of business management books.
Associate Professor Chen Wen-tsung, dean of the National Kaohsiung University of Hospitality and Tourism, said Taiwan's F&B industry is driven by big players such as Wowprime, Tai Tong and Sushi Express, most of which were founded in the 1990s.
Wowprime and Sushi Express together accounted for about 4 per cent of the industry revenue of NT$344.7 billion in 2010.
"These made-in-Taiwan brands have been growing quickly in recent years. They have now matured and reached a stage of explosive expansion," said Chen.
By the end of last year, 15 years after it sold its first piece of sushi, Sushi Express had 289 outlets in Taiwan, the mainland and Hong Kong. It also opened its first store in Singapore, at CityLink mall, last May.
An-Shin now has more than 200 outlets of the MOS Burger brand it brought in from Japan in 1991, making MOS the second-largest burger chain in Taiwan after McDonald's.
Tai Tong, established in 1990, has 30 restaurants.
Day attributes the rise to increasing affluence.
"Once average per capita income crosses the US$20,000 threshold, people will spend money on socialising by having meals at restaurants. This time it may be your treat, the next time, it'll be my turn," he said.
Taiwan's per capita income exceeded US$20,000 for the first time last year to reach US$20,122.
Taiwan consumers prefer eating out to other leisure activities such as Web surfing or shopping, more so than consumers in 13 other economies in the Asia-Pacific region, according to a survey last year by MasterCard, the credit card company.
Eating out accounted for 36.8 per cent of Taiwanese consumers' total spending on food in 2010.
While the F&B titans have set their sights on a bigger piece of the pie in Taiwan, they are also setting up shop overseas, especially on the mainland, or have plans to do so, leading to the rash of IPOs since 2010 to raise capital.
An-Shin opened its first stores in China and Australia in 2010 and is looking to expand its presence on the mainland to 100 shops by the end of this year.
Wowprime has opened shops with local partners in Thailand and is in talks to venture into Singapore. Its target: 1,000 restaurants worldwide by 2020.