Tag Archive | "China"

Chinese suppliers are fast becoming key players in the global supply of food and beverage ingredients


Visitors to Fi Europe will have the chance to meet more than 250 food and beverage leading ingredient suppliers directly from China – all under one roof. Fi Europe, confirmed to be held in Paris from 1-3 December, is a trade show dedicated to the food and beverage industry that brings together more than 25,500 industry professionals every two years.

Fi Europe Brand Director, Richard Joyce, said Chinese food ingredients were playing a key role in the global food and beverage market now more than ever. “The variety and high-quality products coming from Chinese suppliers is something we’ve seen grow during the last few years, and such suppliers are a critical part of Fi Europe for our visitors,” he said. “More importantly, now for a large number of leading Chinese ingredient suppliers, Fi Europe has become their route to the European food market – helping them grow their business and compete with global competitors.”

At Fi Europe 2015, more than 250 Chinese companies will exhibit their ingredients in the China Pavilion, showcasing product innovations and the latest food and beverage solutions. Exhibitors in the China pavilion include COFCO, Weifang Ensign, Fooding Group, RZBC Group, FREDA, Guoxin Union, TTCA, Kunda, Novanat, Changmao, Yuwang and Reephos.

These leading Chinese companies will exhibit a range of food and beverage ingredients solutions, including:

  • Natural colours
  • Sweetners such as Stevia and Stevia extracts
    Citric acids
  • Proteins & Fibres (such as soy and pea)
  • Xanthan-gum, Gellan Gum, Welan gum
  • Extracts
  • Dehydrated vegetables
  • Food additives

Mr. Joyce said the China Pavilion will provide visitors with a range of innovative ingredients and solutions in natural, nutritious, health and functional foods – direct from Chinese ingredients suppliers.

“Even if visitors are not currently sourcing ingredients from China, I would recommend they take the time to visit the China Pavilion to build their network of ingredient suppliers,” he said.

 

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Breakfast Key to Growth of Foreign Fast Food Market in China


With the total amount of foreign fast food outlets in China set to break the 50,000 mark this year – up from 48,477 in 2011 and 36,037 in 2006 – and 44% of Chinese consumers saying that they plan to spend more on fast food in the coming year, the potential for the sector is clear.

However it seems that there is further opportunity for operators wanting to tap into this lucrative market, as new research from Mintel reveals that breakfast is still the under penetrated day-part for foreign fast food outlets. Indeed, only one in five (21%) urban Chinese consumers eat at fast food restaurants in the morning (4am-11am) – as opposed to 75% during lunchtime.

Tan Heng Hong, Senior China Research Analyst at Mintel, comments: “Despite having the upper hand in quality, safety and service, foreign fast food still has much work to do in flavour, affordability, health and variety in order to compete more effectively against Chinese fast food, which has the largest share of the fast food sector. To increase consumption of foreign fast food, more has to be done to unlock opportunities in the breakfast market where usage is the lowest.”

Overall, it seems foreign fast food outlets still have a way to go to match their Chinese counterparts. Mintel’s research has found 86% of respondents have eaten at Chinese fast food restaurants compared to 68% at foreign fast food restaurants in the past year. However, inclusion of local menu items could help bridge this gap.

Mintel’s research finds nearly three quarters (76%) of consumers express an interest to see more fast food options with local flavours on the menu. When asked about what consumers would like to see more of at foreign or Chinese fast food restaurants, the majority of consumers selected the introduction of food with local flavours as their top pick (15%).

Tan Heng Hong continues: “Chinese fast food restaurants, which serve Chinese staples including rice and noodles, are more popular as they win on price, variety, nutrition and flavour. Hamburgers, pizza and Japanese noodle or rice dishes served by foreign fast food restaurants are less popular because they are perceived to be more expensive or less healthy, which makes foreign fast food an occasional indulgence, rather than an everyday purchase. It is clear that consumers demand local flavours on their menu and this can be applied to the breakfast day-part, especially with items that integrate well on the menu, like porridge. The challenge for foreign fast food chains is to come up with new innovative products that can meet the demand for a more localised taste.”

The market for foreign fast food inChinahas seen steady growth over the past five years as Chinese consumers have incorporated it ever more into their lives and culture.China’s foreign fast food sector grew at a compound annual growth rate (CAGR) of 19% from 2006-11 to reach a market value of RMB 75.1 billion or 11.8% of the overall fast food sector. And there is further good news for the market for foreign fast food in China, as Mintel forecasts the sector to increase to RMB 171 billion by 2017, growing by about 95% on the expected value for 2012 or a CAGR of 14.3%. Furthermore, the number of outlets, chained and independents, is expected to increase to 71,964 outlets by 2017, up 39% on the expected number for 2012.

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Diageo Launches Chinese White Spirit Shui Jing Fang into GB Market


Diageo has launched Chinese white spirit brand, Shui Jing Fang, into the GB domestic market. Great Britain is the first European market to stock Shui Jing Fang as part of Diageo’s strategy to build it as an internationally recognised brand.

Shui Jing Fang will be distributed throughout the UK by SeeWoo, a leading specialist Oriental food wholesaler headquartered in the UK. In addition to the launch in Great Britain, Diageo plans to introduce Shui Jing Fang into other northern European markets later in 2012.

Andrew Cowan, country director Diageo GB, says: “This launch represents a milestone in the journey of Shui Jing Fang to becoming an international brand and we look forward to working with SeeWoo to build the brand with British consumers.”

Having gained a controlling stake in Sichuan Chengdu Quanxing Group, the largest shareholder of Sichuan Shuijingfang in 2011, Diageo is the only international company to have invested at scale in Chinese white spirits. This stake in Quanxing gives Diageo the opportunity to participate in the super premium Chinese white spirits segment, one of the largest, fastest growing spirits segments in the world.

Shui Jing Fang will initially be aimed at Chinese consumers in Britain, but the ‘baijiu’ segment is continuing to gain popularity in overseas markets due to rising demand from Chinese travelers and Western businessmen keen to do business in China.

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Bright Food to Acquire 60% of Weetabix


Bright Food, one of China’s largest food groups, is acquiring 60% of Weetabix Food Company from private equity firm Lion Capital for an enterprise value of £1.2 billion. The remaining 40% of the shares will continue to be held by Lion Capital and management. The transaction is subject to regulatory and government approvals in China as well as certain anti-trust approvals. Completion of the transaction is expected in the second half of 2012. No further financial details of the transaction are being announced.

