Brahim's products on 7-Eleven shelves soon

PETALING JAYA: 7-Eleven Malaysia Holdings Bhd's wholly-owned subsidiary 7-Eleven Malaysia Sdn Bhd has entered into a memorandum of understanding (MoU) with Brahim's Holdings Bhd's 51%-owned subsidiary Brahim's SATS Food Services Sdn Bhd (BSFS) to collaborate and cooperate in food chain supply.
BSFS will plan, develop and create menu specifications and products to be marketed through 7-Eleven's nation-wide chain of convenience stores.
7-Eleven, meanwhile, will provide a centralised distribution centre for BSFS to deliver all products manufactured by the company and to arrange for their delivery.
The partnership will enable Brahim's to penetrate a wider market via 7-Eleven's close to 2,000-store network all across Malaysia, in line with the objective of Brahim's and SATS Ltd to venture into the non-airline business in Malaysia.
In the agreement, BSFS is commissioned to manufacture for 7-Eleven Malaysia a range of chilled packaged ready-to-eat products that would be branded under 7-Eleven's proprietary food service brand of "Fresh to Go".
7-Eleven Malaysia CEO Gary Brown said the range expansion efforts with BSFS will be rolled out in phases and it is targeting a number of pilot stores in the Klang Valley to carry this new range by this month before gradually expanding to other key market centres within the Klang Valley and other states, such as Penang.
"We are fully focused on this collaboration as we believe fresh food and beverages are an integral part of our long-term corporate strategy as we seek to provide 24-hour convenience to consumers. This new initiative further increases their choice of meals as we are already serving traditional favourites for those craving for more," Brown said in a statement.
The deal reinforces 7-Eleven Malaysia's commitment to bringing the latest retail offerings as well as convenience to its 900,000 daily customers.
"We believe this range of chilled ready-to-eat meals will be a further attraction to our shoppers," Brown said.
HLIB Research was positive on the news as it reflects Brahim's ongoing initiative and strategy of diversifying from airline catering. It added that 7-Eleven is the leading convenience store brand in Malaysia with a dense network and trusted brand name with a large customer base.
As at the fourth quarter of 2015, there were 1,944 7-Eleven stores throughout Malaysia with 200 more stores targeted to open in FY16.
"We expect BSFS to able to cater to at least 100 stores by the end of FY16, equivalent to a humble 5% of existing 7-Eleven stores. We understand that 35% or 680 7-Eleven stores are in the Klang Valley alone," said HLIB.
While contribution of this supply deal is still immaterial at this juncture, HLIB said, there is tremendous potential for BSFS and 7-Eleven to scale the partnership to cater for existing stores in the urban areas.
"Our back of the envelope calculations implies that this venture could potentially add 3%-9% to Brahim's future annual revenue," it said.