Introducing Pek Sin Choon

Founded in 1925, Pek Sin Choon is one of Singapore’s oldest and most respected tea merchants that continues to brew legacy into longevity, —preserving the authenticity of traditional Nanyang tea blending while continuously evolving for a new era.

Now led by fourth-generation owner Kenry Peh, the family business continues its dedication to craftsmanship and cultural stewardship. Beyond selling tea, it is proud to safeguard time-honoured Chinese tea traditions, educate younger generations about tea culture and expand the appreciation of heritage teas both locally and globally.

Its teas are deeply embedded in Singapore’s culinary fabric; —from serving over 80 per cent of the local bak kut teh market to shops, kopitiams, restaurants, hotels and discerning consumers, as well as sold in markets across Southeast Asia, China and in some Western countries.

While rooted in tradition, Pek Sin Choon continues to innovate, supplying tea blends to businesses that cater to new trends and the younger generation, —such as brands who produce fruity tea mixes, bubble tea and even kombucha.

Challenges

From blends to bucks—a lengthy cash conversion cycle

Pek Sin Choon’s time-tested art of brewing traditional Chinese tea blends that are of consistent premium flavour and quality means that the process can require a lengthy production time depending on the type of signature blend.

In general, production cycles from the purchase of raw tea leaves to sales can range anywhere from three months to over 12 months, —for their different Nanyang blends to be stored, aged and rested allowing them to settle, mature and harmonise, —which leads to inventory accumulation and longer cash flow cycles.

With significant cash flow, between 30 to 40 per cent, committed up front for the purchase of raw tea leaves and the need to have enough stock on hand to supply over 600 long-term customers for their day-to-day requirements and seasonal festive demands, this meant that there was a need for greater capital liquidity.

Solutions & Results

Steady cash flow, smoothly brewed operations

OCBC’s Working Capital Loan provided Pek Sin Choon with the financial flexibility needed to navigate its unique challenges as a heritage tea business, —having the funds to bulk purchase raw tea leaves to maintain consistent inventory and long production cycles.

The extra working capital also helped it to manage market fluctuations as the prices of raw tea leaves depended on each season’s crop yields and the effects of climate change. With greater cash flow, Pek Sin Choon could monitor the market conditions, purchase ahead and stabilise costs.

Such funding also enabled the business to modernise production without losing the soul of its craft, manage rising or unforeseen operating costs, as well as invest in ways to expand its retail presence and reach out to new and younger consumers to grow its brand and sales.

Behind all of this, was the personal nature of Pek Sin Choon’s engagement with OCBC. Beyond transactions, it was all about building connections as OCBC’s Relationship Manager met face-to-face to understand their unique history, needs and challenges in order to advance Pek Sin Choon ‘s legacy and business journey forward.