Weetabix is the second largest branded manufacturer by value of ready-to-eat cereals and cereal bars in the UK. The company’s portfolio of household brands features the market-leading brand Weetabix, and also includes Weetaflakes, Oatibix, Oatiflakes, Seriously Oaty, Ready Brek, Weetos and Alpen, the leading UK muesli brand. Weetabix’s branded cereal business is enhanced by its number two position in the manufacturing of own label cereals for retailers in the UK. In addition to its strong presence in the UK, the company has operations in North America, South Africa, Germany and Spainand exports to more than 80 countries around the world. Weetabix employs about 1,800 people worldwide and in 2011 generated sales of over £460 million.

Bright Food’s landmark acquisition is an exciting move by the company, signalling its entry into both the UK and global food markets through the iconic Weetabix brand. The transaction will represent the largest overseas acquisition by a Chinese company in the food and beverage sector. The purchase also supports Bright Food’s strategy of buying famous international brands, developing advanced technology and taking strong competitive positions in each of its markets.

Bright Food is committed to driving the global growth and success of the Weetabix business, with a focus on the potential in Asia and especially in China, to take advantage of the growing appetite in the country for packaged and convenient healthy foods. Bright Food has extensive experience across all aspects of the food industry spanning the primary (agriculture/ farming), secondary (manufacturing of food products) and tertiary (retail and distribution) industries. In addition, it owns a number of well-known trademarks and branded products in Asia’s food processing industry. Bright Food will also offer an excellent ‘route-to-market’ through its extensive retail platform. In 2011, Bright Food generated revenue of $12.2 billion and had an EBITDA of $1.2 billion.

Lyndon Lea, partner of Lion Capital, comments: “The acquisition of Weetabix in 2004 was the first investment of Lion Capital and launched our strategy of investing in high quality consumer brands. Over the eight years that we have owned Weetabix it has generated top-line growth that has outpaced the broader cereal market as a result of increased investment behind the brands and innovation. We are excited to continue our journey with the Weetabix brand, which has been an enormously successful investment, as we extend the business into China in partnership with Bright Food.”

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University College Dublin Signs MOU With Leading Chinese Dairy Producer


University College Dublin (UCD) has signed a memorandum of understanding (MOU) with a leading Chinese dairy producer Dairy United. The MOU which will result in multi-million euro contracts for products and services, envisages the development of a China-Ireland Agricultural demonstration farm in Hohhot(Inner Mongolia), collaborative research projects, the provision of education and training services, and collaboration on the creation of a trade corridor to facilitate the introduction of Irish exporters to the Inner Mongolian region. The Dairy United/UCD link was established through contacts made by Enterprise Ireland over the past 18 months.

UCD will be collaborating with a number of Irish agricultural equipment and services companies to deliver an integrated package of education and training, research, services and technology to Dairy United.

The UCD Dean of Agriculture and Food Science Professor Alex Evans comments: “This partnership came about because of Ireland’s global reputation in dairy production and the ability of UCD and Irish agri-service companies to offer a complete solution, incorporating education, training, agricultural products and services, that meet Dairy United requirements and will form the basis of a long term relationship.”

Julie Sinnamon, executive director of Enterprise Ireland, says: “This MOU is the fruit of substantial work conducted in the past two years, between Dairy United and UCD, with the support ofEnterpriseIreland. The MOU paves the way for a range ofEnterpriseIrelandclient companies across the agri-services sector to provide world-class agri-technology and services to the China market“

Dairy United was founded in 2004 and specialises in dairy production and processing in China. Dairy United has total assets of Eur75 million and operates fifteen 1,000 cow dairy farms supported by over 2,000 ha of forage production land. Dairy United is currently undertaking an expansion strategy which will see it invest Eur360 million over the next five years for the construction of another 35 dairy farms and a modern dairy processing factory. On the completion of the expansion strategy by 2015, Dairy United will have 50 dairy farms with 100,000 dairy cattle and 20,000 ha of forage producing land, and the factory will have a daily fresh milk processing capacity of 500 tons.

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Tuborg Launched in China For the First Time


Following on from last year’s global repositioning of its Carlsberg flagship brand, Carlsberg Group is now in the process of rolling out a rejuvenation programme for Tuborg, one of the top ten international premium beer brands, across many of its key markets. The Danish brewer has just launched Tuborg in China.

The redesigned Tuborg bottle comes with an easy to pull off “ring-pull” cap. This is the first time ever that an international brand has introduced a pull-off cap to consumers in China.

In addition to the redesigned bottle, the rejuvenated Tuborg carries a new tilted logo and a new strapline ‘Open for More’. The launch will be supported by a new global advertising campaign including a new television commercial, a social media outreach campaign, as well as a louder than ever music campaign.

The China launch follows on from the relaunch of the Tuborg brand in Russia and India earlier in the year and Carlsberg Group plans to roll out the rejuvenated Tuborg brand across 13 markets by the end of 2012, with more markets to follow in 2013.

“As the fourth largest brewer globally, Carlsberg is optimistic about the rapidly growing and dynamic Chinese market. It is an important part of our strategy to provide more high quality, diversified products to Chinese consumers,” comments Stephen Maher, chief executive of Carlsberg China. “Tuborg is the fourth top ten international premium beer brand brought by Carlsberg Group to the Chinese market, following in the footsteps of Carlsberg, Guinness and Corona. By introducing international beer brands and nurturing local brands, Carlsberg Group now owns a product portfolio in China which boasts over 20 brands. The extensive product portfolio, covering super premium to mainstream, supported by a full range of SKUs enables Carlsberg to provide its customers and consumers with a wide range of choices and to successfully exploit different regions and different markets.”

Carlsberg was one of the first international brewers to export beer to China more than 130 years ago. Carlsberg officially began its business in Greater China in 1978. Carlsberg is involved in over 40 breweries, either wholly-owned or through joint-venture, across several provinces and now employs over 14,000 people across China.

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PepsiCo Finalises Strategic Alliance in China


PepsiCo has completed its a strategic beverage alliance in China with Tingyi (Cayman Islands) Holding, one of the leading food and beverage companies in China. China is projected to become the world’s largest beverage market by 2015. The alliance was approved by the shareholders of Tingyi in February and has now received regulatory approval.

