Speech By Mr Tharman Shanmugaratnam, Deputy Prime Minister & Minister for Finance At The Official Opening of Breadtalk International Headquarters

Mr George Quek, Chairman of BreadTalk Group
Distinguished Guests,
Ladies and Gentlemen,

1. It gives me great pleasure today to join you to witness the official opening of the BreadTalk International Headquarters.

2. BreadTalk is a good story. There are several reasons behind its outstanding growth over the last 13 years - innovative products, a strong focus on improving internal processes and manpower quality, and an appetite for internationalisation. But we all know that behind these reasons is a more fundamental factor - the entrepreneurial spirit. As founder-entrepreneur, George Quek had ambition and drive. He depended on himself and his people in BreadTalk, and developed networks with others. Even when he receives Government support, he makes sure he is never dependent on Government. This is why BreadTalk is a good story.

Becoming a culinary capital and upgrading the domestic food industry

3. Our food industry has been growing well in the last five years^[1]. It also has good prospects in the years to come. There is no lack of demand in Asia especially.

4. We must aim for Singapore to be one of Asia’s top culinary capitals, and a distinctive destination globally. But we can only do so by going for quality, and by upgrading and restructuring our industry. Our restaurateurs and food manufacturers already face a challenging domestic environment. The labour market will remain tight. The supply of land will also remain tight. The food industry is also increasingly crowded, with many more establishments being formed in recent years, despite the labour shortage.

5. We therefore have to go for quality growth in the food industry, not just volume growth. Just like for our economy as a whole.

6. It will mean going for quality in both traditional and innovative dishes and cuisines; and going for better manpower quality, better pay and better ways of managing and empowering employees. We must put every effort into achieving this, and use the full Government support available.

7. It is the only way the industry can do well, in Singapore and abroad. It will also allow the food industry to provide desirable jobs for employees young and old, like similar jobs in several advanced countries.

8. Achieving this will require many improvements. Some of this is about continuous, incremental improvements. They may be small changes, but they add up. However we also need major or ‘disruptive’ innovations from time to time. In other words, innovations that displace existing players or cannibalise existing products even within your own firm, or innovations that create new market segments and customer demands that never existed before. These major innovations are necessary even in a so-called ‘old-economy’ industry like food.

9. There are many examples of this internationally, and we are already seeing some examples locally.

10. The Nespresso capsule was a disruptive innovation. It brought expresso coffee brewing into the home or anywhere you wanted it, just one cup at a time, without needing a retailer. Several others besides Nestle have since followed suit with their own capsules and small devices. But what is equally interesting about this example is how Nestle was willing to cannibalise its existing instant coffee products - an area in which they were a market leader. As Mr Valerio Nannini of Nestle^[2] put it just recently, Nespresso introduced a totally new business model based on high-end luxury goods, a new concept that not only jolted the market but cut into their existing core business.

11. Another example, this one in our local market, is RedMart - an online supermarket. While some brick-and-mortar supermarkets are also exploring online shopping, RedMart is wholly online. It leverages on technology and logistics capabilities to keep its inventory lean, and saves significantly on manpower and retail space. It is an example of a young firm that is trying to be relevant in a competitive market by adopting a new business model. It is growing rapidly.

12. BreadTalk is another good example of significant innovation. It did not disrupt the market, but created a new market segment. It changed the way consumers looked at their daily staple of bread, by using R&D to create new and unique bread designs and flavours. In other words, “designer breads”, earning a price premium. BreadTalk also changed its internal processes. It set the trend of having an open kitchen concept, so that it became part of the customer experience. And it has automated multiple labour-intensive processes in its newly designed central kitchen and bakery, using SPRING’s support.

13. Whether it is continuous, incremental improvements or major innovations, the Government is committed to working with the food industry to move to a new position – focused on quality, distinctive cuisines and flavours, better jobs, and growth in markets abroad.

Fostering collaborations

14. One area where we can do more is in collaboration within the industry, between large and small players. Collaboration between firms along the supply chain is a key part of a successful ecosystem.

