What are the keys to rapid growth in business? Gary Loh, vice chairman and CEO at SunMoon Foods, tells CXOTalk how innovation and customer experience helped transform the company from an asset-heavy model to an asset-like model -- a consumer-focused fresh food brand sourced from multiple farms.

“When the old model was going down that whole supply chain of owning everything that we had, we realized that we couldn’t use that model to operate in the new world that we have. We really need to concentrate on knowing the customers, knowing the consumers, and really understand how the buying pattern affects our patterns of working with the other products and buying from the different countries at the different seasons,” Loh says.

“We’re introducing new products like avocados into markets, for example, like in China, and telling the benefits of avocados and what [is] the good stuff you can do with it like salads and spreads. SunMoon is really now concentrating on communicating with the consumer, understanding their needs, especially in a busy world that we are all living in today. That’s kind of what SunMoon’s focus is now on.”

Loh is the Vice Chairman and Chief Executive Officer of SunMoon Food Company Limited. He joined the company’s board in 2007, providing the management expertise to transform the company, putting in place a strong business model after restructuring its debt and injecting capital. Loh is also the Executive Chairman of First Alverstone Capital Ltd, a private equity firm that he founded with his wife in 2005.

Transcript

Michael Krigsman: We are live at NetSuite's 2018 SuiteWorld Conference. I'm Michael Krigsman. I'm an industry analyst and the host of CxOTalk. We're speaking right now with Gary Loh, who is the CEO, the founder of SunMoon Foods. Hey, Gary. How are you?

Gary Loh: Thank you, Michael. I'm good.

Michael Krigsman: Gary, tell us about SunMoon Foods.

Gary Loh: We are trying to use a brand to sell products, consumer products as well as fresh products, to educate consumers about what fresh fruits are all about. This is really a company that we are now trying to change a model that was asset heavy where we used to own plantations, our own packhouse. We've abandoned that heavy asset model to a very much asset-light model.

The asset-light model really requires us to understand what the consumer wants and when they want it. We are turning SunMoon Food into a company very much where the brand explains about what the benefits of eating apples or having oranges or even avocados. We're introducing new products like avocados into markets, for example, like in China, and telling the benefits of avocados and what are the good stuff you can do with it like salads and spreads. SunMoon is really now concentrating on communicating with the consumer, understanding their needs, especially in a busy world that we are all living in today. That's kind of what SunMoon's focus is now on.

Michael Krigsman: You have a set of relationships with suppliers all over the world.

Gary Loh: That's right. The transformation that we turned this company around, it was a company that had 1,900 acres of plantation, which is one acre is equivalent to one football field. We had 1.2 million trees, and we had a huge packinghouse to pack the foods. Now, that model didn't work, so it was a very asset-heavy model.

They wanted to start it off being the one dragon. Well, I guess the dragon doesn't exist, right? We chopped off that head and turned that brand to the consumer and turned that brand into something that basically would be more relevant. We began a multiple-source from different farms, and then bring that product to the consumer. It's very much an asset-light model, similar to an Airbnb or an Uber.

Michael Krigsman: Rather than owning plantations and focusing on growing trees, you're focused on the consumer and the customer experience.

Gary Loh: That's precisely what we're trying to do. We realize that the data that we are getting from the front, which is basically the consumer experiences that you talk about, is far more valuable than just getting the trees. When you become a farmer, that's really what you need to do very, very well, and it's not an easy task. When the old model was going down that whole supply chain of owning everything that we had, we realized that we couldn't use that model to operate in the new world that we have. We really need to concentrate on knowing the customers, knowing the consumers, and really understand how the buying pattern affects our patterns of working with the other products and buying from the different countries at the different seasons.

Michael Krigsman: What are the levers of your business model? What are the elements that drive success in your business?

Gary Loh: I think the key thing that has started off for the company was to be able to have access to the various countries that we were operating in — to be able to have that various network: supermarkets to the convenience stores to the wholesale centers. And then to be able to understand the different countries' requirements or regulations. The products went in, right? That was how we started the whole business.

Then, we leveraged on it by saying, "Well, you've got the access to the markets." Now, we are in 22,000 points of sale. We are probably selling to almost 100 million households right now. We have about 157 suppliers. We have about 100 SKUs. All that requires us to understand what's going on, what we're buying, and where we're selling

Michael Krigsman: We are live at NetSuite's 2018 SuiteWorld Conference. I'm Michael Krigsman. I'm an industry analyst and the host of CxOTalk. We're speaking right now with Gary Loh, who is the CEO, the founder of SunMoon Foods. Hey, Gary. How are you?

Gary Loh: Thank you, Michael. I'm good.

Michael Krigsman: Gary, tell us about SunMoon Foods.

Gary Loh: We are trying to use a brand to sell products, consumer products as well as fresh products, to educate consumers about what fresh fruits are all about. This is really a company that we are now trying to change a model that was asset heavy where we used to own plantations, our own packhouse. We've abandoned that heavy asset model to a very much asset-light model.

The asset-light model really requires us to understand what the consumer wants and when they want it. We are turning SunMoon Food into a company very much where the brand explains about what the benefits of eating apples or having oranges or even avocados. We're introducing new products like avocados into markets, for example, like in China, and telling the benefits of avocados and what are the good stuff you can do with it like salads and spreads. SunMoon is really now concentrating on communicating with the consumer, understanding their needs, especially in a busy world that we are all living in today. That's kind of what SunMoon's focus is now on.

Michael Krigsman: You have a set of relationships with suppliers all over the world.