As part of the alliance, Tingyi’s beverage subsidiary – Tingyi-Asahi Beverages Holding (TAB), one of the country’s leading beverage manufacturers – is now PepsiCo’s franchise bottler in China. TAB will partner with PepsiCo’s current bottlers to manufacture, sell and distribute PepsiCo’s carbonated soft drink and Gatorade brands. In addition, PepsiCo and TAB will begin co-branding their respective juice drink brands using the Tropicana brand name under license from PepsiCo. PepsiCo will retain branding and marketing responsibilities for these products.

Under the terms of the alliance, PepsiCo has contributed its indirect equity interests in its company-owned and joint venture bottling operations in China to TAB and received as consideration a 5% indirect equity interest in TAB. PepsiCo has an option to increase its indirect holding in TAB to 20% at its sole discretion by 2015. The shareholdings of PepsiCo’s existing Chinese joint venture partners in the joint venture bottling operations will not change as a result of the transaction.

“China will soon surpass the United Statesto become the largest beverage market in the world. As a result of this new alliance with Tingyi, PepsiCo is extremely well positioned for long-term growth in China,” says PepsiCo chairman and chief executive Indra Nooyi. “Tingyi is an outstanding operator with a proven track record of success. By leveraging the complementary strengths of each company, we’ll be able to significantly enhance our beverage business in China, reach millions of new consumers throughout the country, and create value for Tingyi and PepsiCo shareholders.”

This transaction involves the companies’ respective mainland China beverage operations. Both PepsiCo and Tingyi will continue to independently operate their respective food businesses.

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Coca-Cola Continues Strong Investment in China


The Coca-Cola Company has opened its 42 and largest bottling plant in China. Located in Yingkou, Liaoning, the new production facility spans an area of more than 170,000 square meters (42 acres), the represents a $160 million investment in China and is part of a three-year, $4 billion investment plan announced last year that underscores the Coca-Cola system’s confidence in China and its fast-growing beverage market.

Upon completion, this third bottling plant in Liaoning, operated by Coca-Cola Liaoning (Central) Beverages, is expected to reach an annual production capacity of more than 5 billion servings of sparkling and still beverages, including Coca-Cola, Sprite, Minute Maid and Ice Dew. Coca-Cola plans to invest in nine production lines at the new facility, with four currently in operation.

The plant will directly create 500 jobs and generate an additional 5,000 job opportunities in the supporting industries. Together with two other existing plants in Shenyang and Dalian, this new investment will allow Coca-Cola to provide better services and refreshing products to 44 million consumers in Liaoning Provinceand enhance its contribution to local development.

“This $160 million commitment to Yingkou is more than an investment in Coca‑Cola’s expansion to capitalize on the fast-growing China market. It is also an important step by Coca-Cola to assist in the development of local communities throughout China,” says Muhtar Kent, chairman and chief executive of The Coca-Cola Company. “China is a vast growth market for Coca-Cola. As we work to double the size of our global business in this decade, China will play a critical role.”

China is one of the fastest-growing markets for The Coca-Cola Company, with volume expanding by 13% in 2011, maintaining double-digit growth in nine of the last 10 years. Consumption of Coca-Cola products in China now represents approximately 8% of the company’s global volume. Coca-Cola announced last year that starting in 2012 it and its Chinese bottling partners will make a $4 billion investment in new infrastructure, partnerships, innovation, sustainability and brand building over the next three years.

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Diageo Gains Regulatory Approval For £630 Million Chinese Acquisition


Diageo has received Chinese regulatory clearance to acquire the outstanding shares of Sichuan Shuijingfang Co for £630 million. ShuiJingFang is one of the largest super premium Chinese white spirits brand by volume in China. The company is listed on the Shanghai Stock Exchange.

Diageo made its first 43% investment in February 2007 and increased its shareholding to 49% in July 2008. It then increased its shareholding to 53% in July 2011. Since 2007, Diageo has begun distributing the ShuiJingFang portfolio across South East Asia, Korea, Australia and in the USA.

Super premium Chinese white spirits is one of the largest, fastest growing spirits segments in the world

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Nestle Supports Dairy Development in China With New Training Institute


Nestle is helping China accelerate the development of its milk industry with the construction of a new dairy farming institute in Shuangcheng in Heilongjiang province. The institute, with its series of training farms, aims to be the country’s leading dairy training centre, offering teaching courses from national and international experts.

Dairy farm owners and workers from Shuangcheng and other Chinese regions will be able to improve their farm management skills and learn how to use the latest agricultural technology. They will gain practical experience in expanding their farm businesses, improving productivity and sourcing high quality milk sustainability.

“We have worked with the local authorities and dairy farmers in Shuangcheng for more than 20 years,” says Roland Decorvet, chairman and chief executive of Nestle China. “Over that time we have helped to transform the area into one of the largest milk producing regions in the country. This new training institute is a continuation of our long-term investment in the future of Shuangcheng to ensure it remains one of China’s leading dairy districts.”

In partnership with the authorities, Nestle has distributed 1,000 free milking machines to farmers to ensure no farmers in the region have to continue milking by hand.

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PepsiCo Enters Strategic Alliance in China


PepsiCo has agreed to form a strategic alliance with Tingyi Holding, one of the major food and beverage companies in China. Tingyi’s beverage subsidiary, Tingyi-Asahi Beverages Holding (TAB), will become PepsiCo’s franchise bottler in China. TAB, whose product offerings include ready-to-drink tea, bottled water and juice beverages, is one of the leading beverage manufacturers in China.

 

PepsiCo currently operates its China beverage business through 24 company-owned and joint venture bottling operations. Upon approval of the transaction, PepsiCo will transfer its indirect equity interests in the bottlers to TAB, and will receive as consideration a 5% indirect equity interest in TAB. PepsiCo will also have an option to increase its indirect equity interest in TAB to 20% by 2015, when China is projected to become the world’s largest liquid refreshment beverage market.

 

The transaction is subject to regulatory approval in China and the approval of the shareholders of Tingyi, which is a listed company on the Hong Kong Stock Exchange.

