January 8, 2007

 

Thailand's CPF aims to be the next Coca-cola

 

 

With a strong presence in Europe and various metropolitan cities in Asia, including Singapore, Hong Kong, Japan, and of course its homeground Thailand, Charoen Pokphand Foods (CPF) is aiming high and intends to make itself a global brand as instantly recognisable as Nestle or Coca-cola, said Pisit Ohmpornnuwat, president of CP Merchandising Co, a subsidiary of CPF.

 

The company aims increase distribution of its products, including frozen, semi-cooked and ready-to-eat meals, to up to 20,000 sites all over the world, Pisit said. 

 

To build the brand, CPF plans to use about THB 100 million for advertising in Hong Kong, Singapore, Korea and Taiwan where its products are already selling well.

 

In Singapore, the company conducted intensive research on retail outlets, consumer behaviour and product testing while hiring top advertising firms to handle its publicity campaigns. The success it has enjoyed here would be used as a template for its campaigns in other parts of the world.

 

CPF is also confident it would be allotted a substantial portion of the chicken quota set by Europe when the new regulations comes into effect in March.

 

Thanks to extensive expansion since the early 1990s, CPF now has a strong distribution network which spans all over Europe, said Pisit.

 

CPF first started in Europe by exporting 1,000 tonnes to Holland and Germany. In 2006, the company sold 60,000 tonnes to the EU, meaning half the estimated 120,000 tonnes of Thailand's chicken shipped to the continent comes from CPF, Pisit said.  

 

The UK, one of CPF's top market accounted for half its chicken exports in 2006.

 

The EU has approved a quota of 160,033 tonnes for Thailand a year with 8 percent tax. THE EU would also select which Thai exporters to allot their quota.

 

Thailand might not use up the quota and could fill between 130,000 and 140,000 tonnes, maximum, with CPF accounting for half, analysts said.

 

In fact, CPF is struggling to keep up with demand.

 

Although the company would dearly like to garner a larger portion of the allotted EU quota, 70,000 tonnes is about all the company can produce for this year for the EU, analysts said.

 

Besides supplying the EU, CPF also has to supply other markets such as Japan, which is planning to buy 35,000 tonnes of chicken from poultry from CPF this year.

 

Japan and the EU alone would have absorbed nearly all the output of cooked and processed chicken made from four CPF plants, about 120,000 tonnes per year.

 

As the firm may not be able to expand production in short timeframes, it may start outsourcing more aggressively, as it did with its shrimp business, Pisit said. 

 

CPF may buy chickens from local farms or use more products from suppliers approved by the company, Pisit said.

 

The move meant CPF would not be expanding its operations to cover farming and slaughterhouses.

 

The trend for the next five to ten years would be to turn to outsourcing, said Pisit.