The location, in the largely rural state of Kedah, has since 2010 provided a home to hundreds of pairs of swiftlets, or walet, as they are known locally. The birds build nests from their saliva which can be harvested and sold whole, or formulated into beverage and health ingredients. Izzy Nezs’s does this through its Lumia brand which was launched last April.
Like many other bird’s nest suppliers, the company’s move into beverages was prompted two years ago by the partial reversal of a 2011 ban by China on the import of all bird’s nest products from Malaysia.
Growing a cottage industry
With the restriction on the export of specifically processed bird’s nests removed, Malaysian suppliers, now armed with their own food, beverage and cosmetics brands, have been able to ship these to the world’s biggest market.
The Chinese are especially keen on the supposed health properties of the nests, and view ones harvested in Malaysia as being particularly impressive. The market could offer vast riches to companies in what until recently has largely been a cottage industry.
Swiftlet farming is expected to contribute RM4.5bn (US$1.1bn) to Malaysia’s gross national income by 2020, according to official figures. With 20,000 swiftlet farmers, according to some estimates, the country exports about 60 tonnes of processed nests each year. It is currently the world's second biggest global supplier after Indonesia, producing an estimated 25 tonnes per month.
As the government entered final negotiations to lift the ban entirely last January, the agriculture minister highlighted the market’s potential.
“[The government] believes the industry can be a new source of wealth which will contribute to economic growth. Thus, we need to further develop the industry,” Ahmad Shabery Cheek said after his ministry had signed an agreement protocol with China last January to resolve the issue between the countries.
The protocol would call on the Veterinary Services department to evaluate Malaysian bird’s nests to ensure that they met Chinese standards. It also sets the standards for Malaysia’s farmers to sell their raw nests to the Agriculture and Agro-based Industry Ministry.
The ministry will then export these “untouched” nests to China where they will be cleaned and processed in Qinzhou, where it jointly owns a RM22m (US$5.4m) quarantine, processing and testing plant, and then sold to the Chinese market.
“When the ban was lifted for processed nests we joined a lot of other companies into manufacturing products like health drinks,” said Fadzil Abd Latif, the husband of the founder and marketing advisor to Izzy Nezs.
“We entered into end-products because we have our own supply. The real difference is we introduced our products in a sachet format. It’s the first of its kind.”
The high levels of collagen in bird’s nests means they are not soluble. Instead, processed foods and beverages featuring the material usually contain extracts or have it suspended in a jelly.
To allow their harvest to be turned into a sachet drink, Izzy Nezs looked for a way to transform their bird’s nests into powder. The company had previously used extraction on earlier versions of its products but soon the husband and wife team met a university professor who had patented a process that made powder from untouched nests and also ensured higher nutritional values than from an extract.
“From there we came out with a sachet to promote convenience. It’s easier to carry around than a bottle or a jar. You can just take out a sachet and have a shot when you want to,” said Fadzil.
“We also customised it into two lines. There is one mixed with pomegranate and collagen for men and women. There is also one customised with ubi jaga and cordycep for men. Ubi jaga is botanical that’s even better than tongkat ali for male potency."
While China is “number one” in the country’s sights, along with Japan and Indonesia, Lumia is also hoping to become the leading bird’s nest products manufacturer for the Muslim market at home and overseas thanks to its Jakim certification, Malaysia’s gold standard for halal.
In particular Fadzil is eager to tap into the Muslim pilgrim market. He feels that the sachet format and bird’s nest’s supposed energy and health properties will make for a good accompaniment to Hajj, the journey to Mecca which Muslims are required to perform once in their lives, and Umrah, which can be done regularly.
“I’m concentrating in Malaysia on Umrah, because it’s good for pilgrims,” said Fadzil. “Sometimes they haven’t had time to eat breakfast and they’re rushing, so they can take out a sachet and get an energy boost that will last until lunch. It also stimulates the mind for prayer.”
“But first they need a lot more education to learn about the benefits of bird’s nests. The halal aspect definitely helps.”
While he believes Muslim market holds tremendous promise, the reality is that Chinese consumers control almost the entire demand for bird’s nests. According to Fadzil, 99% of consumers are Chinese or of Chinese extraction. Bird’s nests have been used in Chinese cuisine and medicine for hundreds of years and there’s no need to convince the market of the health and healing benefits of swiftlet’s saliva. For Lumia its Malaysian origin is the key selling point for Chinese buyers.
Under the terms of the Sino-Malaysia deal to re-establish exports, a new regulatory system has given Chinese consumers supreme confidence in Malaysian bird’s nests and associated products.
“Malaysia is in the golden triangle of bird’s nest production. This includes Malaysia, Indonesia, Thailand the the Philippines, but the Chinese prefer taking bird’s nests from Malaysia because the system is governed by our government,” Fadzil explained.
“If you buy it from Indonesia, it’s only governed by an industry association. If one of that association’s members sells fake formulas, they can’t do anything. If anything happens in Malaysia, the consumer can sue the government. So the government needs to be responsible.”
Indeed, there have been several reports of Indonesian bird’s nest brands passing off their products as Malaysian in an illicit bid to tap into this demand.
In Malaysia, bird’s nest farmers need to register their farmhouse with the veterinary department and Ministry of Health. Officers will visit to inspect compliance towards regulations and grant paperwork.
“It’s very strict and they can shut you down just like that,” said Fadzil.
In terms of overseas expansion, Lumia is “not there yet”. The brand already retails through the Muslim online store AladdinStreet. It’s also building a market in Malaysia and is looking to sell bulk orders to retailers. But China is the prize.
“Our online push into China is still ongoing. The market is so huge that just 1% of it would be ideal” said Fadzil.
“But in the meantime we are looking to Malaysia and other Muslim countries with our halal products.”