AAK underscores making global local

AAK, an expert in specialty oils and fats, is drawing upon its global capability and application know-how to match varying consumer requirements in its different country markets around the world. Finding that delicate balance between following global trends and localising them to suit local contexts and consumer needs has allowed AKK to establish its mark in the industry.

The Sweden-based company continues to expand its worldwide production facilities, opening a factory in Zhangjiagang in Jiangsu province in China. Besides broadening the firm’s manufacturing base, this new factory is expected to help grow AAK’s speciality oils and fats business in China.

According to Michael Skriver, managing director for AAK Malaysia and regional director for SEA, the facility will have 200 tanks with different blends and raw materials, allowing the company to mix various solutions for different customers and requirements.

“With the global ability to work local we take advantage of global trends so we can move faster to each local country. We always try to look at trends from all over the world. Like with this new factory in China, we are starting to develop new products that also include concepts from the Chinese market that might eventually fit the other parts of Asia. It’s catering to local needs, local flavours, even local price points,” Skriver said.

According to Skriver, this approach links back to the company’s global strategy, which is whatever makes life simpler or faster for the customer is value adding. 

Co-developing with customers

AAK is building a regional headquarter and strengthening customer innovation management. It has put in place a five-phase dedicated process for this to move things much more efficiently.

“It’s really a lot about helping the customer innovate and manage the process so that the time to market is much faster,” said Skriver.

From about 24 months previously, the company is looking at having a fat solution within three months depending on shelf-life tests. “We have accelerated shelf-life testing but some customers do not agree to the timeline. So we’ve been doing structured brainstorming with our customers, discussing trends and coming up with prototypes and just pushing to develop new ideas. It is addressing together with the customers questions such as What is the most important? What do you want solved first?” Skriver said.

AAK has completed some projects within six months, doing first the flavour part, followed by the fat part in collaboration with the customer and flavour expert. This co-development framework allows the company to improve the customer-supplier relationship whilst emphasising product development and R&D.

Mr Michael Skriver on front row, right, with the AAK team (Photo courtesy: AAK) 

Taking the premium road in 2018 and beyond

The company increased its emphasis on dairy and nutrition after focusing on chocolate and bakery products the previous years. It is also looking to boost its line of food service-related products.

All in all, however, it remains committed to developing solutions that are healthful yet indulgent, products that are on the high end in terms of flavour release, mouth feel and even frostability whilst still being cost-efficient.

“People want their chocolate or cake, and if they know that these have healthy ingredients, then that’s even better. If you look two or three years back, it was a lot about low fat. Now it’s about getting the carbohydrates down and using the right fat,” Skriver said.

AAK notes many countries in Asia, including Vietnam, Thailand, Indonesia and the Philippines, are focusing on products that are healthy and low on transfat and saturated fats. With trends boosting interest in non-transfat, more consumers are even going into non-hydrogenation, said AAK.

“The solutions demanded now in Asia are much more sophisticated, unlike simple products such as palm kernel olein of years ago. And this is driven by customers wanting to go high end and deliver premium products to their target markets,” Skriver added.

The changes are not about product direction either. Where in the past manufacturers were more concerned about costs, AAK said many of its customers now are open to incurring additional costs if it will mean being able to penetrate the premium segment and offer higher end products eligible for higher price points.

The company also sees the influence of social media on trends, with Skriver noting how it changes the way people perceive things and make purchasing decision.

“Besides the taste and healthful factors, people now want a story to go with the product. Now when we work with customers, it’s not only R&D that we discuss. We also brainstorm on marketing: What storyline do we want? How can we link back to the raw material,” he shared.

AAK continues to invest in expansion initiatives to support efforts to widen market reach. “Looking back at what we’ve done in Asia, in 2014 we had Kamani in India then in late 2015 we had a joint venture in Japan with Miyoshi. This year we open the factory in Zhangjiagang. So we’re definitely continuing to move ahead, and we’re all excited for next year,” Skriver said.  - Joselyn Sangalang-Tayco