[SINGAPORE] The trade war may weaken China’s growth – but Singapore confectionery brand Old Seng Choong still hopes to court consumers with its first overseas outlet there.
Founder Daniel Tay acknowledged that US tariffs will likely reduce demand for China’s exports, weakening its growth and dampening domestic consumption. Yet he is not giving up on the potential of the world’s second-largest economy.
“With a population of 1.4 billion people, China is a big market we don’t want to miss out on – especially if our products can do well there,” he told The Business Times.
There are currently four Old Seng Choong stores in Singapore. By the end of this year, Tay hopes to open the brand’s first China store in Shanghai.
Like the Singapore stores, the China outlet will sell traditional cakes, cookies and pastries. But it will have a smaller menu, focusing on uniquely Singapore flavours such as hae bee hiam.
It may also be rebranded, with a different Chinese name.
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Tay hopes to eventually open 200 to 300 Old Seng Choong stores in China via a mix of franchising and joint ventures, though he has no definite timeline for this.
“We do believe that retail in China will be back. It’s just a matter of when, as there is a lot of uncertainty now,” he said.
One advantage is that Tay also owns food manufacturer Foodgnostic, which already has factories in China that will supply Old Seng Choong stores there.
Founded in 2013, Foodgnostic is a contract manufacturer for pastry brands and franchises in Asia, including Singapore.
Breaking into ChinaA classically trained French pastry chef, Tay founded his first food and beverage venture in 1998 – patisserie-cafe chain Bakerzin. He sold the business in 2007, but continued managing it until 2013. The chain eventually closed in 2020.
Tay sold patisserie-cafe chain Bakerzin in 2007, but continued to manage it until 2013. PHOTO: BT FILEIn 2013, Tay switched his focus to newly founded Foodgnostic, and soon took the company overseas.
The group entered China in 2016, and set up factories in Shanghai and Chongqing in 2018.
The initial days were challenging due to the competitive environment, he said. But in 2019, Foodgnostic achieved a breakthrough by securing its first client – China’s biggest Western coffeehouse chain.
This remains the company’s biggest client across all markets, and accounts for the majority of the 7,000 stores that Foodgnostic supplies in China.
With huge order volumes, this contract alone was sufficient to sustain the business for the first few years.
Foodgnostic has been approached by other F&B brands in China that it had to reject because order volumes were too small for economies of scale. Foodgnostic’s minimum order quantity per confectionery item in China is 100,000 to 200,000 pieces a month.
Yet this single-client strategy was not sustainable in the long run. In 2023, the company’s growth there stagnated as Chinese spending weakened, noted Tay.
Its client cut orders for a certain product, and instead ordered a wider range of products but at smaller volumes of each. With poorer economies of scale, its manufacturing costs rose and profits fell.
To counter this, Foodgnostic expanded its customer base in China.
Over the past two years, the company has bagged contracts to supply cakes to e-commerce giant JD.com’s on-demand retail arm; a big restaurant chain in Guangzhou; and an online cake brand.
It has also made inroads into Hong Kong, having partnered a dim sum restaurant chain in November 2024 to supply Chinese tarts and pastries to its 30 outlets.
Today, about half of Foodgnostic’s revenue comes from China. This is followed by Singapore at 40 per cent, with the rest from Malaysia, Indonesia and Hong Kong. Besides China, it has two factories in Singapore and one in Johor Bahru.
Expanding F&B retail brandsTay has diversified by growing his own F&B retail brands, which have their confectioneries manufactured by Foodgnostic.
In 2014, he launched cheesecake brand Cat & the Fiddle as an online store. It now has six physical outlets in Singapore and exports to Malaysia, Indonesia, China and the United Arab Emirates.
In 2016, Old Seng Choong was launched in homage to Tay’s late father’s now-defunct old-school bakery Seng Choong Confectionery.
The four Old Seng Choong stores in Singapore include two in the transit lounges of Changi Airport’s Terminal 2 and 4. A fifth store will open at Resorts World Sentosa in June, with Tay hoping to open two more in Terminal 1 and 3.
The newest brand, launched in June 2024, is kiosk concept Madam Ang KK, which sells ang ku kueh in traditional and contemporary flavours.
Madam Ang KK’s kiosk in Paragon Shopping Centre. PHOTO: YEN MENG JIIN, BTThese brands help to support Foodgnostic’s business and ensure that the company does not only rely on external customers, explained Tay, adding: “Even if our orders from these customers drop, our revenue won’t fall as much.”
Foodgnostic remains the biggest contributor of revenue – at 70 per cent – to parent group International Foodgnostic, with the rest coming from the three F&B brands.
For FY2024, International Foodgnostic earned S$68 million in revenue, up 18 per cent from the year before.
Group revenue is expected to hit S$100 million for FY2025, driven by Foodgnostic’s growth in China, along with the expansion of Old Seng Choong and Madam Ang KK at home.
Madam Ang KK has opened a third outlet at Parkway Parade, this time with a casual dine-in concept – expanding beyond ang ku kueh to include coffee and toast, as well as local favourites such as laksa and mee siam.
There will always be demand for coffee and toast, which is a “recession-proof” Singaporean staple, said Tay. “People will always want coffee and toast even in a downturn, because their prices remain low.”
While the brand’s first two stores at Paragon Shopping Centre and Square 2 will remain as kiosks, Tay intends to open subsequent stores in the new format. He is aiming for a total of 50 Madam Ang KK outlets in Singapore over the next five years.