 

Indra Nooyi, chairman and chief executive of PepsiCo,

The shareholdings of PepsiCo’s existing Chinese joint venture partners in the joint venture bottling operations will not change as a result of the transaction. Under the new alliance, TAB will partner with PepsiCo’s current bottlers to manufacture, sell and distribute PepsiCo’s carbonated soft drink and Gatorade brands. PepsiCo will retain branding and marketing responsibilities for these products.

 

TAB also will begin co-branding its juice products under the Tropicana brand name under a license from PepsiCo. TAB and PepsiCo’s current bottlers will have the sole rights to distribute PepsiCo’s branded beverage products in China. In addition, PepsiCo will provide the alliance access to its global beverage innovation pipeline.

 

“To win globally, we need to have absolutely the best business partners locally,” says PepsiCo’s chairman and chief executive Indra Nooyi. “Tingyi has a history of successful partnerships with other companies, and we believe this proposed alliance will combine Tingyi’s superb distribution reach with PepsiCo’s innovation prowess, significantly enhancing our beverage business in China in the near term while maximizing PepsiCo’s future growth potential in the fastest growing beverage market in the world.”

 

In China, while converting its beverage business to its globally prevalent franchise model, PepsiCo will continue to independently operate its successful food business.

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AB InBev Partners with GE to Achieve 2012 Energy and Water Environmental Initiatives in China


Anheuser-Busch InBev, the world’s largest brewer, and energy solutions provider GE have formed a strategic alliance to jointly develop innovative manufacturing solutions to drive energy efficiency and water savings in existing and ‘greenfield’ AB InBev facilities across China. AB InBev has defined key performance indicators related to energy use, water use and CO2 emissions.

 

With clear 2012 objectives to reduce the water-to-beer ratio to 3.5, reduce energy usage aggressively and decrease CO2 output and reliance on traditional energy sources via the use of biogas and natural gas, AB InBev was seeking a partner with global reach and a dedicated approach to the challenges facing the brewing industry. GE made an ideal partner.

 

“When GE expressed its desire to partner, we agreed without hesitation,” says Ricardo Dias, vice president of procurement for AB InBev APAC. “We are very pleased to engage in this strategic partnership with GE as we continue to strive for more sustainable manufacturing processes. As a brewing industry leader, we will continue to strive to establish a benchmark for energy innovation in the brewing industry and larger food and beverage marketplace.”

 

GE aims to utilise its resources aligned to the food and beverage industry to support AB InBev to exceed its 2012 objectives. Working together, AB InBev and GE engineering resources will establish an ‘Innovation Team’ to understand AB InBev’s processes and challenges. This insight will enable the team to define clear solutions that can be implemented and piloted in designated AB InBev locations, with successes taken to plants across the AB InBev China landscape.

 

Jack Wen, vice president of GE and president of GE Energy China, comments. “GE has advanced technologies that can address the challenges of the food and beverage marketplace. Our alliance with AB InBev will enable us to work together to create solutions that will empower the larger brewing industry to achieve these same objectives.”

 

With AB InBev’s 2012 goals in mind, this partnership will initially focus on designing and implementing several key solutions, including:

* Energy management solutions that use advanced software systems to provide insight into the level of energy and water used, enabling visibility into potential energy and water losses, while allowing for a better understanding of where improvements can be made.

* Combined heat and power solutions that utilize gas engines will enable several AB InBev pilot sites to create electricity via either biogas or natural gas. With these engines achieving energy efficiency levels of 70 to 90 percent, the utilization of energy is dramatically improved.

* Waste-to-value solutions that will enable efficient use of water and energy normally left over from the manufacturing process.

 

The AB InBev and GE teams will work together to optimize these solutions and define additional solutions throughout the partnership.

 

This initiative is expected to reduce CO2 emissions by approximately 100,000 tons per year in addition to reducing water and energy consumption. The results also have the potential to resonate throughout the broader industry.

 

This initiative is the next step in a growing tradition of environmental leadership for AB InBev. In April 2010, the company announced its three-year environmental performance targets and its goal to become the world’s most environmentally friendly brewer.

 

In 2010, AB InBev China reduced water consumption by 20.7%, carbon emissions by 20% and energy consumption by 13.19%. GE’s Customer Innovation Centers are part of GE’s ongoing investment in China. In 2010, the company announced a plan to invest more than $2 billion in R&D, technology and financial service partnerships in China by 2012.

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SABMiller Expands in China


SABMiller, through its joint venture with China Resources Enterprise, has strengthened its position within the fast growing Chinese beer market. China Resources Snow Breweries has entered into an agreement with China Kweichow Moutai Distillery Co to jointly invest in Guizhou Moutai Beer and form a joint venture called China Resources Snow Breweries (Junyi). As part of the transaction, CR Snow will inject approximately $42m in return for a 70% equity stake in the new joint venture.

 

With an annual production capacity of 1 million hectolitres, Moutai Beer is a popular brand with a strong competitive position in Guizhou Province. CR Snow already has a leading position in Guizhou Province, with a market share of approximately 50% and sales volume of over 1.8 million hectolitres in 2010. Since its entry into the Guizhou market in 2007, CR Snow’s sales volumes have grown at 40% per year, making Snow the most prominent brand in the province.

 

The brewing industry in Guizhou Province has been growing rapidly in recent years, with the overall sales volume in 2010 increasing by 10% year-on-year to 3.9 million hectoliters.

 

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Coca-Cola to Invest Another $4 Billion in China


The Coca-Cola Company and its Chinese bottling partners are to invest $4 billion in China over the next three years, commencing 2012. By the end of 2011, Coca-Cola and its China bottling partners (Swire Beverages and COFCO Coca-Cola Beverage) will have invested more than $3 billion in China over the last three years, bringing the total investment to $7 billion between 2009 and 2014 in the largest and fastest-growing consumer market in the world.

 

“China is one of our most important growth markets in the world as we work to achieve our 2020 Vision goal of doubling system revenues and servings this decade. The new investment is a part of our long-term commitment to invest in innovation, partnerships and a portfolio that will enable us to grow our business in a sustainable and responsible way,” says Muhtar Kent, chairman and chief executive of The Coca-Cola Company. “Besides our infrastructure and capabilities, the new investment will also focus on enhancing the consumer experience, ensuring product affordability and building brand loyalty which deliver sustainable growth.”