Gary Loh: That's right. The transformation that we turned this company around, it was a company that had 1,900 acres of plantation, which is one acre is equivalent to one football field. We had 1.2 million trees, and we had a huge packinghouse to pack the foods. Now, that model didn't work, so it was a very asset-heavy model.

They wanted to start it off being the one dragon. Well, I guess the dragon doesn't exist, right? We chopped off that head and turned that brand to the consumer and turned that brand into something that basically would be more relevant. We began a multiple-source from different farms, and then bring that product to the consumer. It's very much an asset-light model, similar to an Airbnb or an Uber.

Michael Krigsman: Rather than owning plantations and focusing on growing trees, you're focused on the consumer and the customer experience.

Gary Loh: That's precisely what we're trying to do. We realize that the data that we are getting from the front, which is basically the consumer experiences that you talk about, is far more valuable than just getting the trees. When you become a farmer, that's really what you need to do very, very well, and it's not an easy task. When the old model was going down that whole supply chain of owning everything that we had, we realized that we couldn't use that model to operate in the new world that we have. We really need to concentrate on knowing the customers, knowing the consumers, and really understand how the buying pattern affects our patterns of working with the other products and buying from the different countries at the different seasons.

Michael Krigsman: What are the levers of your business model? What are the elements that drive success in your business?

Gary Loh: I think the key thing that has started off for the company was to be able to have access to the various countries that we were operating in — to be able to have that various network: supermarkets to the convenience stores to the wholesale centers. And then to be able to understand the different countries' requirements or regulations. The products went in, right? That was how we started the whole business.

Then, we leveraged on it by saying, "Well, you've got the access to the markets." Now, we are in 22,000 points of sale. We are probably selling to almost 100 million households right now. We have about 157 suppliers. We have about 100 SKUs. All that requires us to understand what's going on, what we're buying, and where we're selling it to. I guess the main level is to ensure that we leverage on that network that we have, make sure that we get the right products to the right marketplace, to the consumer at the right time.

Michael Krigsman: You've been growing very rapidly.

Gary Loh: Well, it's been fortunate that this model actually has worked. On the topline level, we've been seeing growth growing at about 100%, so we hope that this momentum continues.

Michael Krigsman: You're growing 100% a year, you are a public company, and you have got tentacles reaching out to suppliers, to consumers. How do you keep track of all of this? And then, the product you're selling is perishable.

Gary Loh: Yes. [Laughter]

Michael Krigsman: [Laughter]

Gary Loh: Well, yeah. That's the essence of it all, right? I needed to make sure that we have a dashboard to be able to see what's going on to feel the pulse. The ERP system was kind of key. This is where we chose NetSuite OneWorld to be able to see everything on a dashboard.

I always use the example of, I was like Captain Kirk in Star Trek, and in my Enterprise. I needed to know what's going on. I can't run to the engine room and ask Scotty what's going on. That's the key thing that we wanted to do, so we operated using an ERP system.

On top of it, we added another layer, which is the SuiteCommerce Advanced, which allows us to now be able to communicate with our B2B customers, as well as the B2C customers. Then it builds upon the data going down to the ERP system. Now, that really allows you to share with the suppliers that supply to us, as well as the consumer data that we're gathering, to be able to then share that information and do something that's more collaborative, making sure that we are transparent, which is not really the kind of trait that the perishable trade used to be. I think, having that information now being available in an ERP system really is the difference.

Michael Krigsman: You're managing the business through all of this data that's collected in one place.

Gary Loh: That's correct and being able to share that to everyone who is part of the ecosystem.

Michael Krigsman: What is that important? Why is that information sharing so important?

Gary Loh: I think one of the most important things, as you said earlier, is about being perishable. The truth of the matter is, no fruits leave the packhouse because, usually, you know where it's going to go and then how long it's going to be on the shelf. That kind of information to see the whole supply chain is key to everything that we do. Being this perishable detail, it's almost like it's just in time. [Because] that data, in the past, wasn't available, we were doing a lot of guessing games, right? Now, I think it's a little bit of the art of sciences, basically, to manage that data well.

Michael Krigsman: What are you doing, going forward, given the importance of this transparency? What are you doing going forward to ensure that you maintain the transparency and also increase that transparency?

Gary Loh: Well, I think one of the new technologies that we're really exploring right now is blockchain. We're basically exploring it, how to get that blockchain into place because is how do you determine that you bought the apple, how is that apple and the details of the apple, and how do you reach the consumer? It's to really use that as one of the areas.

Then, of course, the IoT of things, to track from farm to fork. How did that fruit arrive to the consumer? Being able to then see that data right now is going to make the difference. With that, it just increases the transparency so that you have an ERP system that is one place, now with blockchain and IoT of things.

The last layer, I think, is natural to put AI into place and then help us buy better so that we can sell better. That information is then shared better.

Michael Krigsman: Regarding blockchain, how far along are you? A lot of people are talking about blockchain, but it's one of those things you don't see too many practical projects these days.

Gary Loh: Yeah. Well, the truth is, it's not the easiest thing because it's sort of like making it work together with a system that we have. We're happy to say that we're almost at the trial. We're going to go into a trial run, literally making sure that we can track an apple from a packhouse all the way to the end consumer, and then making this into a prototype and making sure that all that data is captured. Then, maybe that's what we're really trying to achieve. Maybe, sooner than later, we'll be announcing this.

Michael Krigsman: Are you pretty confident that you'll be able to do this?

Gary Loh: Yes. Yes.

Michael Krigsman: Fantastic.

Gary Loh: I'm happy to say that.

Michael Krigsman: Gary, thank you so much.

Gary Loh: Michael, thank you for the opportunity.