Singapore's SATS eyes India, China to double overseas food sales

In the wide kitchen of Japan's largest in-flight catering factory next to Narita Airport near Tokyo, Filipino women in white coats efficiently put Japanese simmered vegetables into silver containers.

The kitchen's owner, TFK, was acquired by Singapore-based airport services provider SATS from Japan Airlines in 2010. SATS aims to double its non-Singapore sales in the food business by 2029. The company currently operates in 33 locations in 10 countries, and sells meals not only on board planes but on the ground. It is in this area, especially, where SATS is looking for new commercial opportunities.

SATS currently provides aviation in-flight catering to more than 130 airlines, with a reputation for its safe meals and authentic tasting Asian cuisine.

Stanley Goh, head of the company's food solutions business, told Nikkei Asia in an interview that "our past business has been predominantly in Singapore, but we need to have growth beyond Singapore to be a resilient business."

"Our focus is actually in China and India," said Goh, noting that the demand for ready-to-eat meals is expected to increase. "Growth potential is very high now for these two markets. ... One thing in common is that there's a lot of urbanization of consumers."

In March, the Singaporean company began operating its largest kitchen in Bengaluru, India, to help meet the demand for more ready-to-eat meals. The newly opened facility will bolster production from existing kitchens in Singapore, China, Japan and Thailand. "[The] supply chain is the challenge to expand in China and India; very large markets," Goh said.
 

In July, SATS announced a partnership with Japanese trading house Mitsui & Co, which has a worldwide network that could resolve supply chain challenges. Mitsui will acquire a 15% stake in SATS subsidiary operating in India, Thailand, China and Singapore for about 4 billion yen ($27 million).

Mitsuhiro Goto, Mitsui's general manager of the Asia retail business division, who also spoke to Nikkei on the same day, said, "India and China are stepping stones to build up even bigger business [with SATS]." Mitsui already owns operating companies in these two countries that can be used as a distribution network.

Goto also suggested tapping the other countries' know-how to help facilitate growth. "Thailand can be an essential export base, serving as a 'gateway' to expand business further in Japan, the Middle East and Europe," says Goto, adding that SATS and Mitsui are currently in talks to set a "numerical target for the partnership" to be achieved in the next three to five years.

The partnership area will not be limited to in-flight meals as SATS aims to expand its non-aviation food business, targeting general consumers or companies.

Last year, the company's subsidiary TFK launched N's Deli, a frozen-food meal brand that features Asian cuisine, such as Singaporean chicken rice, Indian tandoori chicken and Malaysian mie goreng (a stir-fried noodle dish). N's Deli currently delivers meal packages in Japan through its online store.

"COVID-19 disrupted the supply chain and impacted the aviation industry, and we were affected," said Kerry Mok, President and CEO of SATS in a news conference in late August. "Trade wars were changing trade flows."
 

SATS' latest quarterly result announced last month shows that the aviation-related business, which consists of aviation food, ground services and cargo, occupies 93% of its revenue. Goh said, "Over time, similar to Singapore and overseas, we will be starting to shift" from a current business focus to the non-aviation business.

Using Mitsui's customer network, TFK has begun supplying food products to retail channels, including Japan's high-end supermarket Kinokuniya and railway operator East Japan Railway. With the latter, SATS is supplying "in-train meals," according to Goh. Mitsui and TFK are in talks to expand business cooperation in Japan.

Another plan to supply frozen meals to Ryohin Keikaku, owner of lifestyle brand retailer Muji, is targeted for launch in the first quarter of 2025, according to a July release issued by SATS. Goh said it is "still early discussions," but Mitsui's Goto added, "Muji aims to make its Asian food products more authentic, with the increased focus on its food business. SATS Group could meet the expectation."