 

Muhtar Kent, chairman and chief executive of The Coca-Cola Company.

In its second quarter 2011 financial results, Coca-Cola posted strong worldwide volume growth of 6% in both the quarter and year-to-date, with growth across all five geographic operating groups, including in China.

 

“In the first six months of 2011, sales in China topped 1 billion unit cases – double the rate sold five years ago when the company first delivered 1 billion unit cases for a full year. China had an outstanding performance in the latest quarter, supported by strong growth in the Coca-Cola brand and Minute Maid Pulpy, the number one juice brand in China,” he says. “These achievements are driven by a renewed focus on core brands, continued distribution gains and expansion of cold drink equipment, all made possible by our continued investment and dedicated execution over the years.”

 

The Coca-Cola China system opened five plants in Urumqi, Nanchang, Wuhan, Luohe and Hohhotin 2009-2010. In 2011, the system has already opened a new plant in Sanshui (Guandong province), will open another plant in Yingkou (Liaoningprovince), and break ground on a new plant inShijiazhuang(Hebeiprovince) later this year.

 

With the recently opened plants, the Coca-Cola system now operates more than 40 plants in China employing more than 48,000 people. Consumption of Coca-Cola products in China now represents approximately 7% of the company’s global volume.

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Abbott to Invest $230 Million in Powdered Milk Products Factory in China


Abbott, the broad-based health care company, will invest $230m (Eur160m) to build a state-of-the-art nutrition manufacturing facility in Jiaxing, China. The facility represents Abbott’s largest investment in China to date and will manufacture premium powdered milk products for Chinese infants and children.

 

More than 17 million infants are born each year in China and rising incomes and a growing middle class have created increased demand for high-quality nutrition products. To meet the needs of this dynamic market, Abbott anticipates launching a number of new product innovations over the next three years across the pediatric nutrition category in China.

 

The plant, when operational in 2013, will employ approximately 300 people. With the addition of the new facility in Jiaxing, Abbott will have opened six manufacturing and R&D facilities in its nutrition and pharmaceuticals businesses in the Asia-Pacific region during the past three years, including three in China.

 

China represents the largest single market growth opportunity in global nutrition. Abbott expects to increase its nutrition revenues inChinato more than $1b by the end of 2014.Chinaalso continues to be an important part of Abbott’s emerging markets strategy. In the first half of the year, more than 26 percent of Abbott’s global sales were in emerging markets and nearly 42 percent of Abbott Nutrition’s global sales were in emerging markets.

 

When completed, the plant will become Abbott’s first fully integrated spray drying, blending and packaging facility inChina.

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Nestle’s €1.2 Billion Chinese Confectionery Deal


Nestle has agreed to acquire a 60% stake in Hsu Fu Chi, a leading manufacturer and distributor of confectionery products in China, for SFr1.4b (Eur1.2b). The remaining 40% will be retained by the Hsu family, which founded the Chinese company. Hsu Fu Chi’s current chief executive and chairman, Hsu Chen, will continue to lead the company in the new partnership.

In 2010, Hsu Fu Chi reported sales of Sfr669m and an EBIT margin of 17.3%. The company operates four large-scale factories in China, has excellent route-to-market capabilities and employs 16,000 people.

Hsu Fu Chi’s portfolio includes sugar confectionery, cereal-based snacks, packaged cakes and the traditional Chinese snack sachima. Hsu Fu Chi’s products are tailored to Chinese consumers’ needs and habits, and complement Nestle’s existing product portfolio in China, which includes culinary products, soluble coffee, bottled water, milk powder and products for the foodservice industry. Hsu Fu Chi’s large portfolio of affordable products, with the potential for enhanced nutritional value, fits perfectly into Nestle’s global portfolio.

“This proposed partnership will greatly reinforce our presence in China. It combines Hsu Fu Chi’s strong brands, its large portfolio of products at affordable price points, its efficient operations and entrepreneurship with our proven innovation and renovation capabilities, supported by our R&D Centres in China,” says Paul Bulcke, chief executive of Nestle. “It also demonstrates our long-term commitment to China and enhances our ability to grow our portfolio of international and local brands in this dynamic market.”

Nestle has been present in China for over twenty years and today operates 23 factories, two R&D Centres and employs 14,000 people. Its China region achieved sales of SFr2.8b in 2010. Main Nestle brands in China include Nescafe, Nan and Maggi as well as local brands such as Totole, Haoji and Dashan. Nestle has established several technical assistance initiatives for milk and coffee farmers in China.

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Nestle Expands in China


Nestle has taken a 60% stake in Chinese food company Yinlu Foods Group for an undisclosed price. Family-owned Yinlu is a well established household brand in China and a significant marketer for ready-to-drink peanut milk and ready-to-eat canned rice porridge.

The deal builds on an already successful partnership between the two companies, as Yinlu is a co-manufacturer for ready-to-drink Nescafe coffee in China. Yinlu’s 2010 sales amounted to around SFr750m (Eur584m). Yinlu’s products are tailored to Chinese consumer taste and habits, and complement Nestle’s existing product portfolio in China, which includes culinary products, coffee, confectionery, bottled water, milk powder and products for the food service industry.

Nestle has been present in China for over twenty years and today operates 23 factories, two R&D Centres and employs 14,000 people. Nestle in the China region achieved sales of SFr2.8b in 2010. Main Nestle brands in China include Nescafé, Nan, Maggi, KitKat as well as local brands such as Haoji and Totole.

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Coca-Cola Gains Another Billion Dollar Brand


Muhtar Kent, president and chief executive of Coca-Cola.

Coca-Cola Company has added Minute Maid Pulpy to its portfolio of brands that have achieved global retail sales of more than $1b, bringing the number of its billion dollar brands to fourteen. Minute Maid Pulpy reached the $1b sales mark in only five years.

The success of Minute Maid Pulpy marks the first time that a brand of The Coca-Cola Company, developed and launched in an emerging market, has reached the billion dollar mark. Minute Maid Pulpy was launched nationally in China in 2005, and is now among the premier juice drink brands in 18 geographies across three continents including Indonesia, Taiwan, Philippines, Thailand and India.

In 2010, Pulpy was introduced in Algeria, Malaysia, Singapore and Vietnam. In addition, Pulpy was introduced in Mexico as Valle Pulpy under the del Valle trademark. In Kazakhstan, Pulpy is sold as Piko Pulpy. The brand is poised for further global expansion in 2011.