15. In particular, larger firms including multinationals can partner smaller firms, to co-innovate, transfer knowledge and help train specialised manpower. This is what the PACT (Partnerships for Capability Transformation) programme aims to encourage. Since April this year, the PACT programme was expanded to include more sectors such as food services.

16. I am pleased to announce a new PACT project for the food industry. Unilever Food Solutions or UFS, a subsidiary of Unilever, and the Restaurant Association of Singapore (RAS) will customise a training programme for SMEs under the Chefmanship Academy. Through this PACT project, local restaurateurs would be able to tap on UFS’ expertise and raise their competencies in areas such as menu planning and high-volume production cooking. This programme will benefit local restaurateurs, and I encourage them to participate.

17. We are also looking at how our infrastructural facilities can help foster collaboration. The Paya Lebar iPark where we are gathered today is planned with an emphasis on connectivity. This plus the co-location of businesses within the park, fosters close interaction. I am sure BreadTalk will add to this network.

18. JTC will continue to roll out such projects. I am pleased to share that JTC is exploring the development of a multi-user food hub, that takes things one step further by providing shared facilities such as an integrated cold room.

Supporting internationalisation

19. Another important part of the food industry ecosystem is internationalisation. BreadTalk is of course a prime example. Its vision is to achieve revenues of S$1 billion by 2016, through international growth.

20. BreadTalk’s growth abroad also helps to grow its key, higher value functions in Singapore too, which means good jobs. That is why the Government is actively supporting companies in their expansion abroad: so that they can grow higher value operations here and benefit Singaporeans. IE Sin gapore has supported a project by BreadTalk to roll out a lean and efficient supply chain for BreadTalk and ToastBox outlets in Singapore, China, Thailand and Hong Kong under its Global Company Partnership (or GCP) scheme.

Developing manpower

21. But underpinning all we will do to make a successful food industry is the development of our manpower. At every level and for very job, we have to help our people not only to achieve what they think is their potential, but to stretch their potential.

22. First, this involves starting young. Applied learning is an important part of this – including hands-on learning in a real world setting.

23. In this context, I am glad that BreadTalk is taking the initiative to work with ITE to develop internships for ITE students. I would like to thank Mr George Quek and Associate Professor Tan Khee Giap, who is an independent board member of BreadTalk, for taking this proactive step. It will give ITE students the opportunity to benefit from real-world training at one of Singapore’s most successful home-grown enterprises. They will also have a chance to join the company as BreadTalk is keen on recruiting the interns who perform well and can be a good fit with the company. BreadTalk would gain a new pipeline of potential work-ready recruits who can contribute to their expansion and productivity efforts.

24. Second, manpower development has to be a continuous process. Training and inducting our students into the workforce is only the beginning. We must step-up continuous learning for all our employees through their whole careers, both through on-the-job training and external attachments and courses.

25. This includes giving the employee a pathway to take on larger roles and responsibilities at work. BreadTalk, once more, has done well in this regard. There are quite a few examples, but I thought I should mention William Cheng (41), CEO of the Restaurant Division at BreadTalk. He graduated from Shatec. William joined BreadTalk in 2002, 11 years ago, as a branch manager, was given the chance to be part of the team that worked on the Din Tai Fung franchise, did well and was promoted to GM in 2006. Since 2011 he has been overseeing the Din Tai Fung and RamenPlay brands. These opportunities have benefited William, and benefited BreadTalk.

26. People like William show that whether you are a graduate or non-graduate, there is a pathway to develop yourself, to stretch your potential, and to contribute more. This is also why our efforts to develop our people are not just a matter of economic restructuring and upgrading. They are at the core of what we must do to build a more inclusive society.

Conclusion

27. In conclusion, once again, my warmest congratulations to BreadTalk on the opening of your International Headquarters, including your new central kitchen and bakery. Keep showing the way.

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^[1] Over the past five years, the food manufacturing sector achieved 11% average growth in total sales and a 14% annual growth in direct exports. Likewise, the food services sector saw 9% average growth in total operating receipts.

^[2] MD of Nestle Singapore, and chairman of the board of advisers at the SMF Singapore Innovation and Productivity Institute.