Minute Maid Pulpy joins Minute Maid and the Simply beverages as the third billion dollar brand within the company’s juice and juice drinks portfolio. Globally, Coca-Cola Company is the number one provider of juices and juice drinks.

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Carlsberg Consolidates in China


Carlsberg Group has strengthened its standing in the Chinese beer market by increasing its shareholding in Chongqing Brewery from 17.5% to 29.7%, thereby becoming the largest shareholder. Since 2008, Carlsberg has developed a constructive relationship with both Chongqing Brewery and its main shareholder, Chongqing Beer Group. Following the completion of the transaction, the parties will continue to work together to explore opportunities for increased co-operation, including further sharing of best practices and the development of Shancheng, which is the leading brand in the markets in which Chongqing Brewery operates.

Jorgen Buhl Rasmussen, chief executive of Carlsberg Group.

Chongqing Brewery operates 16 breweries in Chongqing and the surrounding provinces of Sichuan, Hunan, Anhui and Zhejiang. In 2009, Chongqing Brewery’s Chinese beer volumes were approximately 10m hectolitres.

“We have been actively involved with Chongqing Brewery and are very excited about the possibilities for further development arising from the transaction. The transaction is in line with Carlsberg’s strategy of strengthening our presence and building a platform for long-term growth in Asia,” comments Jorgen Buhl Rasmussen, chief executive of Carlsberg Group.

Carlsberg Group operates 19 breweries in China. In 2009 the group’s pro-rata Chinese volumes were approximately 9m hectolitres. Carlsberg Group holds strong market positions in Western China. In addition the group holds a number two position in the international premium segment with the Carlsberg brand portfolio.

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World Dairy Market – China and India Increase Imports


Supply shortages are forcing China and India to raise their imports of dairy products, according to the latest Rabobank Global Dairy Outlook report. “The demand from these two giants will impact dairy processors, dairy farmers and dairy prices for the coming years,” says Tim Hunt of Rabobank Food & Agribusiness Research. Rabobank has now changed its view on the role of China and India in the world dairy market to 2014.

Dairy imports to China surged in 2009 following the melamine crisis as Chinese consumers looked for safer imported milk powders. Tim Hunt remarks: “Contrary to expectations, imports have pushed higher still in 2010. Some Chinese consumers still prefer imported products, despite official assurances that domestic supplies are safe. And it’s now clear that Chinese milk production levels fell below official figures in 2008 and 2009.”

As domestic demand for dairy rises at 5 to 6% year, China is facing a protracted market deficit. “The factors underpinning the major shift in Chinese dairy imports may last longer than anticipated. Which is why Rabobank has shifted its projections. We expect the higher dairy imports to continue for three more years, not 12-18 months as we previously predicted,” he remarks.

India has traditionally met local dairy demand from local production, but is now facing challenges to its self sufficiency. Demand for dairy products has increased rapidly with the rises in population, income levels and urbanisation. Poor monsoon seasons, and steadily rising cattle feed costs caused a slowdown in milk production last year. Butter actually disappeared from retail shelves for a month in 2009, forcing processors to buy in fats from the world market. “With a population of over 1 billion people, a small market shortfall in Indian terms represents substantial volumes for the international dairy trade. India’s ‘topping up’ of butterfat last year sent it straight into the world’s top-10 butterfat importers,” Tim Hunt: points out.

The Global Dairy Outlook presents three scenarios for the Indian dairy industry in the coming years. Tim Hunt explains: “Rabobank forecasts assume that India will be able to maintain self sufficiency in dairy in general. But it is likely to call on the world market for fats in poor seasons. And when India comes calling, the rest of the world will certainly feel its presence.”

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Coca-Cola Opens Three Plants in China


Coca-Cola has opened three new bottling plants in China worth a combined $240m, continuing its rapid expansion in one of the world’s largest and fastest growing beverage markets. The new investments are a part of Coca-Cola’s three-year $2b accelerated investment in China and the latest phase of Coca-Cola’s long-term commitment to its business in China.

Muhtar Kent, chairman and chief executive of Coca-Cola.

The investment is also aligned with the government’s call to develop the central and western areas of the country. The plants in Hohhot in Inner Mongolia, Luohe in Henan Province and Sanshui in Guangdong Province will locally produce beverages such as Coca-Cola, Sprite, Fanta, and Minute Maid to quench the thirst of consumers in those regions.

 

Coca-Cola now has more than forty bottling plants in China, having opened six during the past two years. “Our business has experienced strong growth year on year in China, which is now our third largest market. More importantly, the new plants in Inner Mongolia, Henan and Guangdong, will extend our competitive edge in China,” says Muhtar Kent, chairman and chief executive of Coca-Cola.

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Molson Coors Expands in China


In line with its strategy of increasing its exposure to emerging beer markets, Molson Coors Brewing Company has completed its $40m acquisition of 51% controlling interest in a joint venture with the Hebei Si’hai Beer Company, a regional Chinese brewer.

The joint venture, Molson Coors Si’hai Brewing Company, will provide Molson Coors with a platform to further expand its distribution channels throughout China and give the company greater control over brewing, increased cost efficiency, and more flexibility on packaging and brand innovation in order to grow in the market.

Since entering the Chinese market in 2003 with Coors Light, Molson Coors has enjoyed a rapidly growing business with its leading international brand, which is now available in more than 40 cities across China. The new joint venture will provide opportunities to further expand the sales and distribution of Coors Light and regional Si’hai beers.

Molson Coors is a leading global which operates in Canada through Molson Coors Canada; in the US through MillerCoors; and in the UK and Ireland through Molson Coors UK.

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Chinese Dragon Giving the EU an Upset Stomach


Businesses in the EU involved with importing or selling food and beverage products from China are walking, often blindly, into a potential legal and media storm, according to Aon, the leading risk manager and insurance broker.

While the EU has some of the strictest food safety laws in the world, and China itself has been making fast progress in making food safety a real priority, the EU has just reported 345 safety alerts of food and beverage products originating from China in 2009 in a recently published report, The Rapid Alert System for Food and Feed, Annual Report 2009. This represents an improved number over 2008, when the EU reported 500 safety alerts of products originated from China, however it remains by far the largest number in comparison to all other countries worldwide.

While China has recently introduced a food safety act, similar to regulations seen in the EU, traditionally, quality management systems, food standards and hygiene levels have not been of comparable levels to those of EU manufacturers. However, domestic contamination scandals in China over recent years, including the melamine case in 2008 which left six infants dead, a water supply contamination in South China and the recent report of carcinogens being found in 42 tons of Camellia oil in the Hunan region are likely to place renewed government focus on improving food safety standards.

For companies doing business with Chinese food suppliers, whether they are foreign or Chinese themselves, it is vital to:

* have supplied produce undergo a strict quality management process and have firms not only agree to food safety standards but monitor their implementation;

* have suppliers agree to, and monitor food safety standards such as HACCP procedures, the internationally recognised food safety system;

* establish a recall plan in case a recall does have to be instituted;

* consider taking out an insurance programme for the risk of product contamination;

* develop a system to trace back ingredients of the supplied foods;

* create a crisis management plan in order to minimise the financial and reputational damage a recall can inflict on a company.

“Many EU firms see the advantages of importing from China, and indeed there are many, however the physical and regulatory distance between the EU and China make the risk of doing so higher than buying from a firm within the EU,” comments Christof Bentele, global managing director of Aon’s product recall team: “Forgetting the reputational and financial impact of a recall for a minute, the potential human cost of contaminated food or beverages should be enough to make any firm realise that pre-incident crisis planning and the enhancement of quality management procedures should be an absolute top priority. For everyone involved in food production, distribution and sales, prevention really is better than cure.”

He continues: “However, businesses cannot put blind faith in firms operating under a different social and regulatory framework to ensure they have the same emphasis on safety as they do. It is extremely prudent, for both Chinese firms and businesses in the EU importing Chinese goods, to take out an insurance programme for the risk of product contamination. The insurance market in this area is growing and premium rates are getting more reasonable, however insurers will always look at the level of quality management and plans and procedures in place.”

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Northern Ireland Meat Companies Look to Growth in Global Markets


Northern Ireland’s £1.5 billion meat industry must work on strategies that will reduce costs and increase its ability to exploit opportunities that will grow in Europe and other global markets over the next decade. The business opportunities and threats, including rising feed and other costs, as well as consumer trends facing the local industry, which employs over 9,000 people, are highlighted in a major study by GIRA, a leading French consultancy specialising in the global meat industry, commissioned by Invest Northern Ireland in conjunction with the Livestock and Meat Commission (LMC).

Commenting on the 117-page study, ‘Long-Term Strategic Trends in World Meat Markets 2010-2012’, Ian Murphy, Invest NI’s managing director of clients and entrepreneurship, says: “This is one of the most significant documents that we have produced because meat processing is vitally important here in terms of the scale of its contribution to the local economy, especially rural communities, in areas such as exports, new product development and, of course, employment. Currently the industry contributes around 50 per cent of the £3 billion earned by food processing here.”

He continues: “Ensuring its long-term growth, therefore, is immensely important to Invest Northern Ireland and, of course, to the wider community. What this study does clearly and concisely is highlight the opportunities, particularly in Europe, and the challenges our companies will face increasingly from global competitors from South America, China and the US and from rising input costs such as feed stuffs and energy, as well as from the sharpening focus, particularly among European consumers, on food safety and sustainability.

“Our companies should draw great encouragement, however, from a number of points in the study. There is good news for our companies in terms of the protection provided against competition in the EU with its agri-food and environmental policies.

The study also highlights new business opportunities especially in poultry, one of Northern Ireland’s strengths, pigmeat and beef and the good reputation Northern Irish companies enjoy with key retailers which are increasingly developing their international presence. What companies must do is to redouble their efforts to ensure efficiency, productivity and overall, exports, innovation in areas such as higher value added products for niche markets, and overall competitiveness. For instance, the report identifies the advantage that companies that guarantee food safety through greater control have over their supply chain globally.

“Our commitment is to continue to work with local companies to enable them to apply the relevant points in the study, to harness the opportunities ahead and to overcome the challenges especially in key areas such as costs,” he adds.

Among the key points in the study is the projected continuing growth in poultry products. Demand for most meat products will be driven by rising populations.

While other meats will also continue to grow in sales, poultry will gain the most market share. Poultry is described as the cheapest and easiest of the farmed meats to produce. Demand in the developing world, especially China, will increase for most meat products.

EU growth will favour ‘cheaper, quicker growing species’ with chicken continuing to win market share.

Forces driving change in the industry are likely to include – increasing animal welfare concerns which would mean higher costs, higher oil prices, currency volatility, rising costs as sustainability grows in importance, and nutrition concerns among consumers and governments.

Production in some regions will be impacted adversely by issues such as water shortage and land degradation.

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Emerging Markets Drive Heinz


Emerging markets such as China, India, Indonesia, Latin America and Russia are expected to deliver at least 20% of Heinz’s total sales by 2013, more than double their contribution of just five years ago, according to William Johnson, chief executive of the US-based global food group.

“Emerging markets are key to unlocking future growth because their economies are growing at a significantly higher rate than developed markets; the middle-class in emerging markets will eventually outnumber the combined populations of the US and Europe; and per capita consumption of packaged foods in emerging markets has significant upside,” he explains.

Record Sales and Profit

Heinz achieved record sales of $10.5b, up almost 5%, and record gross profit of $3.8b in its 2010 financial year, despite having to navigate “the most difficult economic environment in decades.” William Johnson adds: “Our record sales were driven by solid results in our Top 15 brands and most importantly, by accelerating double-digit growth in emerging markets, our most powerful growth engine.”

With emerging markets generating organic sales growth of almost 22% in the first quarter of the 2011 fiscal year, Heinz is on track to deliver its financial targets for the full year, even though the consumer and economic environment remains challenging.

Indeed, William Johnson says the global economy is in the worst state he has seen during his 35 years in the consumer goods industry. “The near-term economic outlook for the US and Europe remains pretty dreary, marked by high unemployment and low consumer confidence.” He adds “Many consumers have gone into what I like to term as economic hibernation, eating at home more often, eating out less, reducing spending and worrying more about the future.”

Heinz is not spending much time looking for M & A opportunities in the US and Western Europe but instead is focusing almost entirely on the emerging regions of the world.

Heinz expects to deliver another year of strong results on a constant currency basis, with sales growth of 3 to 4%, operating income growth of 7 to 10%, and earnings per share growth of 7 to 10%. Heinz also projects operating free cash flow of more than $1b for the second consecutive year.

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Interim Profit Surges at Arla Foods But a Challenging Autumn Ahead


Increased prices in the global market, rising foreign exchange rates as well as strict control of costs have allowed Scandinavian dairy group Arla Foods to post a hugely increased profit of DKr697m (Eur93m) on a turnover of DKr23.8b for the first half of 2010, while still increasing the ongoing payment to its co-operative owners. This compares with a 2009 interim profit of DKr263m on a net turnover of DKr22.3b.

“Arla Foods has had a good half-year during which we increased the milk price paid to our owners three times,” says Frederik Lotz, chief finance officer of Arla Foods. “Last year’s extensive savings campaign trimmed the group’s costs and we’ve succeeded in maintaining the low cost levels achieved by the savings campaign in 2009. The accounts demonstrate that we have a sound platform for growth.”

He continues: “We are maintaining good market positions in our biggest markets in the UK, Sweden and Denmark, and the significant part of the growth in the first half year was also created by external factors such as the positive foreign exchange rate developments for our key export currencies. We are continuing to see increasing growth in markets such as Russia, China and the Middle East as well as the potential for further growth in a number of our markets going forward.”

Having recently decided that its annual results should represent 2.5% of turnover (compared to 2% previously), Arla Foods has revised this year’s profit target from DKr950m to DKr1.2b.

Although both turnover and earnings increased in the first half of the year, Arla Foods expects the next six months to be challenging. The first half of the year was characterised by higher prices in international commodity markets where Arla Foods sells butter, cheese and powder to industrial customers. However, it is not anticipated that these high prices will continue for the remainder of the year.

”We have to expect lower earnings from the commodity markets in the second half of the year and at the same time we will see the full effects of the increases in the Arla price,” Frederik Lotz points out. “A decisive factor will be how consumer confidence develops. European consumers still bear the scars of the economic recession – many are still cautious and prefer discount products to brands and this obviously impacts on earnings.”

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Danone to Sell Stake in Chinese Juice Business For €200m


Danone has agreed to sell its 22.98% shareholding in China Huiyuan Juice Group, which is listed on the Hong Kong Stock Exchange, for about Eur200m to SAIF Partners, a Hong-Kong-based private equity firm. Huiyuan holds a leading position in the fruit juice market in China.

The disposal is in line with Danone’s strategy to focus the activities of its Waters division on natural mineral and spring water based beverages.

Since Danone’s entrance in the Chinese market in the late 1980s, the company has built up successful positions in its four core categories – fresh dairy products, waters, baby nutrition and medical nutrition, which together operate 20 factories and employ 9,000 people in China. With a strong commitment to accelerate its development in the Chinese market, Danone will continue to focus on the growth opportunities of its four core categories in China.

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GSK to Launch Lucozade Brand in the US


UK-based global healthcare group GlaxoSmithKline is planning to launch its Lucozade energy drink in the US, which is the world’s biggest nutritional health market. The Lucozade brand, which had sales of £376 million in 2009, is currently predominantly sold in Britain and Ireland.

However, it was recently launched in the vast Chinese market, after GSK signed an agreement with President (Shanghai) Trading Co, a trading arm of Uni-President China Holdings, a leading food and beverage company in China.

Andrew Witty, chief executive of GSK.

The moves into China and the US are in line with GSK’s goal of increasing its presence in emerging markets of the world. Andrew Witty, chief executive of GSK, plans other launches through partnership deals in markets such as Mexico and Brazil.

Indeed, the roll out of Lucozade is part of his wider strategy of creating a global and diversified business. Investment in the consumer business, which in the past had been considered a candidate for disposal, is now seen as means of growing GSK’s overall sales.

The Lucozade brand along with Ribena and Horlicks are part of GSK’s Nutritional Healthcare division. Although the Nutritional Healthcare division is only a small part of GSK’s global operation, which achieved pre-tax profits of £7.9 billion on sales of £28.4 billion last year, its is still a sizeable and lucrative business, armed with its powerful brands portfolio.

GSK is the third biggest player within the £6.2 billion UK take-home soft drinks market, behind leader Coca-Cola Enterprises and second ranked Britvic. The top three players account for almost half of this market. Lucozade was the second biggest brand within the take-home market last year and Ribena was in seventh place.

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Heinz Continues Drive into Emerging Markets With Expansion in China


HJ Heinz is acquiring Foodstar, a leading manufacturer of soy sauces and fermented bean curd in China, from Transpac Industrial Holdings, a private equity firm. The acquisition will increase Heinz’s annual sales in China to about $300m and enable the group to enter the nation’s fast-growing $2b retail soy sauce market.

The purchase price consists of a cash payment at closing of $165m and an earn-out potentially payable in 2014 based on the performance of the business. The completion of the proposed acquisition is subject to regulatory approval in China.

Foodstar’s Master Weijixian light premium soy sauce is the leading brand of Weijixian soy sauce in the southern region of China. Foodstar’s Guanghe fermented bean curd, a popular flavor enhancer that is used in cooking, also holds a strong regional market position. Based in Guangzhou, Foodstar has four manufacturing sites and 2,500 employees in China. A new manufacturing facility is being constructed in Shanghai.

“The acquisition of Foodstar gives Heinz a strong growth platform in China’s huge, rapidly growing soy sauce market. Foodstar’s leading brands have strong equity with Chinese consumers and they are a natural fit with our core global capabilities in sauces and condiments,” says William Johnson, chairman, president and chief executive of Heinz. “The acquisition is another important step in our strategy to accelerate growth in dynamic emerging markets like China, where Heinz is already well positioned with our growing infant nutrition business and Long Fong, a leading brand of frozen dim sum.”

Heinz has been in China, the world’s most populous nation, since the 1980’s, when the US-based food giant opened a factory in Guangzhou to produce Heinz infant cereal. Including China, emerging markets generated approximately 30% of Heinz’s reported sales growth and 15% of the company’s total sales in fiscal 2010. Heinz expects emerging markets to generate as much as 25% of sales by 2016.

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